Daniel Cherrin was a long time PR flack for the City of Detroit and the Detroit Chamber. Since the beginning of this year, he has been attempting to launch the MI Care Council, "an independent voice for providers of person-centered care and social supports in the state of Michigan". He offers some perspectives on the planned MDHHS overhaul of community mental health care:
The Hidden Conflict Undermining Behavioral Health Care in Michigan
By Dan Cherrin - April 21, 2025As Michigan moves toward redesigning its Medicaid-funded behavioral health system, state leaders face a rare opportunity to correct longstanding structural imbalances that have complicated access to care and strained nonprofit providers across the state.
More than 1.7 million Michiganders live with a mental illness, yet fewer than two-thirds are getting treatment. The result is felt across emergency rooms, homeless shelters, courtrooms, and schools—places never designed to provide long-term care but now functioning as last resort.
Behind this growing crisis is a system struggling to meet the demand. Providers are overwhelmed. Psychologists, social workers, case managers, and peer specialists are stretched thin and forced to focus on administrative paperwork rather than patient care. Michiganders in all 83 counties are trying to get the care they need in their communities.
Michigan’s behavioral health system is built on a structure it can no longer support. It is fragmented, hard to navigate, and often unfair to the organizations trying to keep it together.
As the Michigan Department of Health and Human Services (MDHHS) considers rebidding its behavioral health contracts, the state has a rare opportunity to rebuild a system that is more responsive, accountable, and equitable for everyone.
When people get into the community mental health system, they succeed.
Michigan’s community-based behavioral health system was created to keep people out of institutions and help them thrive in their communities. And when it works, it works well.
But getting into the system—and staying connected to care—isn’t easy.
One of the biggest hurdles is how services are managed and paid for. Michigan’s system is built around 10 regional Prepaid Inpatient Health Plans (PIHPs), which manage Medicaid behavioral health funding. In some regions, those PIHPs are also Community Mental Health Service Programs (CMHSPs), the entities that provide or contract services in the community. Services they can’t offer are given to community-based service providers.
The result is a model in which a single organization often acts as both the funder and the provider of care. This creates deep conflicts of interest, with serious consequences.
When your funder is your competitor, the playing field isn’t level.
Many safety net providers across the state, including those providing mental health services and substance use disorder (SUD) services, are nonprofits and are disadvantaged by the current system of care when their funder is also their competitor. There needs to be a way to create fair competition.
Under the current system, these safety net providers face lower reimbursement rates, lose staff to higher-paying public entities, and often compete for funding from the agencies delivering services themselves.
There’s also the issue of fairness. When the same entity sets the rules, delivers care, and controls the money, there’s little incentive for transparency—or accountability. Rate structures may favor internal programs. Disputes can go unresolved. And smaller, independent providers often operate without the same access to data or decision-making power.
This imbalance doesn’t just hurt organizations—it directly affects access to care. Gaps in funding and staffing mean more waitlists, fewer options, and higher barriers for people trying to get help. In a crisis, those delays can mean the difference between recovery and relapse, between housing and homelessness, or between safety and incarceration.
Administrative barriers drain time and resources.
Despite shared goals to improve outcomes and ensure transparency, the current model often leads to fragmentation and inefficiencies. Each PIHP can impose its compliance systems, audits, and data reporting protocols. For organizations working across regions, this leads to duplication of effort and a mounting administrative load that does little to improve care quality.
Even within the same state contract framework, the interpretation and application of rules vary widely. Providers suggest aligning administrative requirements with the state’s master contract and streamlining oversight functions could significantly reduce the burden and help stabilize an already stretched workforce.
There is a path forward.
Michigan’s 2026 budget includes funding to expand Certified Community Behavioral Health Clinics (CCBHCs), higher Medicaid reimbursement rates, and workforce development. But without structural reform, those investments will fall short.
CCBHCs offer a promising model—comprehensive, no-wrong-door care that meets people where they are. However, to fulfill their promise, Michigan must ensure these clinics are accessible to experienced nonprofit providers and protected from the same funding conflicts already plaguing the system.
What’s needed now is clarity and separation of roles. Funders should not be service providers. Oversight should be independent. Every provider—regardless of affiliation—should have a fair shot at delivering care and competing for talent and services.
Why it matters.
Behavioral health reform isn’t just about systems—it’s about outcomes. When people don’t get the care they need, communities absorb the cost. Hospitals fill up. Jails become de facto treatment centers. Families lose hope. And too many Michiganders end up unhoused, unemployed, or worse.
But when the system works—when it’s fair, transparent, and community-based—it saves lives, keeps people out of crisis, and supports recovery, stability, and dignity.
The opportunity before Michigan is not just about fixing what’s broken. It’s about building a system that works for the future—one where every person, regardless of diagnosis or zip code, can access the behavioral health care they need to live a full life.
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