As readers of the blog know, the Certified Community Behavioral Health Clinic (CCBHC) model has been one of the rare bright spots in more recent federal behavioral health policy and one with deep bipartisan roots. As a reminder, CCBHCs are community-based behavioral health providers that meet federal certification criteria. While some operate independently, the CCBHC Medicaid demonstration, established in 2014, created a specific pathway for certified CCBHCs to participate in state Medicaid programs with enhanced payment models. The national expansion of the CCBHC Medicaid demonstration was a centerpiece of the 2022 Bipartisan Safer Communities Act (BSCA). So the latest step in the Medicaid demonstration expansion, which landed late last month, is worth a look.
What HHS Announced
On May 28, 2026, HHS, through CMS and in partnership with SAMHSA, announced that 10 new states will join the CCBHC Medicaid Demonstration Program: Alaska, Colorado, Hawaii, Louisiana, Maryland, Mississippi, Montana, North Dakota, Washington, and West Virginia. This is good news and the second cohort to join under the BSCA’s phased expansion, which adds up to 10 new states every two years; the first 10 came on board in 2024. With the new group, 31 states will now support the CCBHC model through their Medicaid programs or CCBHC demonstration. The agency framed the announcement as expanding access to comprehensive mental health and substance use disorder (SUD) treatment and giving clinics sustainable funding, a fair description of what the demonstration is designed to do.
The CCBHC Demonstration Runs on Medicaid Coverage
But let’s not forget the key to the CCBHC demonstration’s success, Medicaid. Participating demonstration states establish a prospective payment system (PPS) that pays CCBHCs the estimated cost of delivering the required scope of services, and states receive an enhanced federal match (set at their CHIP enhanced FMAP) for those services. But that enhanced payment flows only for CCBHC services provided to individuals enrolled in Medicaid. The PPS, in other words, is built on a covered, enrolled population. Medicaid coverage is not incidental to the model; it is the model.
Why H.R. 1 Cuts and Work Reporting Requirements Could Put CCBHCs at Risk
As we have been tracking and unpacking at CCF, H.R. 1 imposes the largest federal Medicaid cuts in program history. Beyond the direct fiscal impacts on states, H.R. 1 institutes a series of policy changes that are expected to reduce enrollment and shift costs, including work reporting requirements, more frequent eligibility redeterminations, and restrictions on state financing mechanisms like provider taxes and state-directed payments. The work reporting requirement is particularly concerning for CCBHCs.
For the first time, H.R. 1 requires states to condition Medicaid eligibility on work reporting for certain populations, namely most adults ages 19 to 64 in the expansion group who must document 80 hours per month of work or other qualifying activities to keep their coverage, subject to exemptions for groups including pregnant and postpartum individuals, people who are medically frail, and certain caregivers. On June 1, 2026, CMS issued the interim final rule (IFR) regarding implementation of the January 1, 2027 requirement.
The concern is straightforward: work reporting requirements will push eligible people off Medicaid through paperwork burden and restrictive exemption requirements, eroding the very coverage that makes the CCBHC demonstration work. This is of particular concern for the very people CCBHCs are built to serve, adults with serious mental illness and SUDs for whom reporting requirements and complex exemption documentation can be especially hard to navigate. And in many cases, there won’t even be any proof they can submit. When they lose coverage, CCBHCs lose the PPS payments that sustain comprehensive services, including those for the children and adolescents who make up roughly a quarter of CCBHC clients depending on the state.
The medically frail exclusion presents particular challenges. As my colleague Leo Cuello has detailed, CMS’s approach under the IFR requires an assessment–and eventually documentation–that the underlying condition (for example, an SUD) must significantly impair an individual’s ability to comply with the work requirement. For many people, states will simply have no way to assess or document how their clinical condition impacts ability to work. Additionally, this places a significant administrative burden on both states and providers. Unfortunately, CCBHC providers are likely to be at the frontlines of this administrative nightmare (the 80 million has a helpful breakdown of the moral and potential legal risks for providers as well). For critical safety net providers already stretched thin, this becomes another administrative hurdle that can mean the difference between a patient retaining coverage or losing it or time spent on patient care versus navigating red tape.
Ultimately, work reporting requirements along with H.R. 1’s broader cuts to Medicaid that threaten state fiscal environments and key services (such as home and community-based services that CCBHCs rely on) places at risk the success of the CCBHC Medicaid demonstration and the administration’s stated goal to provide states with sustainable funding that expands access to comprehensive mental health and SUD treatment and recovery support services.
What to Watch
We will have more to say as we work through the IFR, including its specific implications for people with mental health conditions and SUDs. For now, the point is simply this: support for CCBHCs and the CCBHC Medicaid demonstration is a bipartisan investment over a decade in the making and as states stand up the work reporting requirements and manage the consequences of new state fiscal environments, states and stakeholders must keep a clear eye on the downstream effects, including on access to critical care like mental health and SUD services.
To find out if there are CCBHCs in your state and whether your state participates in the CCBHC Medicaid demonstration or supports CCBHCs through other Medicaid mechanisms, take a look at the National Council for Mental Wellbeing’s CCBHC Locator Map.