(a) The executive commissioner shall designate a local mental health authority in one or more local service areas. The executive commissioner may delegate to the local authority the authority and responsibility of the executive commissioner, the commission, or a department of the commission related to planning, policy development, coordination, including coordination with criminal justice entities, resource allocation, and resource development for and oversight of mental health services in the most appropriate and available setting to meet individual needs in that service area. The executive commissioner may designate a single entity as both the local mental health authority under this chapter and the local intellectual and developmental disability authority under Chapter 533A for a service area.
(b) The department by contract or other method of allocation, including a case-rate or capitated arrangement, may disburse to a local mental health authority department federal and department state funds to be spent in the local service area for:
(1) community mental health and intellectual disability services; and
(2) chemical dependency services for persons who are dually diagnosed as having both chemical dependency and mental illness or an intellectual disability.

(c) A local mental health authority, with the approval of the department, shall use the funds received under Subsection (b) to ensure mental health and chemical dependency services are provided in the local service area. The local authority shall consider public input, ultimate cost-benefit, and client care issues to ensure consumer choice and the best use of public money in:
(1) assembling a network of service providers;
(2) making recommendations relating to the most appropriate and available treatment alternatives for individuals in need of mental health services; and
(3) procuring services for a local service area, including a request for proposal or open-enrollment procurement method.
(d) A local mental health authority shall demonstrate to the department that the services that the authority provides directly or through subcontractors and that involve state funds comply with relevant state standards.
(e) Subject to § 533.0358, in assembling a network of service providers, a local mental health authority may serve as a provider of services only as a provider of last resort and only if the local authority demonstrates to the department in the local authority’s local network development plan that:
(1) the local authority has made every reasonable attempt to solicit the development of an available and appropriate provider base that is sufficient to meet the needs of consumers in its service area; and
(2) there is not a willing provider of the relevant services in the local authority’s service area or in the county where the provision of the services is needed.