Navigating the Behavioral Health Services Act

How small and medium-sized counties can leverage the benefits of the ISL Learning Window

As of July 1, 2026, counties have begun operating their first fiscal year under the Behavioral Health Services Act (BHSA).

The California Department of Health Care Services (DHCS) is requiring counties to implement a new encounter reporting strategy, Individual Service Level (ISL) reporting, to facilitate increased transparency and more robust data reporting and analysis for public behavioral health services. Embedded within the implementation timeline is a designated six-month “learning window.” From July 2026 through January 2027, data collected will not be used for state reporting or regulatory oversight. For small and mid-sized county behavioral health departments, this deliberate phased implementation offers an important opportunity to focus on building the data infrastructure needed to effectively communicate about what is actually happening in the county. Counties have an opportunity to test approaches, try new tools, build sustainable internal capacity, align frontline teams, and begin to experiment with how to turn administrative change into long-term culture and systems.

While helpful, County Integrated Plans lack the detail and tools required for deep and hard system learning. System transformation takes time, careful planning and intentional workflow adjustment. With major policy overhauls in the forecast, leaders and teams often focus heavily on technical infrastructure—new hires, process maps, electronic health record systems (EHRs), and budget sheets. But through implementation science, we know that the most vital infrastructure in any system transformation is trust. We also know that change moves at the speed of trust, and trust is the foundational element and hidden operational infrastructure that makes system learning possible.

At CIBHS, we want to recognize that county behavioral health teams may not perceive that the 6-month window is not actually a learning window but rather a soft-launch deadline or an active monitoring period. We want to encourage small and medium counties to lean into the fact that there are no active requirements for submission during the learning window, and to use this time to allow leadership teams an opportunity to identify operational friction points without the immediate fear of compliance penalties. The learning window creates space for county teams to build an infrastructure of trust so they can truly learn and work toward long-term sustainable change.

Four Priorities for the Learning Window

Cultivating Internal & Inter-Agency Trust

County leaders should take time to create safe spaces for mistakes and a build an internal culture that is hungry for continuous improvement. Even when safe spaces already exist, there are opportunities to build deeper relationships and create conversation around an internal culture of improvement. For example, counties can create a blameless trial environment by explicitly framing early data submissions as a system test rather than a performance audit. When a data pipeline breaks or a form is filled out incorrectly during a dry run, celebrating the discovery as a successful step towards creating a sustainable workflow builds psychological safety.

Our work with communities has taught us that co-design is the most effective approach to sustainable program implementation. This approach can also be applied internally. Instead of handing clinicians top-down compliance mandates, leaders can co-design frontline workflows in partnership with case managers, peer specialists, and clinicians. When frontline staff see transparency in decision making and their direct feedback shaping administrative tools, burnout decreases and data quality improves.

Leaders can also intentionally break down silos across departments, especially between fiscal and clinical teams. For example, counties can host joint working sessions where finance analysts and clinical supervisors unpack BHSA requirements together. This offers an opportunity to build mutual empathy between teams and to work through each other’s parameters in real time, together.

Cultivating internal and inter-agency trust is outlined here as the first focus area because it should be integrated across all the pillars of the BHSA restructuring process within counties, and especially budgeting and implementing new clinical practices and data procedures.

Navigating Budget Restructuring with Confidence

In California, we often say: if you’ve seen one county, you’ve seen one county.

This expression couldn’t be truer when it comes to BHSA policy implementation. Every county is different and while there isn’t a one size fits all approach to handle the shift toward incorporating substance use services, prioritizing high-need populations, and tracking integrated budgets and services, there are some tools and approaches that counties (in particular those with leaner fiscal teams) can implement during the learning window to build trust within teams and navigate the budget restructuring process with confidence.

With the June 30 release of the updated DHCS Policy Manual (Version 1.5.0) and Budget Template Version 3, counties across California are officially testing their live systems against their submitted FY 2026–2029 Integrated Plans.

More specifically, the six-month learning window allows counties to run their internal workflows, dry-run expenditure tracking, and test real-world billing against the budget projections they submitted with their Integrated Plans.

For example, some counties are testing “Medi-Cal First” routing for expanded Substance Use Disorder (SUD) services., The BHSA allows counties to direct funds toward standalone SUD care without needing a co-occurring mental health diagnosis; however, the state expects counties to bill Medi-Cal Managed Care Plans (MCPs) or Drug Medi-Cal (DMC-ODS) before tapping BHSA dollars.

During the learning window, some counties may find it beneficial to run “shadow claims.” When an individual enters treatment for substance use without a co-occurring mental health need, the fiscal team processes the service through Drug Medi-Cal or an MCP billing pathway first. Counties are looking to verify whether local providers’ claims are successfully accepted through the Medi-Cal claims process or if they are bouncing back. If claims bounce, counties can fix billing codes during the learning window without running into a budget deficit, as well as identify services that can be funded through BHSA because they are not eligible for Medi-Cal reimbursement.

To leverage trust as infrastructure, county leadership can take the opportunity to celebrate the learning when claims bounce back. When a claim is rejected or a data field is deemed incomplete during a trial run, it isn’t an administrative failure—it is vital feedback. Finance teams that test the state’s budget crosswalks early can uncover hidden Medi-Cal revenue opportunities. These early friction point discoveries are system wins and critical data points. If leadership models a culture where staff feel safe to share operational challenges rather than hide them, counties don’t just fix their billing workflows; they reinforce the trust infrastructure necessary to sustain long-term systems change.

Operationalizing Required EBP Fidelity

Transitioning Full-Service Partnership (FSP) programs toward structured, fidelity-monitored Evidence-Based Practices (such as ACT, IPS, and High-Fidelity Wraparound) demands thoughtful workforce planning. In smaller counties where staff frequently wear multiple hats and cover broad rural geographies, implementing rigid fidelity models requires tailored approaches. Leaders can look to use the learning window to evaluate local staffing footprints, cross-train multidisciplinary teams, and establish sustainable peer-support integrations.

More specifically, FSP programs require counties to rapidly enroll individuals experiencing significant mental health needs into care without waiting for lengthy formal eligibility determinations. During the learning window, mobile crisis teams and county intake workers can practice presumptive enrollment protocols. Frontline workers can log individuals into FSP tracks immediately while Quality Assurance (QA) teams monitor how long it takes to complete full documentation. Through this process, teams can identify how/if presumptive eligibility creates a backlog of unbilled claims or data gaps.

During this process, tension can naturally arise between frontline crisis teams and QA compliance leads. Mobile crisis teams often operate under high stress environments in the community and directly interface with individuals who need immediate support. QA team members on the other hand are office-based and focused on state documentation, fidelity tracking and reporting standards. Without intentional collaboration, the QA team can be viewed more like rule enforcers than teammates. The learning window provides an opportunity to dismantle these silos, co-design better workflows, and build relational trust between teams that often work on opposite parts of meeting community needs.

Testing Data Pipelines and Inter-Agency Sharing

New BHSA data requirements are proving especially challenging for small and medium-sized counties. BHSA implementation involves a significant increase in data collection and reporting requirements, both at the state and local level.

Of the 14 statewide behavioral health goals, DHCS has designated six priority statewide goals:

• Improve access to care;
• Reduce homelessness;
• Reduce institutionalization;
• Reduce justice-involvement;
• Reduce removal of children from home; and
• Reduce untreated behavioral health conditions.

For each of these goals, county behavioral health plans are required to compare their local performance to statewide performance, identify any disparities or inequities within their local system of care, and generate a plan to address all measures wherein local performance does not meet or exceed statewide performance. Meeting these extensive benchmarks requires robust data pipelines that many small and medium-sized counties—operating with lean Quality Assurance (QA) and IT staff—are still building. This is precisely where trust as infrastructure and the six-month learning window become operational lifelines.

Rather than viewing early performance metrics through an audit lens, leaders are encouraged to leverage the 6-month period as an opportunity to build data infrastructure and communicate effectively about what is happening in their county. During this window, local disparities and data gaps can be treated as baseline diagnostics and areas for growth and improvement. When a data extraction fails or local metrics fall short of statewide averages, leadership can celebrate the discovery as a win for data collection teams and systems. Normalizing iteration over immediate perfection builds psychological safety across QA, IT, and frontline clinical teams. In doing so, counties can use the learning window to refine local EHR workflows, strengthen cross-agency data sharing with local MCPs, and build the institutional confidence needed to address health equity meaningfully before mandatory Behavioral Health Outcomes, Accountability, and Transparency Report (BHOATR) reporting takes effect in 2028.

Bridging the Bandwidth Gap

A Stronger, More Connected Behavioral Health System

Learn More

CIBHS is hosting a free webinar on August 4, contact Antoinette Manuel to join us or for more information on how we can help your county.