Health and Welfare requests transfer exemptions, cites Idaho Behavioral Health Plan delays and legal challenges

Alex Williamson, budget and policy analyst with the Legislative Services Office, told the Joint Finance Corporation Committee that the Department of Health and Welfare's Division of Mental Health Services is seeking authority to access federal grants related to the Idaho Behavioral Health Plan and an exemption from statutory program-transfer limits.

"This is 6,700,000 one-time federal funds to support the first year of the Idaho Behavioral Health Plan," Williamson said, describing a fiscal-year 2025 supplemental request and a smaller ongoing federal operating request for 2026.

The request follows a delayed go-live for the Idaho Behavioral Health Plan, which the analyst said went live in July 2024 after originally being slated for 2022. Williamson said federal grant awards were issued in connection with the go-live but the original appropriation timing precluded the department from accessing those funds without new legislative authority.

Alex Adams, director of the Department of Health and Welfare, told the committee the procurement and implementation process for the IBHP involved the state's largest contract and attracted legal challenges that delayed awarding and implementation. "I believe this was the largest contract in the history of the state," Adams said. "I also believe there was about a year in legal challenges that delayed it as well."

Adams said the department prioritized doing the procurement correctly rather than quickly, and that after the legal matters resolved the transition to the new contractor went "relatively smooth" when it went live in July. He said the department initially provided weekly updates to the committee and then moved to monthly updates.

Committee members pressed for more detail about the delays, bidding timeline, and budget impacts. Senator Cook asked why the bid and RFP process took so long; Williamson deferred detailed procurement questions to the director because the work predated her assignment. Representative Tanner and others asked whether other vendors could have been used for the 988 crisis-line work; Adams said the contracted managed-care entity, Magellan, is expected to subcontract or choose an appropriate vendor and the department is "agnostic as to who the contractor is."

On budget mechanics, Williamson and Adams discussed a department request for exemptions to program-transfer limits in Idaho Code §67-3511 to allow transfers into adult and children's mental health programs for unforeseen expenditures. Williamson said the department asked for an exemption from the statute's 10% program-transfer limitation for fiscal year 2025 and for no additional transfer limitations in 2026.

Adams drew a distinction between entitlements such as Medicaid — where more demand creates a statutory obligation to pay — and gap-filling programs funded by the budget. He said the department had to temporarily suspend some children's mental health services earlier in the year to live within appropriations because transfer restrictions prevented reallocating funds across object classes. "We had to temporarily suspend children's mental health services," Adams said, describing the action as a budgetary choice to avoid a supplemental request.

The analysts noted recent investments: ongoing community behavioral health clinic funding and one-time appropriations (including funding to stand up the 988 crisis line and grants to assist psychiatric residential treatment accreditation). The committee was told that future slides and the budget document show base adjustments and updated full-time positions for the division.

The department and analysts did not ask the committee for an immediate vote during the hearing; they presented the transfer exemption and appropriation requests for the committee's consideration in the enhancement bill scheduled the following week.