Mental Health Update

As we get closer to the final budget, all sides will be negotiating over the next few weeks.   Listed below is the one house proposals of the Senate and Assembly on issues relevant to mental health.  Thanks to MHANYS Counsel John Tauriello for working on this document.

2025-26 Budget Proposals of the Assembly and Senate

Below is a summary of the 2025-26 budget proposals of the Assembly and Senate that are most relevant to persons with mental health issues and the providers that serve them including:

1) The Legislature’s Aid to Localities budget for New York State Office of Mental Health (OMH), highlighting appropriations added to the Governor’s proposal; and

2) A summary of relevant amendments made by both the Assembly and Senate to the Governor’s Health & Mental Hygiene budget bill.

Aid to Localities Budget for OMH:

Assembly appropriation adds to OMH (total $31M)

• Safe Option Support and Critical Time Intervention teams: $2.5M
• Peer Bridger program: $900,000
• INSET: $1.6 million
• Daniel’s law pilot program: $20M
• Daniel’s Law technical advisory center: $2M
• Crisis intervention teams: $2M
• Miscellaneous legislative initiatives: $2.1M

Senate appropriation adds to OMH (total $267M) 

• Daniel’s law: $22M
• Mental health and community services organizations “to support mental health programs, services, and initiatives to improve access to mental health care, research, crisis, intervention, & community based support”: $20M
• Assertive community treatment teams: $15M
• Supportive housing: $10M
• Children behavioral health clinics: $200M

Summary of the Legislature’s amendments and additions to the Governor’s Health & Mental Hygiene (Article VII) Legislation

Part A:  Medicaid global budget cap

The Medicaid global budget cap would be extended for one year through the 2026–2027 fiscal year.

• Assembly: Accepts the Governor’s proposal.
• Senate: Would repeal the Medicaid global cap.

Part C: Prescriber prevails

This proposal would eliminate a prescriber’s ability to make final prescription determinations under the Medicaid program. These provisions would limit the ability to prescribe antidepressants or antipsychotic medications if such drugs are not on the State’s “preferred drug list.”  (Note: similar provisions have been rejected by the state legislature in several previous years.)

• Assembly: Intentionally omitted.
• Senate: Intentionally omitted.

Part E: Managed care proposals

These amendments would make several programmatic changes to the Medicaid managed care program. They would shift coverage for long-term nursing home stays (three months or more) from managed care to fee-for-service; would exclude medical service services, including emergency services, from the independent dispute resolution (IDR) process when they are covered under Medicaid; and would authorize New York State Department of Health (DOH) to impose enhanced penalties upon managed care organizations for failure to meet contractual obligations or performance standards, or failure to comply with state or federal law or regulations.

• Assembly: Intentionally omits most of this Part, but does include the shift in coverage for longer nursing home stays from managed care to fee-for-service.
• Senate: Includes most of the provisions of the Governor’s proposal in this Part.

Part F: Managed Care Organization tax

This section would authorize a New York State managed care organization (MCO) provider tax, subject to continued federal approval of a Medicaid managed care waiver. The taxes collected could be used to fund the non-federal share of Medicaid expenditures, thereby generating a federal share and windfall.  The MCO tax is anticipated to generate $1.4 billion in the 2025-26 fiscal year. (Note: it is not clear whether or to what extent Administration changes in Washington could impact this tax approval.)

• Assembly: The Assembly largely accepts the Governor’s MCO tax proposal, but with higher total provider Medicaid payment increases.
• Senate: The Senate largely accepts the Governor’s MCO tax proposal, but also with higher total provider Medicaid payment increases.

Part H:  Repeal of EQUAL program 

This Part would eliminate the enhanced quality of adult living (EQUAL) program for adult care facility residents.  This program is intended to enhance the quality of care and life experiences for such residents.

• Assembly: Intentionally omitted.
• Senate: Intentionally omitted.

Part J: Statewide Transformation Grant Program 

Technical amendments are proposed to ensure that previous recipients of grants under the statewide transformation III and IV programs will not be unintentionally disqualified. These transformation programs primarily provide capital grants to eligible recipients. (Award recipients include several behavioral health providers.)

• Assembly: Intentionally omitted.
• Senate: Accepts Governor’s proposal.

Part K: DOH appointed temporary operators for hospitals or adult care facilities

These provisions amend the authority of DOH to appoint temporary operators, with expanded authority, for general hospitals and adult care facilities, including adult homes, when necessary to protect health and safety of patients or residents, or when there is serious financial instability.

• Assembly: Intentionally omitted.
• Senate:  The Senate largely accepts the Governor’s proposal.

Part O: Opioid related proposals

This portion of the bill updates the NY State schedules for controlled substances, in order to conform with schedules of the federal Drug Enforcement Administration.

• Assembly: Intentionally omitted.
• Senate: Intentionally omits most of this Part, but would agree to authorize certain practitioners in any “institutional dispenser” to dispense controlled substances as emergency treatments for use off premises, as permitted by federal law, for the purpose of initiating maintenance or detoxification treatments. Also agrees with provisions that would expand authority of emergency medical technicians and paramedics to administer controlled substances.

Part V: Oversight of certain professions 

This Part would expand the scope of practice for certain medication aides, medical assistants, pharmacy technicians, pharmacists, and physician assistants, to increase their ability to perform immunizations and provide other needed care.  (However, these provisions do not appear to significantly impact behavioral health providers.) This Part also would transfer the licensing and oversight functions regarding professional misconduct of physicians, physician assistants, and specialist assistants from New York State Education Department to DOH.

• Assembly: Intentionally omitted.
• Senate: Intentionally omitted.

Part W: Nurse licensure compacts

This proposal would allow New York State to enter into an interstate licensure compact for nurses to help attract and retain such professionals.

• Assembly: Intentionally omitted.
• Senate: Intentionally omitted.   

Part Z: Making the “preferred source program” permanent 

This proposal would make the State’s “preferred source program” permanent. This program provides employment opportunities for individuals with disabilities through preferred State purchasing of goods and services from programs employing such persons.

• Assembly: Would extend the preferred source program for an additional three years.
• Senate: Would extend the preferred source program for an additional two years.

Part AA: Making mental hygiene demonstration authority permanent

This proposal would make permanent flexibilities for the State mental hygiene agencies, through the permanent authorization of time-limited demonstration programs.

• Assembly: Would extend the demonstration authority for a one-year period, until March 31, 2026.
• Senate: Would extend the demonstration authority for a two-year period, until March 31, 2027.

Part BB: Make permanent temporary operator authority of OMH & OPWDD. 

This Part would make permanent the authority of OMH and OPWDD to appoint “temporary operators” to take over programs that have serious health and safety or serious financial issues.

• Assembly: Would extend the authority to appoint temporary operators for a one-year period, until March 31, 2026.
• Senate: Would extend the authority to appoint temporary operators for a two-year period, until March 31, 2027.

Part DD: Runaway and homeless youth, ability to provide consent

This proposal would allow runaway and homeless youth the ability to provide consent to receive outpatient and inpatient behavioral health services, without parental consent.

• Assembly: Intentionally omitted.
• Senate: Accepts Governor’s proposal with minor amendment.

Part EE: Amendments to civil commitment statutes and Kendra’s law

• Section 1 of this part would amend the Mental Hygiene Law (MHL) article 9 definition of “likelihood to result in serious harm” to include “a substantial risk of physical harm to the person due to an inability or refusal, as result of their mental illness, to provide for their own essential needs such as food, clothing, medical care, safety, or shelter.”   (Note: The term “likelihood to result in serious harm” is the definition which describes the clinical condition of individuals who can be picked up, transported, and admitted to psychiatric hospitals or CPEPs on an emergency basis.)
• Section 2 of this Part would add a new MHL section 9.04 to guide involuntary commitment decisions of clinicians by requiring a review of available medical records, credible reports of the person’s recent behavior, medical and behavioral history, and other relevant information.
• Section 3 would permit one of the two clinicians certifying involuntary commitment to a psychiatric hospital (often referred to as a “2PC”) under MHL section 9.27 to be a psychiatric nurse practitioner.
• Sections 4 and 5 would amend MHL sections 9.37 and 9.39 to include commitment of individuals when there is “a substantial risk of physical harm to the person due to an inability or refusal, as a result of their mental illness, to provide for their own essential needs such as food, clothing, medical care, safety, or shelter.
• Section 6 amends MHL section 9.45 to allow “domestic partners” to notify county Directors of Community Services, or their designees, of the need for individuals, who have a mental illness for which immediate care and treatment is appropriate and is likely to result in serious harm to self or others, to be removed and transported to a psychiatric hospital or CPEP for further examination and possible commitment.
• Section 7 would amend MHL section 9.60 (Kendra’s law) in several ways:
• Authorizes the re-issuance of an assisted outpatient treatment (AOT) court order that has expired within the past six months, when the person has experienced a substantial increase in symptoms that substantially interferes with or limits “the person’s ability to maintain their health or safety,” or due to a “lack of compliance with recommended treatment” such that the person has received emergency treatment, inpatient care, or has been incarcerated.  Current statutory language would be eliminated that requires a showing that the symptoms interfere with or limit “one or more major life activities.”
• Previous noncompliance with mandated treatment would not preclude a finding that the person is “likely to benefit” from AOT (one of the necessary criteria for an AOT court order.)
• Domestic partners could petition for AOT treatment.
• Another provision would remove current limitations on physicians testifying by video conference at AOT hearings.
• Section 8 would add a new MHL section 9.64 to require psychiatric hospitals or CPEPs to ensure that “reasonable efforts are made to identify and promptly notify” community health providers of persons on its caseload who are admitted to such facilities.
• Section 9 would amend MHL section 29.15 to require psychiatric hospitals discharging or conditionally releasing patients to interview providers of mental health services that maintain such patients on its caseload, and provide an opportunity for the providers to actively participate in the development of the discharge plan.

• Assembly: Intentionally omits Part EE in its entirety.
• Senate: Intentionally omits most of Governor’s Part EE, but includes sections eight and nine (i.e., notice by psychiatric hospitals and CPEPs to community providers of admission or discharge of a person on their caseload).

Part FF: Targeted inflationary increase for community-based behavioral health providers

This Part would provide a 2.1% COLA to community-based human service providers for fiscal year 2025–26.  (Note: the applicable Consumer Price Index increase is 2.9%, and many behavioral health associations have jointly requested a 7.8% increase this year to make up for historic funding deficits.)

• Assembly: Increases the Governor’s proposal by providing a targeted inflationary increase that totals 7.8%.
• Senate: Increases the targeted inflationary increase up to 7.8%, but also requires providers to use those funds to provide a targeted salary increase of 4% for all affected staff, with the exception of persons in the CFR position title codes of 601-604, 701 and 702. Those positions are as follows:
• 601 Executive Director/Chief Executive Officer Responsible for the overall administration of the agency. This position is usually appointed by and is under the general direction of the governing board of the agency.
• 602 Assistant Executive Director Assists the Executive Director in the overall administration of the agency and acts on their behalf when necessary.
• 603 Chief Financial Officer/ Comptroller/Controller Responsible for overall fiscal management of the agency. Also includes Business Official, Director of Finance.
• 604 Director of Division Responsible for overseeing a major segment of functions for the agency. Also includes Director of Admissions, Director of Purchasing, Director of Human Services, Director of Personnel, Director of Public Relations, Director of Data Processing.
• 701 Mental Hygiene Director/ Commissioner of Mental Hygiene The individual responsible for the overall direction of the mental hygiene activities/programs of the county.
• 702 Assistant Mental Hygiene Director The individual who assists the Director/Commissioner of Mental Hygiene and acts in his/her behalf when absent in the overall direction of mental hygiene activity of the county.

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Governor’s Revenue Legislation

Part U: Expand the employer tax credit for employment of persons with disabilities 

This Part would increase the tax credit for employers who employ persons with disabilities. The current maximum credit for qualified full-time employees is $2,100. This bill would increase the credit to $5,000 for first-year wages, beginning on January 1, 2025.  Where the “federal work opportunity tax credit” applies, an additional $5,000 employer tax credit would be available for second-year wages earned by each qualified employee with a disability.

• Assembly:  Accepts Governor’s proposal.
• Senate: Accepts Governor’s proposal.

Assembly Only Adds

Part GG: School-based health centers 

This part would exclude school-based health centers from Medicaid managed care.

Part HH: MH incident review panels

This part would amend section 31.37 of the Mental Hygiene Law that establishes the authority for the Commissioner of Mental Health to establish mental health incident review panels to investigate serious incidents involving persons with mental illness. The Assembly would require the Commissioner to establish such panels upon the request of a local governmental unit, rather than merely authorize such establishment by the Commissioner. In addition, the Division of Criminal Justice Services shall be represented on such panels.

Part II: Behavioral Health Crisis Center

This Part would establish within OMH a Behavioral Health Crisis Technical Assistance Center, to address Daniel’s Law recommendations. The Center would be responsible for developing standardized protocols and procedures for “non-police” community-based, public behavioral health crisis responses; provide consultation and training services to local governmental units and crisis response teams; and perform other responsibilities related to the implementation of non-police, behavioral health crisis responses.

A Statewide Emergency and Crisis Council would be established to report on the effectiveness of non-police crisis responses, including the identification of gaps and recommendations to improve the operation and financing of such behavior health crisis response systems. (The Assembly included two appropriations totaling $20 million for a Daniel’s Law pilot and $2M for the Crisis Center.)

Part KK: Psychiatric Hospital admission and discharge responsibilities

This Part would amend section 29.15 of the Mental Hygiene Law to amend the discharge responsibilities for psychiatric hospitals to require notification to the discharged individuals’ community-based providers; to require a discharge summary with post-discharge treatment recommendations; to confirm that a follow up appointment has been scheduled; and to address violence risk factors for persons with an elevated risk of violence. Further, upon admission to a psychiatric hospital or a CPEP, any community provider of mental health services that maintains such patient on its caseload must be identified and promptly notified.

In addition, service plans and discharge summaries for “patients with complex needs” shall include additional requirements and responsibilities, in a manner that appear to be consistent with recent amendments to Parts 580, 582, and 590 of the OMH regulations.

Section 4 of this Part amends Kendra’s Law to require county Directors of Community Services to review, on a quarterly basis, each person on an AOT order, to determine whether such person is suitable for a voluntary service setting or enhanced voluntary services. In addition, physicians and the courts shall be required to explicitly consider voluntary services and/or enhanced voluntary services packages when determining whether an AOT order is appropriate for an individual.

Senate Only Adds

Part HH: OMIG audits 

This Part would impose several limitations on the Office of the Medicaid Inspector General (OMIG) regarding audit and recovery of Medicaid payments to providers. Among those requirements are that OMIG apply uniform audit standards and publish current versions of applicable protocols.

In making audit and repayment decisions, OMIG must also consider whether the audit findings: 1) suggest a high level of payment error, 2) whether the nature of the error is from clerical or minor errors, 3) the impact on the provider’s solvency, and 4) the potential for repayment to negatively impact access to services.

Further, any sampling or extrapolation methodologies would have to be consistent with accepted standards of sound auditing practice and statistical analysis. Importantly, clerical or minor errors or omissions totaling three or less cannot be used to apply extrapolation for those cases.

The draft audit report given to providers must include detailed, written explanations of the methods, assumptions, and calculations used in the audit.

In addition, providers would be able to settle through payment at a lower confidence limit, even if the provider requests a hearing, and recoupment could not begin earlier than 60 days from a final audit report or a hearing determination.

Finally, OMIG would be required to annually report regarding its audit practices, in consultation with the affected state agencies and other government officials.

This Part would take effect on April 1, 2026.

(This Part is consistent with S.4955-A/A.1069-A, a bill that is supported by MHANYS and several other statewide behavioral health advocacy organizations.)

Part LL: Daniel’s Law

This Part would enact “Daniel’s Law” to provide for enhanced use of “non-police” community-run, crisis first responder teams to respond to emergencies involving persons with behavioral health issues, rather than law enforcement.

Local governmental units would be required to specifically address the development of an effective non-police, community-run, crisis first responder teams that utilize peers and independent emergency medical technicians as first responders. Planning for this crisis response system must include at least 51% peers and family peers, and the remaining 49% must be family members and independent emergency medical response providers.

Crisis response teams responding to a crisis situation may request law enforcement assistance to transport a person in distress due to mental health or addiction conditions when the team: has “exhausted alternative methods” for obtaining consent from the person; the person refuses treatment or transport; the person poses a substantial risk of physical harm to others “as manifested by homicidal or other violent behavior by which others are placed in reasonable fear of imminent serious physical harm;” and the crisis response team makes an assessment that “the team is at risk of imminent physical violence due to the person’s actions.”

A Statewide Emergency and Crisis Response Council would be established to work with OMH and OASAS to oversee implementation of this law.

Importantly, this Part would also amend section 9.41 of the Mental Hygiene Law, that governs police transports of persons who appear to be mentally ill and are “likely to result in serious harm” to self or others. This amendment would appear to limit the ability of law enforcement to transport a person to a psychiatric hospital or CPEP unless it is determined that the person is:

1. “an imminent risk of serious physical harm to other persons as manifested by homicidal or other violent behavior by which others are placed in reasonable fear of serious physical harm; or
2. “conducting themselves in a manner which is likely to result in imminent serious physical harm to themselves” and no crisis response team is available.

Law enforcement would also be required to contact the local crisis response team under those circumstances.

The Senate included $22 million for implementation of Daniel’s Law. (The Assembly also included a total of $20 million for a Daniel’s Law pilot and $2 million for a related Crisis Center.)

Part SS: Creative arts therapists: Medicaid 

Would permit creative arts therapists to bill for services under Medicaid.

Part UU: FQHCs Billing for telehealth services

Would clarify that federally qualified health centers (FQHCs) licensed by DOH, that are also licensed by OMH under article 31 of the Mental Hygiene Law, may bill for telehealth services as the same rate as services that are delivered in person, through April 1, 2028.