CCBHC funding in 2026: the demonstration, the grants and the new state plan option

The CCBHC model keeps growing. The National Council for Mental Wellbeing's 2026 Impact Report, released August 4, 2026, counted 539 CCBHCs and an estimated 3.4 million people served in 2025, up nearly 13% from January 2024, reaching about 40% of U.S. counties. How a clinic is funded determines its revenue, its reporting duties and how exposed it is to changes in Medicaid enrollment. Each of the three funding routes changed this year.

Route 1: the Section 223 Medicaid demonstration#

The demonstration was created by Section 223 of the Protecting Access to Medicare Act of 2014. Eight states started in it: Minnesota, Missouri, Nevada, New Jersey, New York, Oklahoma, Oregon and Pennsylvania. Twelve more were added later: Alabama, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, New Hampshire, New Mexico, Rhode Island and Vermont. The 2022 Bipartisan Safer Communities Act allows up to ten new states every two years.

On May 28, 2026, HHS named the second Bipartisan Safer Communities Act cohort: Alaska, Colorado, Hawaii, Louisiana, Maryland, Mississippi, Montana, North Dakota, Washington and West Virginia. Georgetown's Center for Children and Families counts 31 states that now support the model through Medicaid or the demonstration.

Demonstration states pay CCBHCs through a prospective payment system (PPS), a rate based on the clinic's expected cost of providing the required services. In return, the state receives an enhanced federal match, generally equal to its CHIP rate. A clinic's PPS rate depends on its cost report, and both the rate and later rebasing depend on how accurately visits and services are recorded.

Route 2: the new Medicaid state plan benefit#

This is the largest structural change of the year. Section 209 of the Consolidated Appropriations Act, 2024 created an optional CCBHC benefit at §1905(a)(31) of the Social Security Act. On October 6, 2026, CMS issued State Medicaid Director letter #26-004 explaining how states can use it. The main points:

The state plan route is permanent and does not depend on demonstration selection, but it pays at the regular match. Expect states to weigh that against the enhanced demonstration match. Some may cover CCBHCs under a state plan amendment with a payment method other than PPS. Reporting stays the same either way: the quality measures are identical whichever route funds the clinic.

Route 3: SAMHSA grants#

SAMHSA's expansion grants fund clinics in any state, including states outside the demonstration. The FY2026 CCBHC Improvement and Advancement notice (SM-26-015) was posted June 17, 2026, with applications due August 17, 2026. It lists about $117.2 million in total funding, about 117 awards, up to $1,000,000 per year in total costs, for up to four years, with no cost sharing. A companion notice (SM-26-014) funds planning, development and implementation for new CCBHCs.

Grants are time-limited. A four-year award that isn't replaced by demonstration or state plan revenue ends at year four. Clinics should treat grant-funded years as time to build the documentation and data systems that Medicaid payment will require.

The risk on the revenue side: H.R. 1#

Both Medicaid routes pay only for people who are enrolled in Medicaid. As Georgetown CCF noted in June 2026, H.R. 1's community engagement requirement takes effect January 1, 2027 for most expansion adults aged 19 to 64: 80 hours a month of work or qualifying activity, unless an exemption applies. CMS issued the interim final rule on June 1, 2026. When a client loses coverage, the clinic loses that client's PPS revenue, even though the criteria still require it to serve everyone regardless of ability to pay. The law also restricts provider taxes and state-directed payments, which some states use to fund their share of Medicaid costs.

Many CCBHC clients may qualify for an exemption, such as being medically frail or in SUD treatment, but only if the record supports it. Our H.R. 1 exemptions guide explains what that documentation needs to include.

Measures: what to collect regardless of route#

Starting in 2025, SAMHSA and its federal partners moved CCBHC quality measurement from demonstration years to calendar years. SMD #26-004 notes that several CCBHC measures are also on the Medicaid Core Sets, which states have had to report since federal fiscal year 2024. Those include depression screening and follow-up, follow-up after hospitalization for mental illness, follow-up after ED visits for mental illness or substance use, antipsychotic adherence in schizophrenia, weight assessment and counseling for children, and follow-up for children prescribed ADHD medication.

Clinic-collected measures, such as time to services (I-SERV), depression screening and follow-up, and screening for social drivers of health, come straight from clinical documentation. Some states are moving more of the calculation to clinics. Kentucky, for example, required clinics to calculate and report clinic-led measures starting January 1, 2026. Check your state's quality manual for the exact list and deadlines. The deadlines differ from state to state.

What this means for documentation#

• Encounter data that matches the cost report. Under PPS, every qualifying visit you fail to record makes your next rate less accurate.
• First-contact timestamps in the chart, so I-SERV can be calculated rather than reconstructed.
• Instruments recorded as structured scores. A PHQ-9 total in free text can't be counted toward a measure.
• Exemption evidence for clients at risk under H.R. 1, recorded during care, not after a coverage notice arrives.
• Services delivered by DCO partners recorded in the CCBHC's own record, which both funding routes require.
• Grant-funded data systems that will also support Medicaid reporting, so you don't rebuild them when the grant ends.

Our earlier post, CCBHC documentation in practice, applies the certification criteria to individual notes.

How Margent supports CCBHCs#

Funding depends on what gets documented. Calls & referrals records first contact so time-to-services can be calculated. Outcomes stores instrument scores as structured data, so measure rates come from the clinical work itself. Note checks run a CCBHC rule pack at signing, and billing checks eligibility before coverage lapses. Each rule cites its source, and your team can adjust it to your state's standards.