State outlines $80 million plan to improve residential care for children with complex behavioral health needs

The Division of Mental Health, Developmental Disabilities and Substance Use Services (DMH DD SUS) said it is directing $80,000,000 in cross‑division investments to improve care for children with complex behavioral health needs who require residential treatment. Kelly Shusko, a program consultant at the division, outlined the plan during a recorded Side by Side webinar.

The investment is meant to reduce emergency department visits and unnecessary boarding, shorten lengths of stay in out‑of‑home placements, lower readmissions and expand specialized, time‑limited, trauma‑informed treatment that helps children return to their families and communities. "One element of that investment is targeting child behavioral health," Shusko said, adding the funding supports levels 2, 3, 4 and psychiatric residential treatment facilities.

Shusko described four objectives guiding the work: enhance environments of care, improve clinical quality through evidence‑informed practices, increase access so children receive the right service at the right time, and develop specialized capacity for youth with complex co‑occurring needs. She said the division will prioritize family‑connected, time‑limited interventions and implement specialty pilots for two priority groups: youth with problem behaviors and youth with co‑occurring behavioral health and intellectual/developmental diagnoses (including autism spectrum diagnoses).

The division shared baseline system data collected during a spring assessment: just over 1,200 residential beds statewide, with 48 of North Carolina's 100 counties lacking any child/youth treatment facility. For psychiatric residential treatment facilities (PRTFs) Shusko said utilization declined year‑over‑year from 2023 to 2024 but remained substantial—nearly 800 youth over the year, with about 243 youth in care on any given day, an average age near 15, and an average length of stay around 7½ months. She also reported that about 35% of youth who require PRTF services are served out of state.

To improve immediate conditions, the division issued a spring request for proposals to providers and funded 26 environment‑of‑care projects across 19 providers in 12 counties this fall, plus reserve funding for seven PRTFs at approximately $4,700 per bed. "If we can create safe spaces, then our children are more engaged in care," Shusko said, noting those investments touch roughly 414 youth on any given day.

Planned next steps include a residential services cost and clinical effectiveness analysis, a safety initiative to reduce critical incidents and restrictive interventions, design and testing of trauma‑informed treatment models, and an electronic registry (referred to as BH Scan) to enable electronic referrals and better match specialty needs to available beds. The division will also develop a youth and family council and a residential provider workgroup to guide implementation.

The division emphasized that this redesign will span Medicaid products and coordinate with partners including the Division of Social Services (DSS), Medicaid, and the Department of Health and Human Services regulatory partners. Shusko said more information will be shared as pilots are launched and data are analyzed. The webinar recording and slides will be posted and the division invited stakeholders to upcoming forums and advisory meetings.