Virginia’s Behavioral Health Redesign: What Providers Need to Know

Virginia Medicaid is changing how it covers community mental health services through their behavioral health redesign. Several services that providers have delivered for years are being retired, and a new set of evidence-based, team-based services is taking their place. The transition has two tracks, DBHDS licensing and DMAS enrollment, and each has its own deadlines. The windows are already open.

This guide explains what’s changing, when it happens, and what your organization should do now.

Why this is happening

The behavioral health redesign grew out of Virginia’s “Right Help, Right Now” behavioral health plan. The 2024–2026 state budget gave DMAS the authority to replace its community mental health rehabilitative services (CMHRS) and case management service. The new services were first slated for July 2026. The 2026 Appropriation Act then extended the implementation deadline to July 1, 2027.

What’s going away and what’s replacing it

Four legacy services are closing: Intensive In-Home (IIH), Therapeutic Day Treatment (TDT), Mental Health Skill-Building (MHSS), and Psychosocial Rehabilitation (PSR). DMAS has published transition readiness documents that map each legacy service to its successor:

Legacy service	New service	DBHDS license	DMAS provider specialty
Intensive In-Home (IIH)	CPST – Youth, Community	03-021	925
Therapeutic Day Treatment (TDT)	CPST – Youth, School Setting	03-021	924
MH Skill-Building (MHSS)	CPST – Adult, Community	03-020	926
Psychosocial Rehabilitation (PSR)	Mental Health Clubhouse / Recovery and Empowerment Center	03-023	927
New Service	Coordinated Specialty Care (CSC)	03-022	928

The clubhouse service has two names. DBHDS licenses it as a Recovery and Empowerment Center (REC), while DMAS enrolls and pays for it as Mental Health Clubhouse Services. It is the same program.

Case management is also changing. DMAS is reviewing Mental Health Case Management (PS 900) enrollments because Virginia regulation restricts that service to Community Services Boards, and non-CSB PS 900 enrollments will be voided or terminated after a 30-day written notice. If your organization currently bills PS 900 and is not a CSB, plan for that now.

The Key Dates for Virginia behavioral health redesign

The licensing dates come from DBHDS’s Office of Licensing training materials, which describe them as tentative until the new regulations receive final approval.

• August 31, 2026: DBHDS stopped accepting applications for legacy services. Legacy applications on the waitlist or submitted after this date are automatically withdrawn.
• September 8, 2026: Mandatory provider pre-application training began.
• September 10, 2026: DBHDS began accepting applications for the new services in CONNECT.
• By September 25, 2026: The self-guided pre-application training module and assessment are scheduled to post in TRAIN.
• October 1, 2026: DMAS opens provider enrollment for the new services through PRSS.
• November 2026: Service-specific regulatory training is scheduled to post in TRAIN.
• January 15, 2027: This is DBHDS’s target date for complete applications. Applications submitted later are not guaranteed a license by July 1.
• January 29, 2027: DMAS strongly encourages submitting enrollment applications by this date so there is time for specialty activation, MCO credentialing, and service authorization transitions.
• June 30, 2027: DMAS retires the legacy Medicaid services.
• July 1, 2027: The new services go live, and all legacy DBHDS licenses close automatically.

Legacy licenses close on July 1, 2027. No grace period or automatic conversion is planned. If you don’t have a new license by then, you can’t deliver the new service.

Track 1: DBHDS licensing

To begin providing the behavioral health redesign services, your organization will need to be licensed through DBHDS. If your organization already holds a DBHDS license, you add a new service through a Service Modification in CONNECT. You do not file a new initial application. According to DBHDS, modifications from currently licensed providers are reviewed ahead of new-provider applications, which is a real advantage if you file early.

Eligibility depends on what you hold today. If you have an active legacy license (TDT, IIH, MHSS, or PSR), you may submit one or more modifications for CPST, CSC, and/or REC. If you don’t hold a legacy license, you may submit only one modification, and only if you have no other pending modification and your license is not on first or second conditional status. DBHDS also considers your current standing, including enhanced monitoring, unresolved corrective action, or pending negative action.

The process runs in seven steps:

1. Complete the mandatory training first. Your Main Authorized Contact must finish the Pre-Application Training and pass its assessment with a score of 85% or higher. DBHDS administratively withdraws any modification submitted before training is complete, and you have to start over.
2. Submit the modification in CONNECT. Include a service description written for the new service, a staffing plan, a position description for every position on the plan, evidence of financial resources, and a proposed budget. REC applications also need a floor plan, a certificate of occupancy, and a health inspection.
3. Upload your policies within 10 calendar days. DBHDS sends a Provider Portal Message listing the required policies. CPST and CSC each require two policies (admission and discharge). REC requires six.
4. Go through application review. If DBHDS finds deficiencies, you have 10 calendar days to respond.
5. Complete the interview. CPST and CSC need a standardized interview only. REC also needs an on-site or virtual inspection, depending on whether DBHDS already knows your location.
6. Receive the license. Approved services carry a July 1, 2027 effective date, so you can’t start the new service early.
7. Legacy closure. Your legacy license closes on July 1, 2027.

Track 2: DMAS enrollment and accreditation

A DBHDS license alone doesn’t get you paid. You also have to enroll each new specialty with DMAS through PRSS and then complete credentialing with each Cardinal Care MCO. DBHDS states plainly that licensure does not guarantee enrollment with payers.

Accreditation now matters too:

• CPST: At enrollment, providers submit proof of accreditation or proof of accreditation intent from COA, CARF, or The Joint Commission, and they have 18 months from July 1, 2027 to become fully accredited. The CPST Clinical Director must also enroll individually in PRSS and be affiliated with the agency’s enrollment.
• Mental Health Clubhouse (REC): Providers accrediting directly with Clubhouse International have four years from July 1, 2027. Providers with existing CARF Community Integration accreditation have five years. The five-year pathway has specific eligibility criteria tied to prior PSR enrollment.
• CSC: No accreditation is required for enrollment.

The DBHDS target date (January 15) and the DMAS target date (January 29) are only two weeks apart, so licensing is the critical path. Starting accreditation early also matters, because proof of intent is required at enrollment.

What to do this month

1. Confirm your eligibility against your current DBHDS licensing record.
2. Have your Main Authorized Contact complete the Pre-Application Training in TRAIN.
3. Decide which new services you will offer, and map your current staff against the new staffing requirements. DMAS’s provider readiness self-assessments for CPST are a good starting point.
4. Begin drafting service descriptions and policies against the new regulations, which are posted on Virginia Regulatory Town Hall.
5. Contact COA, CARF, The Joint Commission, or Clubhouse International about accreditation.
6. Build a calendar that includes the 10-day response windows, and assign someone to check the CONNECT portal every day once you submit.

Resources for Virginia behavioral health redesign

• DMAS Behavioral Health Services Redesign page: draft policies, rate sheets, FAQs, readiness assessments, and Provider Open Office Hours, which DMAS holds twice a month. Link.
• DMAS enrollment bulletin (August 2026): provider types, specialties, licenses, and accreditation requirements. Link.
• DBHDS Office of Licensing: OLBHRDsupport@dbhds.virginia.gov
• DMAS Behavioral Health Division: enhancedbh@dmas.virginia.gov

How Revive BHS can help

The Virginia behavioral health redesign touches almost everything we do: licensing applications, policies and procedures, staffing plans, accreditation, Medicaid enrollment, and MCO credentialing. With firm deadlines and little room for resubmission errors, a second set of experienced eyes can be the difference between going live on July 1 and waiting. Contact us for a free consultation.