SACRAMENTO, Calif. — Sacramento and Solano counties are in a standoff with the state over mental health coverage for a portion of Medicaid patients in those counties — a dispute that threatens to disrupt care for nearly 50,000 low-income residents receiving treatment for severe mental illness.

The Department of Health Care Services, which administers Medi-Cal, the state’s Medicaid program, says Sacramento and Solano counties must take over managing and providing specialty mental health care for thousands of Medi-Cal patients enrolled in Kaiser Permanente plans. It insists on shifting the responsibility because California’s remaining 56 counties already operate this way. State officials argue the switch would simplify the state’s disjointed mental health system and is needed to implement a larger transformation of Medi-Cal, an initiative known as CalAIM.

State health officials gave counties until March 15 to accept Kaiser Permanente patients, so California can properly transfer their specialty mental health care to counties by July 1. But the two counties are rebuffing the transfer, arguing that without more funding they can’t adequately care for a major influx of Medi-Cal patients with severe mental health conditions, such as schizophrenia or bipolar disorder. Medi-Cal officials, meanwhile, are threatening steep penalties or potentially terminating mental health contracts with those counties.

Local officials warn that if the state follows through with its plan, about 39,000 patients in Sacramento County and about 8,000 in Solano County could see their care disrupted and, for instance, may be forced to find a new psychiatrist.

“For someone who has schizophrenia or another serious mental health disorder, it has taken a long time to build a trusted relationship with their provider, and now they are going to see that care disrupted or have to find a different provider,” said Debbie Vaughn, assistant county administrator for Solano County. “There will be risks of people going into crisis.”

Ryan Quist, director of behavioral health services for Sacramento County, said the counties need not only more funding, but also more time to transfer the patients’ care. “The state is playing chicken with their lives,” he said.

Under state law, counties are responsible for administering and delivering specialty care to Medi-Cal patients with severe mental illness. Medi-Cal managed-care insurers are responsible for providing treatment for mild or moderate mental health conditions, such as anxiety or low-level depression.

But under a decades-old arrangement between the state and the counties of Sacramento and Solano, California has been paying Kaiser Permanente to provide all mental health care for the health care giant’s Medi-Cal enrollees. Now the state is dissolving that arrangement, forcing roughly 7,000 specialty mental health patients in those two counties to move out of Kaiser Permanente and into county-run mental health plans.

State officials argue that the two counties are legally obligated to provide care for Medi-Cal patients with severe mental illness and that county behavioral health agencies would be the ones putting patients in danger if the counties continue refusing the shift. Medi-Cal patients enrolled in health plans other than Kaiser Permanente get their specialized mental health care directly from counties.

“Sacramento and Solano counties’ failure to engage in this process places Medi-Cal members at risk of losing access to critical Medi-Cal entitlement services,” said Tony Cava, a spokesperson for the Department of Health Care Services. “DHCS will have no choice but to take action if the counties continue to refuse to fulfill their obligations.”

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