DATE: November 17, 2026
TO: Board of Supervisors
SUBMITTED BY: Susan L. Holt, Director, Department of Behavioral Health
SUBJECT: Agreement with Mental Health Systems, Inc. for Assisted Outpatient
Treatment and Community Assistance, Recovery, and
Empowerment Act Services
RECOMMENDED ACTION(S):
TITLE
1. Under Administrative Policy No. 34 for competitive bids or requests for proposals (AP 34), determine that an exception to the competitive bidding requirement under AP 34 is satisfied and a suspension of competition is warranted due to unusual or extraordinary circumstances, and that the best interests of the County would be served by entering into an agreement with Mental Health Systems, Inc. as no other agency exists that could immediately contract with the County to provide the required level of services to persons petitioned to Assisted Outpatient Treatment & Community Assistance, Recovery, and Empowerment Act programs; and
2. Approve and authorize the Chairman to execute an Agreement with Mental Health Systems, Inc. for the provision of Assisted Outpatient Treatment & Community Assistance, Recovery, and Empowerment Act services, effective upon execution through June 30, 2030, which includes two optional one-year extensions, total not to exceed $6,484,000; and
3. Approve and authorize the Chairman to execute Amendment No. 2 to Agreement A-25-380 with Mental Health Systems, Inc. to remove Exhibit A1 and A2 and revise Exhibit C to remove Assisted Outpatient Treatment and Community Assistance, Recovery, and Empowerment Act services, effective upon execution, with no change to the term of July 1, 2025, through June 30, 2030, and decreasing the maximum compensation by $1,336,000 to a total of $30,795,247.
REPORT
There is no additional Net County Cost associated with the recommended actions. The recommended actions will separate the Assisted Outpatient Treatment (AOT) and Community Assistance, Recovery, and Empowerment (CARE) Act services from the exiting Agreement onto their own agreement and will be removing the scopes of work from the current Adult Full Service Partnership (FSP) Agreement on which they are currently provided. Services will still be provided by the same agency, but instead through a standalone agreement tailored to this service line, including care coordination, outreach and engagement, data gathering and reporting through established civil court processes. This item is countywide.
ALTERNATIVE ACTION(S):
Should your Board not approve the recommended actions, AOT and CARE Act services would remain under Agreement A-25-380 with Mental Health Systems, Inc. (MHS). However, without sufficient funding allocated to the CARE Act program, the Department would be unable to adequately fulfil the state-mandated requirements for assertive outreach and engagement at the level expected for persons served who are petitioned and referred to CARE Act program. Continuity of care would be impacted for individuals receiving assertive outreach and engagement services through both the AOT and CARE Act programs as these are persons living with serious mental illness, are among the most vulnerable members of the community, and are most often connected to Assertive Community Treatment (ACT) that is provided by Mental Health Systems, Inc. The criteria for qualifying for CARE Act and AOT services often overlap with the criteria to qualify for ACT level services. These services are provided in compliance with Welfare and Institutions Code (WIC) Section 5970.5(b), which mandates CARE Act services and Assembly Bill (AB) 1976, which mandates AOT services.
SUSPENSION OF COMPETITION/SOLE SOURCE CONTRACT:
It is requested that the County find under AP 34 that an exception to the competitive bidding requirement is satisfied, and a suspension of competition is warranted due to unusual or extraordinary circumstances due to MHS already serving as the provider for AOT and CARE Act services and no other entity exists that the County could immediately contract with to provide the appropriate level of services to persons served who are referred and petitioned to AOT and CARE Act programs. The General Services Department - Purchasing concurs with the Department’s assessment that this satisfies the exception to the competitive bidding process required by AP 34.
FISCAL IMPACT:
There is no increase in Net County Cost associated with the recommended actions. The total maximum compensation of the Agreement identified in Recommended Action No. 2 ($6,484,000) will be funded with CARE Act Administrative Activities Claims Reimbursement Funds ($5,940,000), CARE Act Implementation Funds ($176,000) and Behavioral Health Realignment ($368,000).
The total maximum compensation of Amendment No. 2 to Agreement No. A-25-380 identified in Recommended Action No. 3 ($30,795,247) is funded with Medi-Cal Federal Financial Participation (FFP) ($28,414,726), Mental Health Services Act (MHSA) ($751,529), Behavioral Health Services Act (BHSA) ($1,075,000), CARE Act Administrative Activities Claims Reimbursement Funds ($418,659), CARE Act Implementation Funds ($20,000), and Behavioral Health Realignment ($115,333).
Sufficient appropriations and estimated revenues are included in the Department Org’s 5630 FY 2026-27 Adopted Budget and will be included in future budget requests for the duration of the term. Actual costs will be determined by actual services provided.
DISCUSSION:
On March 17, 2025, the County released Request for Proposals (RFP) No. 25-077 seeking a qualified contractor to operate an Adult Full-Service Partnership Continuum of Care and provide AOT and CARE Act services. An addendum to the RFP was released on April 8, 2025, to provide a response to potential bidder questions and revising the Medi-Cal Fee for Service reimbursement rates. RFP No. 25-077 closed on April 18, 2025, with no bids received.
In March and April 2025, the Department released Requests for Proposals (RFPs) for Full-Service Partnership Continuum of Care services which includes Full Service Partnership (FSP), Intensive Case Management (ICM) and Outpatient (OP) levels of care. The County, through its DBH, approached a selected bidder of the Adult FSP Continuum of Care RFP to request their support in providing CARE Act and AOT services.
On August 5, 2025, your Board approved Agreement No. A-25-380 with MHS for Adult FSP Continuum of Care services and included the provision of AOT and CARE Act services through their Daring to Achieve Recovery Together (DART) West program.
On August 19, 2025, your Board approved Agreement No. A-25-413 with MHS for Co-Occurring Adult FSP Continuum of Care services through their Fresno Impact program.
On June 16, 2026, your Board approved Amendment No. 1 (26-252) to Agreement No. A-25-380 with MHS, to increase funding for CARE Act services and incentives, to meet new accountability measures set by the State for counties implementing CARE Act and to meet new requirements pursuant to Behavioral Health Services Act (BHSA) through Proposition 1. Your Board also approved Amendment No. 1 (26-253) to Agreement No. A-25-413 with MHS for Co-Occurring Adult Full-Service Partnership Continuum of Care services to change the scope of work to include FSP ACT and FSP ICM to meet new requirements pursuant to BHSA.
To further align the delivery of AOT and CARE Act services with the Department’s behavioral health continuum of care, the Department is proposing to transition these services from the current DART West program to the Fresno Impact program, which are both within the Mental Health Systems, Inc. organization through the execution of a standalone Agreement. This transition will consolidate outreach, engagement, and ongoing treatment services alongside a continuum of care that is better equipped to address the complex needs of individuals served through AOT and CARE Act programs. Aligning these services with the Fresno Impact program will also strengthen coordination with FSP and ACT-level services, reduce potential gaps in care, and support more effective transitions to the appropriate level of treatment based on the individual needs of each person served.
The MHS Fresno Impact program includes FSP ACT-level services, which is the highest level of outpatient care available within the Department’s system of care and is most often the appropriate level of care needed for persons who are petitioned and referred to AOT and CARE Act. The Department met with the Purchasing Manager to discuss the shift of AOT and CARE Act services from DART West to Fresno Impact to allow for improved continuity of care. The Purchasing Manager supports the movement of the programs to improve continuity of care and care coordination onto a standalone Agreement.
Utilization data for the CARE Act program indicates an average of 30% growth in petitions and referrals over the last five months of FY 2025-26. Data on the success rate of CARE Act is not yet available as the program is still in its early stages following implementation on December 1, 2024, and requires twelve months of participation to successfully graduate from the CARE Act process. Since implementation, the Department has received 161 petitions and referrals to CARE Act and of those, 105 were received in the last six months of FY 2025-26; 50 CARE Agreements (43) and CARE Plans (7) have been approved by the Court for persons served by the program. At present, there are 80 persons currently being served by the program with more anticipated growth. Because the program continues to expand, funding levels must be increased to meet the growing needs. During the early part of the CARE Act process, assertive outreach and engagement requires a significant number of meaningful contacts with each person served and on average, lasts approximately 60 days, with multiple contacts each week.
The maximum compensation for each fiscal year under this recommended Agreement was estimated using historical funding data from prior Agreements. Funding for CARE Act Administrative Activities, which is 100% reimbursable by the State, was calculated with the assumption that the program would be fully staffed, to include enough funding for one full-time equivalent employee to complete accurate and timely monthly data collection and reporting mandated by the State for all persons referred and petitioned to CARE Act services. Funding was also projected at a level that would allow for the program to maximize all claiming opportunities and meet State requirements of assertive outreach and engagement, data reporting, service notice, report writing, and court hearing attendance in support of all persons petitioned and referred to CARE Act services. CARE Act rates are set by activity calculated by using the hours available that each staff can work per month separated by activity type.
Proposed funding for CARE Act incentives is to maintain the current level to support and meet the immediate needs of persons who are in the CARE Act process at an assumed average of 50 persons receiving incentives per month, with those further in the process requiring fewer incentives than those who in the earlier stages of the process.
The AOT program has maintained a steady number of referrals throughout each fiscal year. Approximately 50% of individuals who are referred to AOT meet eligibility criteria and are provided with assertive outreach and engagement services. The proposed maximum compensation for the AOT program is to maintain the current level of funding to continue to support the program which also entails significant AOE efforts, which can last up to 90 days for each person served.
Approval of the recommended actions will authorize the reduction of the maximum compensation and remove AOT and CARE Act services from the current MHS Agreement for Adult FSP Continuum of Care and execute a standalone new Agreement with MHS for the specific provision of AOT and CARE Act services, for a base term (including two optional one-year extensions). Total maximum compensation under the new Agreement shall not exceed $6,484,000, representing a $5,424,000 increase from the maximum compensation under the current Agreement, which is fully reimbursable by the State. This increase is necessary to address the significant growth in CARE Act petitions and the resulting increase in demand for outreach and engagement services/care coordination at a rate of $79 per hour, court report writing at a rate of $115 per hour, attending court hearings at a rate of $92 per hour, and data reporting at a rate of $97 per hour. The CARE Act program is currently averaging approximately 90 open CARE Act petitions monthly, which includes new petitions and ongoing petitions and requires additional staffing capacity to meet service delivery expectations, maintain program effectiveness, and ensure timely and accurate reporting.
In March 2026, the California Governor placed Fresno County on the CARE Improvement Coordination Unit (ICU) list indicating that the county was underperforming due to falling short of receiving the State-anticipated number of CARE Act petitions. In response to being placed on the ICU, the department continued to bolster its CARE Act program by taking a data-informed approach to providing community education to spread awareness of CARE Act to potential petitioners to ensure those in need receive these services, as well as ensuring the county receives the requisite number of petitions annually. On October 1, 2026, the Governor’s office announced that the county demonstrated notable advancements by doubling its number of petitions since last year. The State continues to develop accountability measures for counties, such as the CARE Act ICU. These measures are informed by CARE Act annual reports, annual evaluations, and monthly data reporting. The State has also made CARE Act progress data publicly available on its Behavioral Health County Profile dashboard as part of an accountability measure.
The increased maximum compensation was calculated based on the projected cost of maintaining a fully staffed CARE Act team including the addition of at least four full-time equivalent (FTE) employees. When fully staffed, the team will be comprised of 2 FTE licensed mental health clinicians, .25 FTE psychiatrist, .5 FTE licensed psychiatric technician, 2 FTE certified peer support specialists, 2 FTE case managers, and 1 FTE data analyst, to support the expanded workload and ensure the program can adequately respond to current and anticipated service needs, including the ability to expand staffing levels as community awareness of the CARE Act increases over time.
AB 339 noticing has occurred, and the Human Resources Department approved execution of the recommended Agreement and Amendment.
OTHER REVIEWING AGENCIES:
The Behavioral Health Board will be notified of the recommended Agreement and Amendment during the November 2026 meeting.
REFERENCE MATERIAL:
BAI #45, June 16, 2026
BAI #39, August 19, 2025
BAI #46, August 5, 2025
ATTACHMENTS INCLUDED AND/OR ON FILE:
Suspension of Competition Acquisition Request
On file with Clerk - Agreement with Mental Health Systems, Inc.
On file with Clerk - Amendment No. 2 with Mental Health Systems, Inc.
CAO ANALYST:
Ronald Alexander Jr.