# What is PPS? CCBHC Prospective Payment System

> PPS (Prospective Payment System) is the cost-based Medicaid payment for CCBHCs — a fixed rate per qualifying encounter, set from the annual cost report.

Source: https://www.curertech.com/resources/what-is-pps
Last updated: 2026-07-15

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# 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-1**

-   How it pays

A daily rate per qualifying visit (quality bonus payments optional)

**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.

[Explore CCBHC solutions](https://www.curertech.com/solutions/ccbhc)