What changed
On October 6, 2026, the Centers for Medicare & Medicaid Services (CMS) published State Medicaid Director letter SMD 26-004, New State Plan Option to Cover Certified Community Behavioral Health Clinic Services. It gives states the guidance they needed to add Certified Community Behavioral Health Clinic (CCBHC) services to their Medicaid state plans as a standing benefit.
The legal authority isn't new. Section 209 of the Consolidated Appropriations Act, 2024 (Public Law 118-42, enacted March 9, 2024) created a new Medicaid benefit category for CCBHC services at section 1905(a)(31) of the Social Security Act. What was missing until now was CMS's guidance on how states can use it.
Until this point, many states that paid for CCBHCs through Medicaid did it through the Section 223 CCBHC Medicaid Demonstration. Participation in that demonstration is limited to selected states and runs for a set period. The state plan option is open to any state and is not time-limited.
How it differs from the demonstration
| Section 223 demonstration | New state plan option | |
|---|---|---|
| Which states | States selected by HHS in cohorts | Any state that files, and CMS approves, a state plan amendment |
| How long | Time-limited participation | Ongoing Medicaid benefit |
| Payment method | Clinic-specific, cost-based prospective payment system (PPS) required | Fee schedule or bundled payment allowed; PPS not required |
| Federal match | Enhanced federal match | Standard federal match (FMAP) |
| Cost reports to CMS | Required | Not required to be submitted to CMS for clinics outside the demonstration (states may still use cost reports to set rates) |
The trade-off for states is clear. They get more flexibility in how they pay and no time limit, but they lose the enhanced federal match that made the demonstration attractive. Demonstration states that move to the state plan option may keep their current PPS approach, but they must file a state plan amendment before doing so.
The demonstration continues alongside the new option. HHS announced ten more states for it on May 28, 2026: Alaska, Colorado, Hawaii, Louisiana, Maryland, Mississippi, Montana, North Dakota, Washington and West Virginia.
What a state has to do
According to SMD 26-004, a state that wants to use the option must:
- File a state plan amendment (SPA) authorizing coverage and payment for CCBHC services, including a full description of its payment method. CMS has since released a state plan coverage preprint for states to complete.
- Certify each clinic against the most recent version of SAMHSA's CCBHC certification criteria.
- Cover all nine required CCBHC services, delivered by the clinic directly or through a Designated Collaborating Organization (DCO) under a formal agreement.
- Use an approved authority for managed care delivery, such as a section 1932(a) state plan authority or a 1915(b) waiver, if services run through managed care plans.
- Report quality measures to SAMHSA, the same measures used in the demonstration.
- Consult with Tribes, the Indian Health Service and urban Indian organizations.
The letter sets no application window or deadline. The pace depends on each state.
The nine required services
Every CCBHC must offer, directly or through a DCO:
- Crisis services, including 24-hour mobile crisis response
- Screening, assessment and diagnosis
- Person- and family-centered treatment planning
- Outpatient mental health and substance use services
- Primary care screening and monitoring
- Intensive case management (the demonstration's targeted case management was replaced under the state plan benefit)
- Psychiatric rehabilitation, including supported employment, education and housing support
- Peer supports and family or caregiver supports
- Intensive, community-based mental health care for members of the armed forces and veterans
What this means for your policies
Certification is where most of the work lands. SAMHSA's certification criteria are organized around six program areas, and each one needs written policies, procedures and supporting forms:
- Staffing: a staffing plan based on a community needs assessment that is updated at least every three years, required roles, credentialing, and staff training, including cultural competence and trauma-informed care.
- Availability and accessibility: timelines for initial screening, evaluation and access to care; crisis access around the clock; and a policy of serving everyone regardless of ability to pay or place of residence.
- Care coordination: agreements with partners such as hospitals and emergency departments, primary care, inpatient psychiatric facilities and opioid treatment programs (formal where possible, and required in writing for DCOs); consent and information-sharing procedures that comply with HIPAA and 42 CFR Part 2.
- Scope of services: policies for each of the nine services, including how DCO-delivered services are overseen.
- Quality and reporting: a quality improvement plan and the procedures behind required measures and data reporting.
- Governance and accreditation: governance that includes meaningful participation of people with lived experience and their families, a qualifying organization type, an annual independent financial audit, and accreditation.
Clinics that already hold a CCBHC grant or demonstration certification may have much of this in place. Clinics pursuing CCBHC status for the first time usually need a full set built around the criteria.
A note on versions: SMD 26-004 points to the certification criteria SAMHSA published in March 2023. SAMHSA's current criteria document notes it was updated in August 2025 to align with administration policies. Confirm which version your state will certify against before building or revising your policies.
A checklist for clinics
- Ask your state Medicaid agency whether it plans to file a CCBHC state plan amendment, and on what timeline.
- If your state is in the demonstration, ask whether it intends to stay in the demonstration, move to the state plan option, or run both.
- Compare your current policies against each of the six program areas in the certification criteria.
- Inventory the nine required services and decide which you will deliver directly and which through DCOs. Put DCO agreements in writing. Under the criteria, the clinic itself must deliver the majority (at least 51%) of service encounters, and services are billed by and paid to the CCBHC.
- Review your crisis policies, especially 24-hour mobile crisis coverage.
- Confirm that your consent, release-of-information and care coordination procedures meet both HIPAA and 42 CFR Part 2.
- Check your governance structure against the requirement for meaningful participation by people with lived experience and families.
This article is general information, not legal advice. Your state's implementation will set the details.
Sources
- CMS, State Medicaid Director Letter SMD #26-004, "New State Plan Option to Cover Certified Community Behavioral Health Clinic Services," October 6, 2026. medicaid.gov
- Medicaid.gov, Certified Community Behavioral Health Clinic (CCBHC) Services. medicaid.gov
- Medicaid.gov, CCBHC Demonstration Background. medicaid.gov
- SAMHSA, "HHS Welcomes 10 New States to CCBHC Medicaid Demonstration Program," May 28, 2026. samhsa.gov
- SAMHSA, CCBHC Certification Criteria. samhsa.gov
Checked against the primary sources listed above as of October 29, 2026. Rules and dates can change; confirm current requirements before acting. This article is general information, not legal advice.