Section 223 of the Protecting Access to Medicare Act of 2014 (PAMA; Public Law 113-93) authorized the Certified Community Behavioral Health Clinic (CCBHC) demonstration, which allows states to test an innovative and evidence-based strategy for delivering and reimbursing a comprehensive array of services provided in community behavioral health clinics. The demonstration aims to improve the availability, quality, and outcomes of outpatient services provided in these clinics. The demonstration requires participating states to reimburse CCBHC services through a Medicaid prospective payment system (PPS) intended to cover the expected costs of CCBHC services for Medicaid beneficiaries. In 2016, the U.S. Department of Health and Human Services (HHS) selected 8 states to participate in the demonstration (Minnesota, Missouri, Nevada, New Jersey, New York, Oklahoma, Oregon, and Pennsylvania). The demonstration was originally authorized for two years, but Congress has extended it multiple times and it is currently authorized in the original states through September 2025. In August 2020, HHS announced that Kentucky and Michigan would begin participating in the demonstration as a result of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; Public Law 116-136), which allowed HHS to add two states from among the original 24 states that had received planning grants under PAMA. The Bipartisan Safer Communities Act (BSCA; Public Law 117-159), enacted in June 2022, extended the demonstration period for Michigan and Kentucky through September and December 2027, respectively. It also funded additional planning grants and authorized any state that received a planning grant (either under PAMA or BSCA) to apply to participate in the demonstration beginning in 2024. Starting July 1, 2024, and every two years thereafter, HHS may select up to 10 additional states to participate in the demonstration for a period of four years. In 2024, HHS welcomed 10 new states into the demonstration.

PAMA mandates that the HHS Secretary submit an annual report to Congress that assesses: (1) access to community-based mental health services under Medicaid; (2) the quality and scope of services provided by CCBHCs; and (3) the impact of the demonstration on federal and state costs of a full range of mental health services. PAMA, as amended by the BSCA, also requires HHS to submit to Congress recommendations concerning the continuation of the demonstration. This report describes findings related to the PAMA topics from 18 states participating in the demonstration as of August 2025 and includes the required recommendations. The report draws on interviews with state officials and CCBHCs, quality measure data, and a survey of CCBHCs in the original PAMA and CARES Act states.