S. 3402 — Ensuring Excellence in Mental Health Act

This section amends Medicaid criteria for certified community behavioral health clinics (CCBHCs)—comprehensive outpatient providers of mental health and substance use disorder services to Medicaid enrollees with complex needs—by (1) requiring states, by agreement with the Secretary, to access specified data via the system established under section 340J–3 of the Public Health Service Act for performance measurement reporting; and (2) authorizing states, for services furnished on or after January 1, 2026, to deem a clinic non-compliant with federal criteria unless accredited by a body approved under section 340J–4 of such Act. (Thus, states must continue to certify clinics under paragraph (2)(A).)

This section establishes a Medicaid prospective payment system (PPS) for services furnished by certified community behavioral health clinics (CCBHCs)—comprehensive mental health and substance use disorder treatment services described in section 1905(a)(31)—for states that elect such services in their state plan, beginning with services furnished on or after January 1, 2026 (first fiscal year beginning after September 30, 2025). In the initial fiscal year, states must pay CCBHCs 100% of average reasonable costs from the prior fiscal year base (calculated per daily visits or unduplicated monthly visits, at state option), subject to annual inflation adjustment per the Medicare factor in section 1834(aa)(2)(C) and scope-of-services adjustment; states may elect separate rates for special populations, outlier payments, distinct crisis services rates, prior demonstration rates (under section 223 of PAMA), or estimated data. For subsequent fiscal years, payments equal the prior year's amount increased by the inflation factor and adjusted for scope changes. For new CCBHCs, initial payments use rates from similar local clinics or projected costs, with rebasing to actual first-year costs by the second fiscal year.

This section revises the scope of services under the Certified Community Behavioral Health Clinic (CCBHC) Medicaid demonstration program (i.e., a HHS demonstration authorizing enhanced federal matching payments to up to eight states to improve access to comprehensive mental health and substance use disorder treatment). Specifically, it requires CCBHCs to provide, in a person-centered manner, at least nine specified services—(I) crisis mental health services including 24-hour mobile crisis teams; (II) screening, assessment, and diagnosis including risk assessment; (III) patient-centered treatment planning including crisis planning; (IV) outpatient mental health and substance use services; (V) primary care screening and health risk monitoring; (VI) targeted case management; (VII) psychiatric rehabilitation services; (VIII) peer support, counselor services, and family supports; and (IX) intensive community-based care for Armed Forces members and veterans consistent with VA guidelines (particularly in rural areas)—either directly or through formal relationships with other providers; and, at the clinic's discretion, at least one additional service (e.g., primary health services under section 330 of the Public Health Service Act) furnished directly by the clinic. It further (1) replaces references to "mental health services" with "certified community behavioral health clinic services" and defines the latter term; and (2) authorizes states to use supplemental or wraparound payment frameworks for demonstration services furnished under managed care contracts, notwithstanding federal regulations prohibiting additional payments. The amendments apply to services furnished on or after October 1, 2026.

This section expands the definition of certified community behavioral health services under Medicaid—provided by Certified Community Behavioral Health Clinics (CCBHCs), which deliver comprehensive mental health and substance use disorder treatment—to require nine specified services (which may be furnished directly or through formal relationships with other providers), including (1) crisis mental health services, (2) screening, assessment, and diagnosis, (3) patient-centered treatment planning, (4) outpatient mental health and substance use services, (5) outpatient primary care screening and monitoring, (6) targeted case management, (7) psychiatric rehabilitation services, (8) peer support and family supports, and (9) intensive community-based mental health care for eligible Armed Forces members and veterans; and to require at least one additional service furnished directly by the clinic, such as primary health services under section 330 of the Public Health Service Act. The amendments apply to services furnished on or after October 1, 2026.

This section adds certified community behavioral health clinic (CCBHC) services to the list of Medicare Part B covered outpatient services (i.e., items and services ordinarily furnished by physicians), effective January 1, 2027. It defines CCBHC services and CCBHCs by reference to the Medicaid criteria in section 1905(jj) (i.e., clinics providing comprehensive, coordinated behavioral health treatment—including outpatient therapy, crisis services, and peer supports—for mental health and substance use disorders).

This section establishes a prospective payment system (PPS) for Medicare Part B payments to certified community behavioral health clinics (CCBHCs) for community behavioral health clinic services (as defined in SSA sec. 1861(aa)(8)) and provides that such payments equal 80% of the lesser of the actual charge or the PPS-determined amount under new SSA sec. 1834(aa). The Secretary must develop the PPS to account for service type, intensity, and duration; an appropriate unit of service; a design ensuring continued access to quality services; and possible geographic adjustments. The PPS applies for cost reporting periods beginning on or after January 1, 2027, with initial rates based on national average allowable service costs from the two most recent audited cost reports (or estimated data if unavailable), without per-visit limits or productivity screens. Rates in subsequent years increase by the Medicare Economic Index (MEI) in the first year after implementation and thereafter by a CCBHC services market basket (or, if unavailable, the Federally qualified health center market basket); the Secretary may periodically adjust rates for changes in service intensity, average costs per unit of service, or other factors.

This section expands Provider Reimbursement Review Board (PRRB) eligibility to certified community behavioral health clinics, in addition to federally qualified health centers. (As background, the PRRB provides hearings for Medicare providers dissatisfied with fiscal intermediaries' final determinations of total program reimbursement due for cost reports, if the amount in controversy is $10,000 or more and the request for hearing is filed within 180 days.)

This section extends the safe harbor under the anti-kickback statute (42 U.S.C. 1320a-7b(b)(3)(D)) for waivers of coinsurance or deductible amounts to certified community behavioral health clinics (CCBHCs), in addition to federally qualified health centers (FQHCs). (Thus, CCBHCs—which provide comprehensive mental health and substance use disorder services under a Medicaid demonstration program—may waive such patient cost-sharing without violating the anti-kickback statute.)

This section establishes a grant program under which the Secretary of Health and Human Services (HHS) awards operating grants of up to five years to certified community behavioral health clinics (CCBHCs)—facilities certified under Medicaid criteria (SSA §1905(jj)(2)) to deliver a comprehensive, person-centered array of required behavioral health services (SSA §1905(jj)(1))—and to other clinics committing to seek certification and accreditation. Grant amounts equal the difference between a clinic's operating costs (including estimated costs for new services or certification) and its other revenues (state/local funding, fees, and third-party payments); funds must support service delivery and certification (if applicable) and may support cost reduction, access/quality improvements, infrastructure, equipment, training, and facility expansion. Grantees must submit an implementation plan within 120 days of award.

This section extends Federal Tort Claims Act (FTCA) protections to clinicians providing services in certified community behavioral health clinics (CCBHCs), as defined in section 1905(jj)(2) of the Social Security Act. (CCBHCs deliver comprehensive Medicaid-funded mental health and substance use disorder services; thus, personal injury claims arising from such services must be brought against the United States under the FTCA, with the Attorney General defending the clinicians.)