The status quo is Michigan’s behavioral health systems current operating system with still lots of stakeholders waiting to see what comes next. Yet it seems that things are already changing with more funds being withheld, more services being taken away, and conversations shifting from the courtroom to the legislature over policy and budget. April is Autism Awareness Month giving providers an opportunity to engage policy makers and stakeholders in a conversation about what you do and the impact you make - take advantage of it. In the meantime, Spring is upon us and the Detroit Tigers home opener is later this week. So we have lot of work to do, but also a few minutes to enjoy the people around us and everything our state has to offer. Pull Up Your Chair & Let’s Start the Conversation.

Redesign Remains in Holding Pattern as Policy Debate Shifts to Budget

As of this morning, there are no new developments in Michigan’s behavioral health redesign, and no Request for Proposals (RFP) has been issued. Providers, plans, and stakeholders remain in a period of uncertainty, preparing for potential changes without clarity on timing, scope, or direction, in the wake of millions of dollars in anticipated Medicaid cuts, a proposed Mental Health Framework, and an election that will bring a new Governor and legislator in January (2027). While work may be continuing behind the scenes, the lack of a formal RFP or what may come next is anyones guess.

At the same time, attention appears to be shifting toward the state’s Mental Health Framework and the state budget process, even as some advocacy groups are actively working to slow or block both the redesign and the framework through budget boilerplate language. Proposed boilerplate provisions would prohibit MDHHS from issuing or funding an RFP without legislative approval and would also restrict the department from advancing the Mental Health Framework or altering current system responsibilities absent statutory authorization. The proposed boilerplate prohibiting MDHHS from spending additional dollars on a new procurement process may prohibit any new funding towards an RFP, but the Yates decision allows the state to issue an RFP or contract with whom they want to. It would also not be effective until FY27, still making an RFP or procurement possible this year. While a formal redesign has yet to be proposed, the debate over the future structure of the system is very much ongoing, now playing out through the budget process as much as through policy design.

As for CCBHCs, advocacy groups are advancing boilerplate language to strike restrictions on expansion and replace them with continued funding and a pathway for measured growth, but only in Regions 1 and 2. However, soon-to-be introduced legislation would formally expand the CCBHC model in Michigan while adding guardrails to ensure fair access for community-based providers, prevent conflicts of interest, and require transparent, actuarially sound payment structures. Taken together, the proposal reinforces CCBHCs as a mechanism to expand access and strengthen the provider network, while addressing long-standing concerns about certification, payment flow, and equitable participation across the system.

Michigan’s behavioral health system is beginning to feel the financial effects of declining Medicaid enrollment following post-pandemic redeterminations. At the center of the conversation is whether PIHPs and CMHSPs are facing a significant shortfall, and what that actually means. These entities are paid on a per-member, per-month basis, so when enrollment declines, total revenue declines as well. But the picture is more complicated. Capitation rates are designed to reflect expected costs, and in theory should adjust as enrollment and acuity shift. The real issue is timing and structure: fixed costs, higher-acuity populations, and lagging rate adjustments can create pressure even as overall enrollment drops. The question is not simply whether there is a shortfall, but how that pressure is being managed and where it ultimately lands.

For community-based behavioral health providers, the implications are immediate and practical. Unlike PIHPs and CMHSPs, providers are not paid based on enrollment, they are paid based on services delivered, under rates and terms they do not control. When system revenue tightens, providers should prepare for increased utilization management, pressure on rates, delayed payments, and closer scrutiny of services by their funder.

Providers should also be ready to demonstrate their value as the most efficient, scalable part of the system, particularly in crisis diversion, outpatient stabilization, and community-based care that reduces higher-cost utilization elsewhere. As the system adjusts, the central question remains: will financial pressure be absorbed within administrative structures, or pushed downstream to the providers delivering care?

Dive Deeper with Soapbox Cincinnati, on what the Michigan Health & Hospital Association are saying.

Are Referrals Slowing Down in Michigan’s Behavioral Health System?

While there is no statewide, real-time data yet confirming a drop in referrals in the first quarter of 2026, early signals from providers and hospitals suggest growing friction in access to care. As Medicaid enrollment declines and financial pressure builds, PIHPs and CMHSPs appear to be tightening authorization practices, slowing intake, and in some cases directing services internally—changes that don’t show up as formal policy shifts but are felt immediately on the ground. Community-based providers report fewer referrals or longer approval timelines, while hospitals are seeing longer psychiatric boarding and delays in discharge due to lack of placement. Whether intentional or structural, these patterns raise a critical question: is access being constrained by capacity, or by how the system is managing entry into care? If the latter, this becomes not just a budget issue, but a network adequacy and accountability issue that demands closer scrutiny now, not after the data catches up.

Workforce Pressures Highlight Funding Gaps in Behavioral Health System

Michigan’s behavioral health workforce is under growing strain, according to the March 2026 Workforce Survey Report from Incompass Michigan and the Michigan Assisted Living Association (MALA). The survey, representing 55 organizations employing nearly 7,000 direct support staff, highlights a system under pressure from low wages, high turnover, and insufficient funding. Average wages remain modest—$17.14/hour starting and $18.19/hour current—while turnover approaches 38% and more than 875 positions remain unfilled. At the same time, 40% of organizations reported refusing additional programming due to staffing shortages and inadequate reimbursement, and 20% have already discontinued services, impacting at least 154 individuals.

The report makes clear that the workforce challenge is closely tied to Medicaid funding levels, which have not kept pace with rising costs or mandated wage increases. Direct care workers—who support approximately 300,000 individuals statewide—are leaving for better-paying jobs, while providers work to absorb unfunded wage mandates, with fewer than 30% receiving additional funding to cover these increases. Providers note that without adjustments to reimbursement, service capacity may continue to tighten, raising important questions about access to care and long-term system sustainability.

To Better Serve Residents, Strengthen Nonprofit Partnerships, Governing

Midland officers face growing mental healthcrisis demands, Midland Daily News

Health experts: Rural health funding may fall short in Michigan, WXPR (WI)

Derek Swajanen Announces Campaign for 96th District Court Judge in Marquette County, Archeyde

MENTAL HEALTH CARE: Events set to offer education, support, Traverse City Record Eagle

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