Summary of AB 2704 (2025-2026) – Statewide Fee Schedule Pilot Program
Section: Welfare and Institutions Code; California, 2025–2026 Regular Session
Author/ Sponsor: Assembly Member Addis (co-sponsor Dawn Addis)
Purpose
- Establish a Statewide Fee Schedule Pilot Program to address gaps in access to the school-linked statewide behavioral health fee schedule for certain populations, with a focus on small/rural providers, transition-age youth, and very young children.
- Build capacity and streamline billing and reimbursement for outpatient mental health and substance use disorder services delivered to students and other eligible groups.
Key Provisions and Changes
- Creation of the Statewide Fee Schedule Pilot Program (Section 5961.41).
- Goals:
- Improve access to the statewide fee schedule for behavioral health claims billed by small and rural schools, early learning providers, and higher education institutions serving transition-age youth.
- Increase the number of behavioral health services for children aged 0–5, students in small/rural schools, and transition-age youth (ages 16–25).
- Reduce administrative and participation burdens for providers serving underserved communities.
Pilot lead and participation (begins by 2027; lasts up to three years):
- Monterey County Office of Education (MCOE) will serve as the pilot lead, coordinating with the State Department of Health Care Services (DHCS).
- By April 1, 2027, select 25 entities to participate in the pilot program for up to three years.
Criteria for selecting pilot participants:
- Prioritize applicants that:
- Increase the number of children aged 0–5 receiving behavioral health services.
- Increase transition-age youth (16–25) served.
- Expand services in small school districts.
- Increase the total amount of statewide fee schedule reimbursements.
- Support community schools (Education Code Section 8902).
- Achieve diverse representation across geography and communities.
- Serve areas with high proportions of unduplicated students (Education Code reference).
- Ensure providers have experience serving the target age groups.
Application process:
- A concise application will be published by February 1, 2027, requesting information such as:
- Current enrollment by age.
- Current patients receiving services and designated providers.
- Number and qualifications of behavioral health providers.
- Capacity and interest to expand services.
- Ability to meet qualifications for the school-linked statewide behavioral health provider network and the fee schedule readiness.
Intensive technical assistance (April 1, 2027 – July 1, 2030, or longer):
- Support to participating entities including:
- Credentialing: National Provider Identifier (NPI) and statewide fee schedule credentialing for all staff and affiliated providers.
- Health records: Access to an electronic health records (EHR) system for documentation and claims submission at no cost.
- Privacy and data governance: Assistance with FERPA/HIPAA applicability, consent forms, privacy notices, data governance, release of information, and related forms and protocols.
- Training: Documentation, coding, consents, privacy requirements, disclosure rules, and referral processes.
- Billing and enrollment: Assistance with obtaining health plan information, insurance discovery, and follow-up.
- Claims processing: Review prior to submission to improve clean-claim likelihood and, if needed, submit claims on behalf of entities; subcontracting possible for specialized needs.
Reporting requirements:
- Progress report due by January 1, 2028 to Legislature (policy and fiscal committees) detailing:
- Numbers and names of participating entities.
- Qualifications completed by entities to join the school-linked network and fee schedule cohort readiness.
- Training/onboarding progress with EHR and data-sharing/privacy compliance.
- Number of providers certified for the statewide fee schedule (including NPIs).
- Enrollment data: children and youth in EHRs, age-disaggregated.
- Verification of health plan information and consent completion rates.
- Summative report due by January 1, 2031 assessing success (policy and fiscal committees), including:
- Claims activity from small/rural districts (numbers, age breakdowns for 0–5 and transition-age youth).
- Total claims, approval/pay rate, and total value of claims.
- Total number of providers authorized to deliver services under the pilot.
- All reports must comply with Government Code Section 9795.
Funding and reimbursement implications:
- The California Department of Education, subject to appropriation, may allocate funds to MCOE to administer the pilot for three years.
- The bill notes that enacting this pilot constitutes a state-mandated local program; local reimbursement rules apply under established mandate reimbursement processes if costs are deemed mandated by the state.
Legislative intent
- Expresses the Legislature’s intent to enact future legislation to further increase access to behavioral health services for children and youth 25 years and younger.
Constitutional note
- If the Commission on State Mandates determines costs are state-m mandated, reimbursement to local entities would follow established mandate reimbursement procedures.
Timeline Highlights
- By February 1, 2027: Publish pilot application; first eligibility screening.
- By April 1, 2027: Select 25 pilot participants, coordinate with DHCS.
- April 1, 2027 – July 1, 2030: Provide intensive technical assistance and onboarding.
- January 1, 2028: First progress report to Legislature.
- January 1, 2031: Summative evaluation/report to Legislature.
Impact and Affected Parties
- Affected entities: 25 pilot participants (selected – up to three years) including small/rural schools, early learning and care providers, higher education institutions serving transition-age youth, and affiliated behavioral health providers.
- Beneficiaries: Children aged 0–5, transition-age youth (16–25), and students in small school districts who receive outpatient behavioral health services.
- State and local agencies: Monterey County Office of Education (pilot lead), California Department of Education (funding/administers), California Department of Health Care Services (DHCS) for coordination and policy alignment, and participating local providers and schools.
Bottom line
- AB 2704 creates a 3-year pilot to expand access and streamline billing for the school-linked statewide behavioral health fee schedule, prioritizing services to young children and transition-age youth in underserved areas, with substantial technical assistance, data privacy considerations, and reporting to the Legislature.
