California Weighs Diverting Behavioral Health Funds From Psychiatric Rate Relief
California's Department of Health Care Services has proposed directing $185.2 million of $300 million in 2025 Proposition 35 behavioral health funding toward wellness coaches, housing subsidies and data exchange grants, rather than toward Medi-Cal inpatient psychiatric reimbursement that hospitals say they need to absorb new nurse staffing ratios. The ratios, effective since June 1, require one nurse per six adult patients (one per five for minors) in freestanding psychiatric hospitals, with costs estimated at $145 million to $275 million statewide. Hospitals, through the California Hospital Association and allied advocacy groups, sent letters in October asking the state to commit at least $275 million of $600 million in available throughput funds to reimbursement, warning that counties have already lost nearly 70 inpatient psychiatric beds. DHCS argues the proposed investments indirectly ease capacity pressure, but providers say the state should fund the "foundation" of inpatient care first.