April 2025

Federal Funding & Restructuring: Impacts on Colorado

Recent federal actions have introduced significant uncertainty into Colorado’s behavioral healthcare landscape. First, the Substance Abuse and Mental Health Services Administration (SAMHSA) abruptly clawed back $31.5 million in federal ARPA grants designated for critical mental health and substance use prevention, treatment, and recovery services within the state. In response, Colorado’s Attorney General joined 23 other states and the District of Columbia in filing a lawsuit against the U.S. Department of Health & Human Services (HHS), securing a Temporary Restraining Order (TRO). The TRO remains in effect while the judge prepares to issue a further injunction, anticipated later this month or in early May. Consequently, the Behavioral Health Administration has lifted the stop work orders and resumed payments, although reimbursement will not be provided for services delivered between March 27th and April 4th; invoices for work completed after these dates, however, will be processed.

Adding to this instability, HHS has started reducing its workforce by 10,000 employees, building on prior layoffs and resignations. Furthermore, HHS announced a sweeping consolidation of its divisions, reducing them from 28 to 15. This restructuring includes the dismantling of SAMHSA, which will be absorbed into a new Administration for a Healthy America alongside other agencies. The restructuring of SAMHSA raises concerns about its funding and core functions.

All of this unfolds against a backdrop of ongoing uncertainty regarding potential Medicaid cuts.

Despite this challenging environment, CBHC’s members and their dedicated employees continue to rise to the occasion, delivering vitally important services to their clients, even as planning and budgeting for the future become exceptionally difficult. Now more than ever, we urge you to continue reaching out to Colorado’s congressional delegation to help them understand the potentially devastating impacts of Medicaid and SAMHSA cuts on your communities and local economies. Your voice is crucial in advocating for the vital services you provide. To increase awareness, CBHC and our members launched two coordinated social media campaigns across platforms focused on protecting Medicaid and SAMHSA: #ProtectOurCare and #StandWithSAMHSA. We encourage all members and stakeholders to follow and share these campaigns to amplify our message.

CBHC remains committed to keeping our members informed with timely updates and messaging, facilitating their outreach to Colorado’s congressional delegation, and directly communicating with the delegation on behalf of all members. We will continue to support our members and partners in their advocacy throughout this rapidly evolving situation. CBHC’s statement on the impact of these federal developments is available here and our latest letter to the Colorado congressional delegation can be found here.

Legislative Session: Progress and Priorities

With just four weeks remaining in the session, CBHC’s highest priority bill – SB 290, providing stabilization funding for safety net providers – has now been introduced and is moving quickly through the process. At the same time, another high-priority safety net funding bill, HB 1174, continues its own progress. Here’s a brief snapshot of those bills:

• HB25-1174 (Reimbursement Requirements for Health Insurers): This bill caps hospital reimbursements from small group health plans and the state employee health plan and allocates the savings to safety net providers and reducing premiums for state employees. It directs 20% of the resulting savings to comprehensive behavioral health safety net providers. This allocation, secured through CBHC’s advocacy, is significant not only for the vital funding it provides but also for formally establishing behavioral health providers as integral components of the healthcare safety net. It’s currently awaiting a second reading vote in the House.
• SB25-290 (Stabilization Payments for Safety Net Providers): This bill establishes a new provider stabilization fund financed through a mix of public and private funds. CBHC has been developing this bill since late last year along with our partners in the Save Our Safety Net Coalition in response to the significant increase in uncompensated care resulting from the end of continuous Medicaid eligibility during the COVID public health emergency. It provides immediate funding (effective in the fiscal year beginning July 1) to a wide array of safety net providers: behavioral health, primary care and rural health clinics. The bill passed unanimously out of the Senate Health Committee April 17 and is continuing through the committee process before its anticipated first floor vote later in April.

In addition, we’re pleased to report that SB25-042 (Behavioral Health Crisis Response Recommendations), HB25-1002 (Medical Necessity Determination Insurance Coverage), and HB25-1070 (Electroconvulsive Treatment for Minors), all bills we supported, have become law.

You can follow all the legislation we’re tracking here.

The Joint Budget Committee (JBC) has wrapped up the proposed budget package for FY 2025-26. At this writing, a conference committee is meeting to reconcile Senate and House budget amendments; we anticipate the governor will sign the completed budget by the end of this month. To get to a balanced budget this year, JBC members used a combination of one-time revenue enhancements, reallocation of cash fund balances, and technical adjustments to TABOR-related revenue classifications. While effective in balancing the budget in the short term, most of these mechanisms do not constitute ongoing revenue sources or permanent modifications to state expenditures, and therefore, the state’s structural deficit persists.

The FY 2025-26 budget package includes the Long Bill (SB25-206), outlining operating appropriations for state departments, and 63 companion bills that authorize necessary statutory changes. These companion bills, some JBC-sponsored and others introduced separately, are essential for balancing the budget.

Within these budget adjustments, a few orbital bills address behavioral health services, though none have a significant adverse impact:

• SB25-236: Consolidation of Crisis Response Services – consolidates the telephone crisis line into the 988 hotline, yielding a small one-time savings of $200,000.
• SB25-237: Repeal Behavioral Health Voucher Program – Repeals the behavioral health voucher program for rural and agricultural communities, a small initiative that faced administrative challenges. This repeal reduces the Behavioral Health Administration’s funding by $50,000.
• SB25-238: Repeal Mental Health Screening Act – Repeals the mental health screening act for grades 6-12. Created in 2022, this program has been used by only a handful of schools statewide.

Importantly, a budget amendment reinstates $5.6M in general funds for the Primary Care Fund, inadvertently removed during the balancing process, which is crucial for Federally Qualified Health Centers, including some CBHC members.