PPS-1
- How it pays
A daily rate per qualifying visit (quality bonus payments optional)
What is PPS?
PPS (the Prospective Payment System) is the cost-based Medicaid payment method for CCBHCs — Instead of fee-for-service, a Certified Community Behavioral Health Clinic (CCBHC) is paid a fixed rate per qualifying encounter — daily or monthly — set each year from the clinic's cost report. There are four PPS methodologies, and some include Quality Bonus Payments (QBPs).
Methodologies
What are the four PPS methodologies?
States choose how the rate is structured — daily or monthly, with or without a separate crisis rate.
PPS-2
- How it pays
A monthly rate per qualifying month (quality bonus payments required)
PPS-3
- How it pays
A daily rate plus a separate rate for crisis services
PPS-4
- How it pays
A monthly rate plus a separate rate for crisis services
| Methodology | How it pays |
|---|---|
| PPS-1 | A daily rate per qualifying visit (quality bonus payments optional) |
| PPS-2 | A monthly rate per qualifying month (quality bonus payments required) |
| PPS-3 | A daily rate plus a separate rate for crisis services |
| PPS-4 | A monthly rate plus a separate rate for crisis services |
Rate setting
How is a CCBHC's PPS rate set?
The rate is built from the clinic's own costs and visits, reported annually, so payment reflects the actual cost of delivering CCBHC services.
PPS rate =
Total annual allowable CCBHC costsTotal annual CCBHC visits
The state sets each clinic's rate from its annual cost report and rebases it on a regular cycle (typically every three years). One qualifying encounter equals one PPS payment at the clinic's assigned rate.
Why it matters
Why PPS makes accuracy matter
- Cost report
This year's data sets next year's rate
Because the rate comes from the cost report, an error can set the wrong rate for a full year.
- Bonus payments
Quality bonus payments (QBPs)
Under PPS-2 and PPS-4, QBPs are tied to quality measures — missing the reporting forfeits revenue.
- Encounters
One qualifying encounter, one payment
Capturing qualifying encounters correctly is what turns documented care into PPS revenue.
Sources: CMS/Medicaid CCBHC PPS Guidance and Cost Report Instructions; SAMHSA CCBHC materials (2024–2026).
Common questions
PPS, answered
What does PPS stand for?
PPS stands for Prospective Payment System — a cost-based Medicaid payment method used to reimburse CCBHCs at a clinic-specific rate.
How is the PPS rate calculated?
It's the clinic's total annual allowable CCBHC costs divided by its total annual CCBHC visits, set from the annual cost report and rebased on a regular cycle.
What are Quality Bonus Payments?
Quality Bonus Payments (QBPs) are additional payments tied to CCBHC quality measures. They are required under the PPS-2 and PPS-4 methodologies.
How is PPS different from fee-for-service?
Fee-for-service pays per individual procedure. PPS pays a fixed daily or monthly rate per qualifying encounter that reflects the full cost of delivering CCBHC services.
CCBHC billing
See PPS billing on one record
How CurerTech handles encounters, the cost report, and quality measures for CCBHCs.