House Bill 4577 Summary

• Amends the Mental Health Code to facilitate transition from specialty prepaid inpatient health plans to contracted entities for managing Medicaid-funded behavioral health services, requiring the department to contract with these entities within 2 years of the bill's effective date.

• Creates the Office of the Behavioral Health Ombudsman as an autonomous entity within the department, appointed by the governor with senate consent, to oversee recipient rights and establish procedures for receiving complaints and conducting investigations.

• Establishes the Behavioral Health Accountability Council within the ombudsman's office to monitor integration efforts, conduct formal evaluations beginning 18 months after contract implementation, and develop predefined key metrics to assess contracted entities' effectiveness.

• Expands definitions and requirements for mental health services to include substance use disorder services and intellectual disability; updates references from "shall" to "must" throughout the code and clarifies roles of contracted entities in service delivery and administrative functions.

• Adds new Section 203 establishing that contracted entities assume administrative and management functions as specified in their contracts with the department, while community mental health services programs remain responsible for direct service provision unless other arrangements are approved.