Nearly $17.7 million to Encompass for mental health and addiction services

In plain English

The county would renew two pay-per-service contracts with Encompass Community Services, a local nonprofit provider. One contract (No. 27H0129) for $7,047,176 covers mental health services for adults, youth and families, including outpatient care, crisis residential care, housing support, case management, and intensive youth programs. The other (No. 27H0100) for $10,666,495 covers substance use treatment for adults and youth, including residential treatment, outpatient and intensive outpatient care, medication-assisted treatment, and a newly added clinically managed withdrawal management (detox) level of care. A yes vote approves both agreements, lets the Health Services Agency Director sign them, and includes a one-time advance payment to Encompass equal to two-twelfths of each contract amount because Encompass is short on cash while waiting on state and federal reimbursements.

Adults, youth and families in Santa Cruz County who rely on county-funded mental health and addiction treatment would keep getting those services from Encompass, and adults going through withdrawal would gain a new supervised stabilization program staffed by certified alcohol and drug counselors.

Key facts

Contract No. 27H0129: $7,047,176 for mental health outpatient, crisis residential, housing support, targeted case management and intensive youth programs.
Contract No. 27H0100: $10,666,495 for substance use services including early intervention, outpatient, residential treatment and withdrawal management.
Both contracts add a one-time advance payment of two-twelfths of the applicable Net Contract Amount because Encompass faces delayed reimbursements from the Si Se Puede Behavioral Health Continuum Infrastructure Program Bond project and a federal Community Project Funding grant, plus a county payment process that now requires Encompass to cover costs for up to eight weeks.
New withdrawal management service for adults 18 and older meets American Society of Addiction Medicine Level 3.2 standards, with daily census reporting and quarterly utilization updates to the County.
Funding comes from federal and state sources (Federal Financial Participation, State General Fund, 2011 Realignment, Substance Use Block Grant, Proposition 47, First Five), plus County General Funds, Measure K, Senate Bill 900 Trust and Opioid Settlement Funds; the report states no new County General Funds are needed.

Reasons to support

Approval keeps an existing continuum of care running without interruption for adults, youth and families already in these programs.
The mental health contract adds changes required by the state — High-Fidelity Wraparound rules, Family First Prevention Services Act and Medi-Cal children's screening requirements, and new admission criteria under state notice BHIN 25-014 — which the report says is necessary to keep state and federal funding eligibility.
The substance use contract fills an identified gap: the report says existing resources do not meet demand for timely supervised stabilization during withdrawal, and that untreated withdrawal raises risks of homelessness and criminal justice involvement.

Reasons to oppose or change it

The advance payment shifts cash-flow risk onto the County: taxpayers front roughly two months of each contract's value before services are delivered, on the expectation that delayed state and federal funds will arrive.
Part of Encompass's cash shortage stems from the County's own switch to fixed payment in arrears, which now makes the provider cover up to eight weeks of costs — some may argue the payment process itself, rather than a one-time advance, is what needs fixing.
Together the two agreements commit $17,713,671 in one fiscal year to a single provider, concentrating the county's mental health and addiction treatment capacity in one organization that is currently under financial strain.

Official wording

Approve rate/fee-for-service agreement with Encompass Community Services in the amount of $7,047,176 to provide various mental health outpatient, residential and housing support services to adult and youth clients, approve rate/fee-for-service agreement with Encompass Community Services in the amount of $10,666,495 to provide various substance use disorder services to adult and youth clients, and take related actions (Health Services Agency)

Official agenda Staff Report Contract 27H0129 Encompass Community Services (eSign)Contract 27H0100 Encompass Community Services (eSign)

Summary written by claude-opus-5 from the agenda and the Staff Report. It can contain mistakes. The official documents govern.