Current State:
Under current law (from HB22-1278), when state agencies contract for behavioral health services, they must use universal contract provisions that meet 16 specific requirements. These requirements cover standards like data collection and grievance processes. This system was meant to streamline contracts across agencies, but it imposed many detailed conditions on providers and agencies.
Proposed Changes:
HB25-1124 would repeal 13 of the 16 requirements for these universal contracts, keeping only the essentials (such as minimum data collection standards and grievance reporting). It adds one new requirement: ensuring individuals can be connected to necessary care through the behavioral health safety net system. In short, the bill simplifies the contracting process by removing most mandates except data and grievance standards, and clarifies that no new data collection expansion is required
Impact on Providers:
For behavioral health providers and organizations, this mainly matters if they are in a position to become employee-owned or already operate as such. For example, a group psychiatric practice or a counseling clinic could consider converting to an employee-owned cooperative or an employee stock ownership plan (ESOP). The bill would make that financially more attractive – owners could sell part or all of the practice to the staff and avoid state capital gains tax on the sale portion, and the practice (if structured as a cooperative) could potentially pay no state income tax on its first $1M of income. Additionally, much more of the technical assistance and transaction cost could be offset by tax credits (75% of costs). In practical terms, this could encourage consolidating or transitioning private behavioral health clinics to employee-owned models, possibly improving workplace morale and retention of providers (since employees would have ownership stakes). Large community mental health centers or human services nonprofits typically aren’t privately sold, so they may not be directly affected, but smaller for-profit practices might take advantage. Behavioral health professionals might also see more job opportunities in worker-cooperative settings if this leads to growth of such businesses. Overall, while this bill is economic in focus, it could indirectly strengthen some behavioral health organizations by supporting employee ownership transitions, which can lead to more stable, invested workforces (a potential benefit in a field that struggles with burnout).
Status:
The bill passed the House (41–22) and was introduced in the Senate. As of late February 2025, it’s “Under Consideration” in the Senate Health & Human Services Committee. (House approval on Feb. 19, 2025; now awaiting Senate committee review.)
