REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 23, 2026
FROM
JOSHUA DUGAS, Acting Director, Department of Behavioral Health
SUBJECT
Title
Amendments to Contracts for Crisis Residential Treatment Program Services
End
RECOMMENDATION(S)
Recommendation
Approve amendments to the following contracts for the provision of Crisis Residential Treatment program services, increasing the combined contract amount by $9,200,000, from $74,000,000 to $83,200,000, updating contract language, with no change to the contract period of July 1, 2022 through June 30, 2027:
1. Amendment No. 3 to Contract No. 22-361 with Telecare Corporation, for services in the West Valley region, increasing the contract amount by $2,000,000, from $14,800,000 to $16,800,000.
2. Amendment No. 2 to Contract No. 22-362 with Valley Star Behavioral Health, Inc. for services in the East Valley region, increasing the contract amount by $2,000,000, from $14,800,000 to $16,800,000.
3. Amendment No. 2 to Contract No. 22-363 with Valley Star Behavioral Health, Inc., for services in the Eastern Desert region, increasing the contract amount by $2,000,000, from $14,800,000 to $16,800,000.
4. Amendment No. 2 to Contract No. 22-364 with Valley Star Behavioral Health, Inc., for services in the High Desert region, increasing the contract amount by $2,000,000, from $14,800,000 to $16,800,000.
5. Amendment No. 3 to Contract No. 22-365 with Valley Star Behavioral Health, Inc., for services for transitional age youth in the East Valley region, increasing the contract amount by $1,200,000, from $14,800,000 to $16,000,000.
(Presenter: Joshua Dugas, Acting Director, 252-5142)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of additional Discretionary General Funding (Net County Cost). The recommended contract increase of $9,200,000 is needed due to higher costs per client under California Advancing and Innovating Medi-Cal (CalAIM) initiatives for clients receiving Crisis Residential Treatment services (CRT). The increase is funded by Federal Financial Participation Medi-Cal and Behavioral Health Services Act Behavioral Health Services and Supports funds. Adequate appropriation and revenue are included in the Department of Behavioral Health’s (DBH) 2025-26 budget and 2026-27 budgets.
BACKGROUND INFORMATION
DBH provides mental health and substance use disorder (SUD) services to county residents experiencing severe mental illness and/or SUD. CRT is a bundled service for adults ages 18-59 or transitional age youth (TAY) ages 18-25 who are in crisis. This service bundle includes, but is not limited to, assessments, treatment plan development, collateral services, crisis intervention, medication support services, and individual and group therapy. The length of stay in a CRT facility may be up to 30 days. If medically necessary, up to two additional 30-day extensions may be authorized, for a maximum stay of 90 days. Services are available 24 hours a day, seven days a week.
On May 24, 2022 (Item No. 31), as the result of a formal procurement, the Board of Supervisors (Board) approved Contract No. 22-361 with Telecare Corporation (Telecare) in the amount of $14,000,000, Contract No. 22-362 with Valley Star Behavioral Health, Inc. (Valley Star) for services in the East Valley region, in the amount of $14,000,000, Contract No. 22-363 with Valley Star for services in the Eastern Desert region, in the amount of $14,000,000, Contract No. 22-364 with Valley Star for services in the High Desert region, in the amount of $14,000,000, to provide adult CRT program services, and Contract No. 22-365 with Valley Star for services for TAY in the East Valley region in the amount of $13,000,000, for a combined contract total of $69,000,000, for the period of July 1, 2022 through June 30, 2027.
On February 28, 2023 (Item No. 19), the Board approved Amendment No. 1 to Contract No. 22-365 with Valley Star to provide TAY CRT program services, increasing the contract amount by $1,000,000, from $13,000,000 to $14,000,000 with no change to the contract period of July 1, 2022 through June 30, 2027.
On September 26, 2023 (Item No. 19), the Board approved Amendment No. 1 to Contract No. 22-361 with Telecare, updating standard contract language, with no change to the total contract amount of $14,000,000, or to the contract period of July 1, 2022 through June 30, 2027.
On May 21, 2024 (Item No. 20), the Board approved Amendment No. 2 to Contract No. 22-361 with Telecare and Contract No. 22-365 with Valley Star, and Amendment No. 1 to Contracts No. 22-362, 22-363, and 22-364 with Valley Star, increasing the combined contract amount by $4,000,000 from $70,000,000 to $74,000,000, with no change to the contract period of July 1, 2022 through June 30, 2027.
On December 16, 2025 (Item No. 29), the Board approved contract-amendment templates to update the provisional payment language in contracts with providers of specialty mental health and/or SUD services to reflect a Combined Cost Reimbursement and Fee-For-Service (FFS) payment methodology. As part of the California Department of Health Care Services (DHCS) CalAIM, DBH has shifted from cost-based reimbursement to FFS with eligible providers for Medi-Cal billable services, streamlining administrative processes to prioritize equitable health outcomes for all Californians.
To support the establishment of appropriate reimbursement rates under the new methodology, DBH engaged a third-party consultant to evaluate existing payment structures and reimbursement practices. Based on the consultant’s recommendations, DBH determined that the current CRT contract allocations are insufficient to support minimum utilization expectations at the revised FFS reimbursement rates. Accordingly, DBH is requesting increases to the annual CRT contract allocations to ensure adequate funding for residential treatment services, outpatient medication support, case management services, and required outreach activities, all in alignment with the contractors’ approved scopes of work and cost-based reimbursement requirements.
Effective this fiscal year and for the remainder of the contract term, the annual budgets for the four 16-bed adult CRT programs will increase from $3 million to $4 million each, and the annual budget for the 14-bed Transitional Age Youth (TAY) CRT program will increase from $3 million to $3.6 million. While these contracts reflect an increase in overall allocation, the Behavioral Health Services Act (BHSA) funding commitment associated with the programs is decreasing significantly. Concurrently, the Medi-Cal revenue expectation is increasing to ensure DBH is appropriately leveraging all available funding sources, including Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) funding, consistent with CalAIM objectives and reimbursement opportunities.
The requested increase of $9,200,000 will prevent service disruptions and ensure compliance with CalAIM requirements, including the required shift to FFS payment models under the Behavioral Health Payment Reform. Approval of the recommendation will update standard language to include BHSA performance requirements effective July 1, 2026.
Valley Star has been providing adult CRT program services in the East Valley region since 2017. Valley Star and Telecare have been providing adult CRT services in the High Desert, Eastern Desert, and West Valley regions since 2018.
In 2024-25, the CRT program annually served:
• 442 unduplicated clients across the four adult 16-bed CRT facilities at an average cost per client of $27,149
• 98 unduplicated clients at the 14-bed TAY CRT facility at an average cost per client of $30,612
For 2026, DBH projects the CRT program to serve:
• 127 unduplicated clients at each 16-bed adult CRT facility at an average cost per client of $31,496.
• 115 unduplicated clients at the 14-bed TAY CRT facility at an average cost per client of $31,304.
Performance measures for the CRT contracts focus on tracking service quality, timeliness, accessibility, and outcomes to ensure providers meet established standards. Contractors are required to submit regular reporting such as monthly service logs, outcome data, fiscal reports, and compliance documentation, which allows the department to monitor progress and identify trends or concerns. Accountability mechanisms, including performance audits, contract monitoring meetings, site visits, and corrective action plans, help ensure that services are delivered as intended and align with program goals. Together, these structures promote transparency, support continuous improvement, and ensure that community members receive high-quality, effective behavioral health services.
DBH will continue to regularly review: 1) client service data and progress, conduct site visits and annual monitoring to ensure performance and compliance standards of the contract(s) are met; 2) applicable claims data and claims for reimbursement to ensure fidelity and accuracy of service billing and optimization of Medi-Cal reimbursement in alignment with contract terms and DHCS billing requirements; and 3) provider invoices administratively and programmatically to ensure client and/or bed counts are accurate prior to payment processing.
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by Behavioral Health (Marianna Martinez, Administrative Supervisor II, 383-3940) on June 3, 2026; County Counsel (Dawn Martin, Deputy County Counsel, 387-5455) on June 2, 2026; and County Finance and Administration (Iliana Rodriguez, Administrative Analyst, 386-8392) on June 4, 2026.