We are now just over the halfway mark of the legislative session, and many of the dynamics outlined last month are beginning to take clearer shape. Fiscal constraints continue to influence nearly every policy conversation, and proposals impacting behavioral health are increasingly being weighed not only on policy merit, but on cost, scalability, and long-term sustainability.
At this stage in the session, most bills have been introduced and are moving through committee hearings, where stakeholder input and amendments are actively shaping their trajectory. As fiscal notes are finalized and budget decisions come into sharper focus, we are seeing a narrowing of viable pathways forward for many proposals.
Budget Pressures Continue to Drive Decision-Making
The challenging budget environment remains the defining backdrop of the session. Following the March revenue forecast, the projected budget shortfall for FY 2026-27 has grown to $1.47 billion, up from earlier estimates of approximately $850 million. As the Joint Budget Committee advances through figure setting, the tension between cost containment and maintaining access to critical services is becoming more pronounced.
For behavioral health providers, the potential for Medicaid rate reductions and broader cost containment strategies continues to create uncertainty. At the same time, policymakers are increasingly aware that reductions to community-based services may result in higher downstream costs in emergency departments, the criminal justice system, and state-run facilities.
This dynamic is contributing to a more cautious approach to new investments, while reinforcing the importance of protecting existing safety net infrastructure.
Key Legislation Moving Forward
CBHC continues to engage on a number of bills that could significantly impact the financing of and access to mental health and substance use treatment. Below are several where we have been most actively involved:
HB26-1002 — Provider Participation in Health Insurance
This bill addresses persistent barriers related to network access and reimbursement. It would require commercial insurers to verify network participation, expedite credentialing for behavioral health providers, and allow prelicensed clinicians to be reimbursed when working under supervision. It also reduces clinical hour requirements for LCSW licensure. These changes could improve network accuracy, reduce administrative delays, and strengthen the workforce pipeline during a critical staffing shortage.
Status: Passed the House; now moving to the Senate.
HB26-1195 — Psychotherapy Artificial Intelligence Restrictions
This bill establishes guardrails on the use of AI in psychotherapy, including limits on AI interacting directly with clients or generating treatment recommendations without clinician oversight, while allowing administrative uses like scheduling and documentation. This protects clinical decision-making and the therapeutic relationship. We are working with sponsors to clarify liability for AI use.
Status: Passed unanimously out of House Health & Human Services Committee.
HB26-1116 — Processes for People with Behavioral Health Disorders
This bill aligns emergency commitment processes for substance use and mental health, expands discharge planning to include ongoing treatment and support, and allows courts to incorporate treatment requirements into release decisions. It also extends post-discharge follow-up timelines and creates limited regulatory flexibility for outpatient and telehealth providers. This bill aims to improve continuity of care and better integrate behavioral health into both crisis response and the criminal justice system.
Status: Passed third reading in the House; now moves to the Senate.
We will continue to keep you updated as the session progresses and will highlight opportunities for engagement as they arise. You can follow all the legislation we’re tracking here.
