What's the deal with CCBHCs?
The importance of solving for the right problem
On my recent Fierce Healthcare podcast with journalist Anastassia Gliadkovskaya and my piece in the Indianapolis Star, I share about the importance of the Certified Community Behavioral Health Clinic (CCBHC) model for improved access to behavioral health care. I wanted to elaborate a bit more here.
This is not a comprehensive CCBHC explainer–I’d suggest visiting the National Council for Mental Wellbeing if you are looking for something like that.
Rather, I’m interested in two specific questions, with answers that have broader applicability than just the narrow CCBHC context. First, what is the main problem that plagues the public behavioral health system?1 Second, how does CCBHC address those issues?
Drawing Lines, Ignoring Needs
Any system of scarcity–where demand outpaces supply–requires rationing. Rationing is simply the drawing of lines–about who can access care, how much they can access, and when and how that access is granted or denied. Without some form or rationing, a system of scarcity will devolve into chaos and implode.2
The public behavioral health system is a system of scarcity. There is more demand for the services provided by community mental health than there is supply of those services. This is basically true for most counties in every state in the United States.
Consequently, providers operating in that system have to draw lines. These lines differ from county to county and state to state, but they generally involve strict adherence to a prescribed formula: an optimal mix of patients, services, and payor sources to maximize fiscal advantages. That formula–not the needs of patients, families or communities–is what drives the design and availability of services.
The Indiana Story
Take Indiana as an illustrative example. Be warned, we are about to get fairly wonky for a few paragraphs. Also, I’m going to bounce back and forth between past and present tense, as I am describing a system in flux–transitioning to CCBHC but still operating the old system.
There is a Medicaid program in Indiana called Medicaid Rehabilitation Option (MRO), which is intended to serve patients with severe mental illness who are in the medium to medium-severe range of functional limitations. Patients who are either too functional or completely dysfunctional are not *supposed* to receive these services. Indiana’s 24 community mental health centers (CMHCs) are the only providers in Indiana who can bill under the MRO program.3
MRO is so important to providers because it generates revenue that subsidizes the rest of the treatment continuum, through a service called “skills training,” that can be billed by lower compensated and less educated staff at a higher rate than their wages. CMHCs lose money on every other type of service, but can make it up by ramping up skills training. To be clear, this isn’t a “making money hand over fist” scenario, but rather the key to basic fiscal solvency.
Therefore, the operating formula for Indiana CMHCs is clear: seek out patients who qualify for MRO, maximize skills training, and use that revenue to do your best with the other parts of the system. Over the years, many Indiana CMHCs designed their entire operating and business models to perfect this formula. This is not unique to Indiana–most public behavioral health systems have some version of complicated cross subsidies that skew incentives in a certain direction.4
Okay, so what?
The main consequence of this system is that its spectacular complexity makes it extraordinarily difficult to reform. My first week on the job, the system was described to me, by the people in it, as “a house of cards built on top of a shell game.” Exact quote. It is an un-reformable system because any reform would bring the whole thing crashing down.
There are three other important consequences:
First, because smart providers figured out how to maximize the system, it provided an illusion of financial health that allowed everyone involved to ignore the larger structural problems. “They are staying in business, it must be working fine,” was the conventional wisdom, even as providers had to resort to ever more sophisticated financial gymnastics to keep their lights on, and even as we had no insight into the effectiveness of the system.
Second, if a system must prioritize maintaining a certain operating formula just to stay solvent, guess what it cannot prioritize? That’s right–the evolving needs of patients and communities. The people leading and working in the community mental health system are fiercely dedicated to improving care in their communities. They were limited, however, by the structure of the system. The formula eats first.
Finally, because the system could not adapt to meet community needs, many important stakeholders were getting increasingly frustrated. I met constantly with angry judges, sheriffs, and county commissioners, and it was always the same story. They felt like they were not getting what they needed out of their local CMHC. They wanted changes: more types of services in jails or schools and more insight into outcomes and operations. Many of them wanted to change their designated CMHC.
I told this (100% true) story on the podcast and have told it many times because it is so illustrative. In a short period of time, I met with two separate groups of county commissioners from two counties that were in the same general region of Indiana. Both groups were upset, for the reasons detailed earlier, and both groups wanted the other county’s designated mental health center—the same one their counterparts were fed up with!5 If you don’t see that as an example of a structural problem, you don’t believe in structural problems.
TLDR: We had a public behavioral health system that needed more investment and substantial reform, but was un-reformable and unable to build a compelling case for the legislature to invest more in it.
Why CCBHC?
We needed a bold swing to align and amplify our goals: more money and a better way of doing things. CCBHC checked both boxes. I made the decision to go “all-in” on CCBHC in the fall of 2022. A little more than two years later, we had a new infusion of $50M annually in state funds towards a new behavioral health infrastructure and significant progress towards building that system in a short period of time, including selection into the federal CCBHC demonstration program to accelerate the transition.
8 CMHCs began operating as full-time CCBHCs in January 2025, bringing higher quality care to around 40% of Indiana. Depending on legislative support, there are plans to expand coverage to the whole state over the next several years.
There are so many reasons for this success. We enjoyed three-branch state government leadership and radical alignment across the spectrum of behavioral health stakeholders. Another reason, however, is that the move to CCBHC addressed the actual problem I’ve described here: the complicated, opaque, inflexible, under-resourced and calcified legacy system. The (slightly ageist-my bad) line I would often use is “the CMHC system is 60 years old—time to retire it.”
The real innovation of CCBHC is the payment system, because it addresses the cross-subsidy problem. Rather than forcing providers to analyze various rates and magic together a fiscally sustainable formula, CCBHC asks providers to deliver quality care, report their costs for delivering that care, and pays them for those costs. It is a categorically different bargain between providers and the state–one that has been proven to work wherever it has been tried.
CCBHC is not a silver bullet. It will not solve the fundamental scarcity issues–there will still be more demand than capacity. The nuts and bolts of transitioning to the system is extraordinarily complicated and requires constant oversight and tweaking. It is more expensive than the systems it replaces, and will therefore require ongoing investment and commitment.6
It is, however, a system that is driven by the needs of patients and communities, rather than a hodgepodge of reimbursement schemes. As we collectively struggle for progress on the mental health crisis, it is a pretty good place to start.
These systems look different in different states, but generally involve a Medicaid supported safety net focused on treatment for individuals with Severe Mental Illness.
This is why I am skeptical of insurance industry criticisms. The industry is often a bad actor, but we have to understand that, as long as there is scarcity, some entity will have to do the rationing.
There is a whole other dimension to this involving the financial between the CMHCs and the state. Without going down an entire rabbit hole (takes deep breath): the CMHCs “pay” the state match for MRO with their state appropriations in exchange for exclusive access to the program. In theory, this provides cost predictability for the state. In reality, there is so much moving money back and forth so many times that no one really knows.
Also, healthcare, in general.
The narrative deliciousness of this simple and true story also obscures the fact that many counties and CMHCs enjoy productive and collaborative relationships. As always, beware of the Danger of a Single Story
There is decent early evidence that transitioning to CCBHC pays for itself by reducing financial stress on the criminal justice and healthcare systems. Regardless, it still requires an initial investment.