PHP reimbursement: how partial hospitalization is paid in 2026

The companion guides cover IOP reimbursement rates and the Texas Medicaid SUD fee schedule.

PHP payment at a glance

Payer	How it pays	Claim and codes	Where the rate comes from
Medicare	Per diem in two tiers (3 services; 4 or more), different for hospitals and CMHCs	Institutional claim with each service line and the PHP condition code (billing codes)	Addendum A of the year's OPPS final rule, APCs 5853, 5854, 5863, 5864
Commercial	Contracted per diem for each day that meets the contract's hours	Usually a UB-04: revenue code 0912 (less intensive) or 0913 (intensive), often with H0035 or S0201; some contracts use a CMS-1500	Your contract
Texas Medicaid managed care	Contracted per diem, where the plan offers PHP as an in-lieu-of service	HCPCS code required on PHP lines since July 1, 2025 (Superior's notice)	Each plan's contract
Single case agreement	Negotiated per diem for one client	As the agreement says	The agreement (how to get one)

Medicare: who can bill PHP

• Hospitals and CMHCs only. Medicare's partial hospitalization benefit is furnished by a hospital outpatient department or a Medicare-certified community mental health center. A freestanding program licensed by the state isn't either one unless it's also certified, so most freestanding Texas programs don't bill Medicare for PHP. (Rural health clinics, FQHCs and opioid treatment programs can bill Medicare's newer IOP benefit, not PHP; see IOP reimbursement rates.)
• The patient. Under 42 CFR 410.43, PHP is for a patient who would otherwise need inpatient psychiatric care and who needs at least 20 hours a week of therapeutic services, under a plan of care, certified by a physician and recertified while they stay.
• The services. The regulation lists what a PHP day is built from: individual and group therapy, occupational therapy, services of social workers, psychiatric nurses and other trained staff, drugs and biologicals that can't be self-administered, activity therapies that aren't primarily recreational, family counseling, patient training and education, and diagnostic services.

How a freestanding program can add PHP, and what Medicare certification would involve, is covered in how to start a PHP.

Medicare's four PHP rates

The CY 2026 OPPS final rule (published November 25, 2025) kept the structure of earlier years: four separate PHP per diem rates.

APC	Setting	Day
5853	CMHC	3 services
5854	CMHC	4 or more services
5863	Hospital-based	3 services
5864	Hospital-based	4 or more services

• The fourth service is worth money. A day with 4 or more qualifying services is paid at the higher tier. In a Medicare PHP, the daily schedule decides which tier most days land in.
• CMHC rates follow hospital costs. For 2026, CMS calculated CMHC per diem costs as 40 percent of the hospital-based costs, because CMHC cost data had been pricing a 3-service day above a 4-service day. The CY 2027 proposed rule (July 7, 2026) keeps the approach.
• IOP is priced from the same costs. CMS uses one per diem cost per setting and tier for both PHP and IOP; the difference is the patient (20 hours a week for PHP, 9 for IOP) and the documentation.
• CMHC outliers. The 2026 rule keeps the CMHC outlier policy: when a CMHC's cost for a day exceeds 3.4 times the APC payment rate, Medicare pays 50 percent of the amount above that threshold.
• Yearly changes. New rates take effect January 1. The CY 2027 final rule hadn't been published when we checked on October 27, 2026.

We don't print the dollar amounts here. Published summaries of the 2026 rule disagree with each other, because some quote the per diem costs from the rule's tables and others the payment rates in Addendum A. The payment rate is the number you're paid from; look it up yourself with the steps below.

How to look up the current Medicare PHP rate

1. Go to CMS's page for the year's OPPS final rule: for 2026, CMS-1834-FC (summarized in the November 21, 2025 fact sheet).
2. Download Addendum A, or the latest quarterly update of it that covers your date of service.
3. Find APC 5853/5854 (CMHC) or 5863/5864 (hospital). Read the payment rate and the minimum unadjusted copayment.
4. Remember these are national rates. Your Medicare administrative contractor adjusts payment for local wages.
5. Record the APC, the rate, the addendum's date and the link in your budget.

How Medicare wants the claim built (condition code, revenue codes, one line per service) is in the Medicare Claims Processing Manual, chapter 4, and our IOP and PHP billing codes guide summarizes it.

Commercial PHP billing

• Revenue codes. On a UB-04, partial hospitalization is revenue code 0912 (less intensive) or 0913 (intensive). Plans define the split differently; one Medicaid plan's fee schedule, for example, uses 0912 for a day of 3 to 5 hours and 0913 for 6 hours or more.
• HCPCS codes. Many contracts want the HCPCS code with the revenue code: H0035 (partial hospitalization, less than 24 hours) or S0201 (partial hospitalization services, less than 24 hours, per diem). Superior's Texas Medicaid mapping pairs H0035 with 0912 and S0201 with 0913. Use your own contract's map.
• The form. A facility contract usually means a UB-04 (837I); a few contracts pay PHP on a CMS-1500 (837P). The difference is in UB-04 vs CMS-1500.
• The rate. Contracted and private. What moves it, and where negotiated rates are public, is in IOP reimbursement rates; the negotiating itself is in negotiating insurance rates.
• Authorization. Expect prior authorization for PHP and concurrent reviews every few days. Our prior authorization guide and continued-stay documentation guide show what reviewers want.
• Bundling. As with IOP, individual sessions on a PHP day are usually part of the per diem unless the contract says otherwise in writing.

Texas Medicaid PHP

Texas Medicaid pays adult PHP mainly through managed care plans, as an "in-lieu-of" service a plan may offer instead of inpatient psychiatric care; members under 21 may get it through Texas Health Steps. Plans like Superior require prior authorization at least five business days before services start and the HCPCS code on PHP lines since July 1, 2025. The rate is in each plan's contract; TMHP notes plans aren't required to follow the fee-for-service schedule. Details: Texas Medicaid for IOP and PHP programs and how to read the TMHP fee schedule.

Minimum hours, by source

Source	What it requires
Medicare (42 CFR 410.43)	A patient who needs at least 20 hours a week of therapeutic services, certified by a physician
The ASAM Criteria	Level 2.5 for adults: 20 or more hours of services a week
Commercial medical policies	Commonly 4 to 6 or more hours a day, several days a week; some split half days (0912) from full days (0913)
Your contract	Its definition of a PHP day wins. Write it into your billing policy.

Payer-by-payer examples, with links to each policy, are in per diem billing for IOP and PHP.

A worked week

An example with a made-up client. The same week, billed two ways. A3 and A4 stand for the Addendum A rates for your setting's 3-service and 4-or-more-service APCs; C stands for a commercial contract's PHP per diem for a day of at least 6 hours.

Day	Signed services and hours	Medicare (hospital or CMHC)	Commercial (6-hour day)
Monday	4 services, 6 hours	A4	C
Tuesday	3 services, 4.5 hours	A3	Not a PHP day under this contract
Wednesday	4 services, 6 hours	A4	C
Thursday	2 services, 3 hours (left early, time noted)	Below both tiers; check chapter 4 and your contractor before billing anything	Not billable
Friday	4 services, 6 hours	A4	C
Week	25.5 hours	3 × A4 + 1 × A3; the week still meets the 20-hour plan of care	3 × C; Tuesday and Thursday go to the treatment team

What it shows: under Medicare, the fourth service on Tuesday would have moved that day up a tier; under the commercial contract, Tuesday's 4.5 hours earned nothing. Either way, Thursday is a clinical question first (why did the client leave?) and never a day to "round up." A late note for a session that really happened gets a dated late entry; time the client wasn't there doesn't get a note at all.

To turn per diems into a monthly projection with census, payroll and rent, use the IOP and PHP break-even calculator.

Before you add PHP

1. Licensing. In Texas, PHP for substance use is a level of care on the HHSC chemical dependency treatment facility license; mental health PHP has its own questions. See adding a level of care and licensing a mental health IOP or PHP in Texas.
2. Contracts. Ask each plan in writing whether your contract covers PHP, at what per diem, under which codes, and what a PHP day is.
3. Staffing and schedule. A 20-hour week means a 4- to 6-hour day, five days a week for most clients; staff it before you sell it (Texas IOP staffing requirements, schedule templates).
4. Medical oversight. PHP clients are sicker; payers expect psychiatric involvement (psychiatric services in an IOP or PHP).
5. Billing. Set the PHP code, revenue code and hours in your EHR before the first admission, and check the first claims by hand.

PHP days in Cima

Cima's Program plan treats PHP as its own level of care. By default a PHP day needs 4 documented hours and the week 20, billed as one unit of S0201; set the hours and the code (S0201 or H0035) to your contracts. Days can go out on an 837P, or on an 837I with your PHP revenue code (0912 or 0913) and type of bill. Hours come from signed group notes, each client's own entry; the attendance screen marks short days in red with the week's total against 20 hours, and the biller's list says why a day isn't ready ("3 h documented; PHP needs 4"). Individual sessions on a PHP day stay inside the per diem unless you switch on billing them separately.

Adding PHP to a program, or opening one? Cima Consulting's IOP / PHP Program Launch ($39,500) covers the license, policies, clinical program, credentialing and billing set-up. Compare Cima EHR plans.

Questions

How is partial hospitalization reimbursed?

As a per diem: one payment per day that meets the payer's requirements. Medicare pays hospitals and CMHCs one of four rates (setting × 3-service or 4-or-more-service day); commercial plans and Medicaid managed care pay the per diem in your contract.

What is the Medicare PHP rate for 2026?

It's published by APC in Addendum A of the CY 2026 OPPS final rule (CMS-1834-FC): APCs 5853 and 5854 for CMHCs and 5863 and 5864 for hospitals. Look up the payment rate there; your contractor adjusts it for local wages.

Does Medicare still pay differently for 3 and 4 services?

Yes. The CY 2026 final rule kept separate rates for 3-service days and 4-or-more-service days, for hospitals and for CMHCs.

What revenue codes are used for PHP?

0912 for less intensive and 0913 for intensive partial hospitalization, often with the HCPCS code H0035 or S0201. Payers define the hours for each.

How many hours is a PHP day?

Your contract decides. Commercial policies commonly require 4 to 6 or more hours a day; Medicare and the ASAM Criteria look at the week, 20 or more hours.

Can a freestanding program bill Medicare for PHP?

Only if it's a Medicare-certified community mental health center or part of a hospital. A program licensed only by the state can't bill Medicare's PHP benefit.

Sources

All checked October 27, 2026. Rates and rules change every year; open the current version before relying on any detail.

• CMS, CY 2026 OPPS final rule (CMS-1834-FC) and addenda; fact sheet, November 21, 2025.
• Federal Register, CY 2026 OPPS final rule, November 25, 2025 (four PHP APCs; CMHC costs at 40 percent of hospital-based; CMHC outlier threshold); CY 2027 proposed rule, July 7, 2026.
• eCFR, 42 CFR 410.43 (partial hospitalization services).
• CMS, Medicare Claims Processing Manual, chapter 4.
• American Society of Addiction Medicine, The ASAM Criteria.
• CareSource, SUD fee schedule (0912 and 0913 hour definitions); Superior HealthPlan, Medicaid Behavioral Health Billing Clinic.

This guide is general information. Cima isn't a law firm, an accounting firm or a billing company, and we don't guarantee any rate, contract or payment.