Behavioral health care is undergoing a revolution in the way it is being offered and paid for in the outpatient setting. The development of the Certified Community Behavioral Health Clinic (CCBHC) model was developed to improve behavioral health care by developing a unique model combining services and payments into a more comprehensive setting. It was kicked off by the Excellence in Mental Health Care Act in 2014. What started as a CMS Medicaid demonstration program in eight states in 2017, now constitutes over 500 CCBHC’s in 46 states, plus D.C. and Puerto Rico.

At its core, CCBHCs are clinics mandated to offer nine essential services, ensuring a holistic approach to behavioral care:

• 24/7 Crisis Services 
• Comprehensive Outpatient Mental Health and Substance Use Treatment 
• Person- and Family-Centered Treatment Planning 
• Community-Based Mental Health Care for Veterans 
• Peer and Family Support Services 
• Targeted Care Management (Case Management and Coordination) 
• Outpatient Primary Care Screening and Monitoring 
• Psychiatric Rehabilitation Services 
• Screening, Diagnosis, and Risk Assessment 

These services are reimbursed primarily through three funding mechanisms. The Section 223 Medicaid Demonstration Project, launched in 2017, provides enhanced Medicaid funding to selected states that adopt the CCBHC model, utilizing Prospective Payment System (PPS) rates. Some states also implement CCBHC programs independently through Medicaid waivers or state funds. In addition, the Substance Abuse and Mental Health Services Administration (SAMHSA) offers competitive grants to help establish or enhance CCBHC services. 

There are financial benefits that can make it worth the cost to develop and operate a CCBHC. SAMHSA implementation grants help at the beginning. Below, the focus is on the Medicaid-paid CCBHC, since that is the revenue stream that will sustain the clinic over the longer term.

Of course, a complete financial analysis should be prepared for your specific situation.

Cost-Based Payment Rate

Medicaid-paid CCBHC’s are paid using a Prospective Payment System (PPS) consisting of single payment for an episode of care. Some leeway is given to states to define an episode as either a day or month, as well as how crisis services, coverage of special populations, and quality incentives are paid.

Regardless of details of the PPS model in a particular state, all of the payment rates are set based on historical costs per visit updated by an inflation rate determined by the federal government. At least every three years, the rate is rebased using the results from an annual cost report prepared by the clinic.

The benefit of the PPS rate model is that the PPS rate stays close to the clinic’s actual cost of providing the care. Actual cost could end up a little above or below the PPS rate depending on how the clinic’s actual cost trends compared to the federal inflation rate.

The PPS payment model is not enough to generate a sustainable margin for many organizations, but can improve the financial performance in many situations, for example:

• A behavioral health clinic that has a large Medicaid-covered patient population that does not cover costs, or
• A behavioral health clinic that has to limit its Medicaid patient base due to low Medicaid rates.

Industry Trends

There are now over 500 CCBHC’s in 46 states, plus D.C. and Puerto Rico. The Medicaid demonstration project is planned to grow with all states to eventually become part of the project by 2030. With this growth, one could reasonably assume that this model is not going to go away in the foreseeable future. There are financial advantages to being an early adopter to this model. An early adopter has a chance to develop the processes that make a cost-reimbursed payment rate successful. They include,1. Controlling cost growth, 2. Program growth to ensure costs are covered, 3. Diversifying the payor mix to include payors that pay more than cost. 

Conclusion

With cost based reimbursement, predictable revenue streams, and a model designed to grow nationally in the coming years, organizations that adopt the CCBHC framework position themselves to better meet patient needs while strengthening their financial footing. 

Published: 01/26/2026

_{^{Readers should not act upon information presented without individual professional consultation.}}

_{^{Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.}}