Innovation in Behavioral Health (IBH)

The Innovation in Behavioral Health (IBH) Model – Cohort II, administered by the U.S. Department of Health and Human Services through the Centers for Medicare & Medicaid Services (CMS), Center for Medicare and Medicaid Innovation, is a seven-year cooperative agreement designed to strengthen integrated behavioral and physical health care. The model builds on earlier cohort activities and will fund up to five state Medicaid agencies to establish aligned payment and care delivery systems supporting adults with moderate to severe mental health and substance use disorders who are served by specialty behavioral health organizations. The program operates under the authority of Section 1115A of the Social Security Act and is listed under CFDA 93.610. The IBH Model tests a value-based payment approach aligned between Medicaid and Medicare, with each participating state developing its own Medicaid payment method to parallel a federal Medicare performance-based payment. Recipients will lead state-based efforts to design and operationalize care models where behavioral health settings function as the primary point of integrated care. The cooperative agreements support development of infrastructure, certified health information technology, and value-based payment mechanisms while fostering collaboration between behavioral health providers, primary care, and community services. The total anticipated federal funding is $37.5 million, with up to $7.5 million available per state Medicaid agency over seven years, contingent on the availability of funds. The program consists of a two-year Pre-Implementation Period (January 1, 2027, through December 31, 2028) focused on readiness and system design, followed by a five-year Implementation Period (January 1, 2029, through December 31, 2033). Funds may be used for activities such as practice transformation, health IT adoption, care coordination, and quality reporting. Direct service delivery, program income, and uses restricted by federal policy are excluded. Eligible applicants are U.S. state Medicaid agencies only. Participating states must recruit and support eligible Practice Participants—specialty behavioral health providers such as community mental health centers, certified community behavioral health clinics, opioid treatment programs, and tribal health organizations—that serve at least 25 Medicaid beneficiaries with moderate to severe behavioral health conditions each month. Providers must meet state Medicaid enrollment requirements, operate at the outpatient level of care, and be capable of implementing value-based payment arrangements. Applications are due electronically by June 3, 2026, at 11:59 p.m. Eastern Time. An optional Letter of Intent to Apply is encouraged by April 1, 2026. Awards are anticipated to be announced September 15, 2026, with performance beginning January 1, 2027. Applications must be submitted through Grants.gov following the standard CMS cooperative agreement format and include required forms (SF-424 series), program narrative, and budget justification. Applications will be evaluated on responsiveness to program requirements, readiness for value-based payment, data and quality infrastructure, partnerships, and capacity to scale integrated care. The IBH Model aligns with national behavioral health priorities in the HHS Behavioral Health Integration Roadmap. It emphasizes data-driven quality improvement, use of certified EHR technology, and addressing social determinants of health such as housing, food, and transportation needs. Technical assistance, evaluation, and learning opportunities will be provided by CMS and its contractors throughout the award period. Questions concerning the program may be directed to the CMS Innovation Center programmatic contact listed in Section G of the NOFO.