State officials cite legal challenges and size of contract for delay in Idaho Behavioral Health Plan rollout; department seeks transfer exemptions to cover gaps

Chairing the Joint Finance-Appropriations Committee hearing, analysts and the Department of Health and Welfare (DHW) described remaining work to operationalize the Idaho Behavioral Health Plan (IBHP) and asked for transfer-exemption authority to allow department-wide fund moves to cover shortfalls.

Alex Williamson, budget and policy analyst with the Legislative Services Office, told the committee the agency is requesting a fiscal 2025 supplemental of about $6.7 million in federal funds to support the first year of the IBHP and a 2026 ongoing federal operating augmentation of $261,400 to support administration of federal grants. She said the state received federal grants tied to the IBHP after the program’s planned 2022 start was delayed; because the appropriation originally was timed to 2022, DHW needs new authority to access the grant dollars now available.

Director Alex Adams of the Department of Health and Welfare told the committee the IBHP procurement and start-up “precede[d] me,” and that the contract was unusually large. “I believe it is the largest contract in the history of the state, so I do think it is wise and prudent for the department to do it right versus to do it quickly,” he said, adding that the contract attracted “about a year in legal challenges that delayed it as well.”

Adams described the department’s immediate practical request as a waiver to the 10% program-transfer limitation in Idaho Code 67-3511. He said the department seeks exemption to transfer department-wide resources into adult and children’s mental health for unforeseen expenditures in the current fiscal year and is asking that psychiatric hospitalization and mental health services not be subject to additional transfer restrictions beyond those in 67-3511.

Committee members pressed for more detail about the procurement timeline and legal challenges. Senator Cook asked why the request took so long; Adams repeated that the contract’s size drew litigation, which delayed implementation, and said once the litigation cleared the department chose to prioritize a correct launch over speed to avoid operational failures. “When things get tied up in court it delays the ability to implement,” Adams said.

Adams and Williamson stressed that many behavioral health services for Medicaid-eligible patients are covered in the Medicaid budget, and the mental-health appropriations heard at this meeting are intended to fill gaps—services Medicaid does not cover and services for non‑Medicaid-eligible people. Adams called those gap budgets “gap filler[s]” and warned that some services previously available had to be temporarily suspended earlier in the year when the department constrained spending to live within existing appropriations.

On the committee’s question whether lifting transfer restrictions would simply let the department move money around to avoid asking the Legislature for supplements, Adams framed the request as pragmatic: without the ability to transfer, the department would be more likely to return with supplemental requests for entitlement-style costs it cannot control. He told the committee that Medicaid is an entitlement—if more eligible people access services the state must pay—while gap-filling services are not legal entitlements and can be limited if appropriations are insufficient.

The committee did not take a formal vote on the transfer-exemption request during this hearing; staff presented the requested supplemental amounts and the department confirmed the nature of the ask and the reason federal grant authority needs to be re-authorized in statute-year alignment.

Ending: DHW asked the committee to grant transfer exemptions and supplemental authority to access federal IBHP grants that were awarded but not aligned to the original appropriation year. The committee scheduled further budget consideration in upcoming Medicaid-focused hearings, where members indicated they expected more detailed fiscal discussion about IBHP operations and the larger Medicaid budget consequences.