Establish a Mental Health, Intellectual/Developmental Disabilities or Substance Abuse Service

This page provides information regarding how to obtain a mental health license.  Mental health licenses are required for a variety of services that offer treatment for individuals with mental illness, developmental disabilities, and/or substance use disorders.

In North Carolina, for some services there are other rules or regulations to follow and other steps to take in order to be able to provide a service.  Therefore, below we also provide guidance and referral information regarding the following:

Do I Need a License?

  1. The definition of a licensable facility in North Carolina according to North Carolina General Statute 122C-3(14)b., is as follows:

    North Carolina General Statute 122C-3(14)b.:
    (14) "Facility" means any person at one location whose primary purpose is to provide services for the care, treatment, habilitation, or rehabilitation of the mentally ill, the developmentally disabled, or substance abusers, and includes:
    b. A "licensable facility", which is a facility that provides services to individuals who are mentally ill, developmentally disabled, or substance abusers for one or more minors or for two or more adults. These services shall be day services offered to the same individual for a period of three hours or more during a 24‑hour period, or residential services provided for 24 consecutive hours or more. Facilities for individuals who are substance abusers include chemical dependency facilities.

    Therefore, the main purpose of your service must be treatment. Some services are excluded from licensure per N.C.G.S. 122C-22. Please review the General Statute if you think your service may not require a license. Some typical exclusions are as follows.

    § 122C-22. Exclusions from licensure; deemed status.
    (a) All of the following are excluded from the provisions of this Article and are not required to obtain licensure under this Article
    (1) Physicians and psychologists engaged in private office practice

    (8) Facilities that provide occasional respite care for not more than two individuals at a time; provided that the primary purpose of the facility is other than as defined in G.S. 122C-3(14).
    (9) Twenty-four hour nonprofit facilities established for the purposes of shelter care and recovery from alcohol or other drug addiction through a 12-step, self-help, peer role modeling, and self-governance approach.
    (10) Inpatient chemical dependency or substance abuse facilities that provide services exclusively to inmates of the Division of Adult Correction of the Department of Public Safety, as described in G.S. 148-19.1.
    (11) A charitable, nonprofit, faith-based, adult residential treatment facility that does not receive any federal or State funding and is a religious organization exempt from federal income tax under section 501(a) of the Internal Revenue Code
    (12) A home in which up to three adults, two or more having a disability, co-own or co-rent a home in which the persons with disabilities are receiving three or more hours of day services in the home or up to 24 hours of residential services in the home. The individuals who have disabilities cannot be required to move if the individuals change services, change service providers, or discontinue services.

Choosing a Service Category

  1. When you have determined that the service you wish to provide does require a license, the following questions will help you pinpoint the service category that best fits your proposed program:
    • Do you want to provide a day or residential service?
    • Who do you want to work with?
      • People with mental illness, intellectual/developmentally disabilities or substance use disorders?
      • Adults or minors?
    • How do you expect to be paid for the services you provide?

  2. Once you have answered these questions, review the 31 specific services (PDF, 87 KB) that DHSR licenses to determine the best service category for your program. You can find more specific information about each service category under Rules and Resources. Review Subchapter G. Scroll through the document to find the service category number.

New Provider Orientation

New Provider Orientation provides a general overview of the North Carolina Mental Health System and reviews the requirements for licensure. Consider attending if you are interested in learning more about the nuts and bolts of the licensure process. Registration information and useful handouts can be found at New Provider Orientation.

LME/MCOs: Do I need to contact them?

The Local Management Entity/Managed Care Organization (LME/MCO) are organizations in North Carolina which are responsible for determining the need for publicly funded treatment services in their region. Providers that wish to be paid with Medicaid or state/county funds must have a contract with an LME/MCO. You can find a list of LME/MCOs online.

  1. Day Programs:
    • If you expect to be totally private pay, you do not need to contact your LME/MCO.
    • If you wish to access Medicaid funding or state/county funding, you need to contact your LME/MCO. The LME/MCO will let you know if there is a need for the service in their area and the process for contracting with you.
  2. Residential Programs (except ICF-IIDs): If you wish to license a residential program you need to contact the LME/MCO in your region. Two reasons why: letter of support and funding.
    • Letter of Support (per N.C.G.S. 122C-23.1):
      • ICF-IIDs: Because these two programs require a Certificate of Need in order to apply for a license, they do not need a letter of support from the LME/MCO to apply for a license.
      • All other prospective residential providers must obtain a letter of support from their LME/MCO to accompany their application. An applicant should request a letter of support in writing from the LME/MCO in the catchment area where the residential facility will be located. This letter of support reflects a need for the service in the LME/MCO catchment area.
    • Funding: The letter of support is separate from a commitment to pay for the service. If you wish to be paid through Medicaid or state/county funding, you must communicate with the LME/MCO regarding whether or not there is a need for the service in their area and the process for contracting with them.

Services with Additional Requirements

In addition to the DHSR licensure process, there are four service categories which have additional requirements. In some cases, these requirements need to be fulfilled prior to applying for a DHSR mental health license.

  1. Psychiatric Residential Treatment Facilities (PRTF) (10A NCAC 27G .1900):

    A PRTF provides care for children or adolescents who have mental illness or substance abuse/dependency in a non-acute inpatient setting.

  2. Outpatient Opioid Treatment Facilities (10A NCAC 27G .3600):

    There are numerous entities involved in the licensure of a new Opioid Treatment Program (OTP). There are also sequential steps to follow in gaining multi-agency approvals to begin serving clients. The agencies involved include the following:

    1. State Opioid Treatment Authority (SOTA): The provider must have approval from the N.C. SOTA to provide OTP services in N.C. The OTP must contact SOTA to obtain preliminary approval to apply for a license. Please contact Smith Worth (Program Administrator) at 919-733-4670 to obtain preliminary program approval prior to beginning the application process with DHSR. A change of ownership of an existing OTP does not require pre-approval by SOTA.
    2. DHSR: The provider must obtain a license from the Division of Health Service Regulation to provide Opioid Treatment: 10A NCAC 27G .3600.
    3. Concurrently, the OTP applies for approval/permit to DCU, DEA, SAMHSA, and an accreditation body.
      • North Carolina Drug Control Unit (DCU): The provider must be approved by the N.C. DCU in order to dispense controlled substances in North Carolina.
      • Drug Enforcement Agency (DEA): The provider must be approved by the DEA in order to dispense controlled substances in the United States.
      • Substance Abuse and Mental Health Services Administration (SAMHSA): The provider applies for Opioid Treatment Program Certification through SAMHSA. This allows them to provide OTP services pursuant to the federal regulations 42CFR 8.11.
      • Accreditation: Accreditation is required pursuant to federal regulation CFR 42 Part 8.11(d)(e).
    4. LME/MCO: The provider contracts with their Local Management Entity/Managed Care Organization to bill for services through Medicaid or state/county dollars.
    5. NCTOPPS: The provider registers with NCTOPPS to enter data about consumers. This program gathers outcome and performance data that can be used by providers, LME/MCOs, and others.
    6. DHSR licenses the facility.
    7. DEA and DCU conduct site visits to determine if they have things in place to dispense controlled substances. DEA notifies SAMHSA. DCU notifies SOTA.
    8. Once SAMHSA is triggered by DEA, they send a letter to SOTA to see if SOTA approves.
    9. SOTA conducts a site visit, sends back an approval letter to SAMHSA.
    10. SAMHSA sends approval letter and certificate to provider and copies SOTA, and DEA.
    11. DEA sends registration to provider.
    12. SOTA sends final approval to provider and DHSR, with copy of SAMHSA approval letter.
    13. Provider is ready to provide services.
    14. Once the OTP receives their certificate, then they can order the medications and begin dosing within about 5-6 days.

  3. Intermediate Care Facility for Individuals with Intellectual Disabilities

Funding: Clinical Coverage Policy & Service Definitions

DHSR does not assist with funding for facilities. Prospective providers should determine their funding source prior to applying for a mental health license with DHSR. If your plan includes being reimbursed with state dollars or Medicaid dollars, you will need to have a contract with a LME/MCO, and must contact the LME/MCO you wish to work with (generally the LME/MCO for your region) to find out the process for contracting with them.

Local Management Entity/Managed Care Organizations Directory

In order to be paid with Medicaid or state funds for providing a service, there may be additional staffing, training, or treatment requirements, for that particular service. These additional requirements are called "clinical coverage policies" for Medicaid funds, and "service definitions" for state funds. You may wish to research the service definition or clinical coverage policy that matches your service before you contact your LME/MCO.

DMH/DD/SAS web page with state funded service definitions

NC Medicaid web page that includes links to Clinical Coverage Policies for Medicaid Reimbursement.

Private Pay
If a prospective provider does not wish to take advantage of public dollars as a funding source (i.e. Medicaid, state, county funds), then the provider does not need to have a contract with the local LME/MCO and can just bill prospective clients.

Building Code Zoning Classifications

Here you can find the Building Code Zoning Classifications for Mental Health Licensure. Note: Day Programs for children and adolescents cannot be located in a building classified as a Business Occupancy. These programs are required to meet either Group E-Educational Occupancy or Group I-4 - Child Daycare Occupancy under the NCSBC.

How to Apply for a License

Prospective applicants should review the North Carolina General Statute 122C and the 10A NCAC rules [North Carolina Administrative Code (mental health licensure rules)].

Applicant should complete the Initial Mental Health Licensure Application Packet. Detailed information is in the application on how to submit an application.

Once the application has been submitted and the appropriate fee paid:

The application is then sent to DHSR construction Construction will send a standard acknowledgment letter applicant stating, "You may expect your review in approximately 10-12 weeks. However, if areas require a code interpretation, there could be a delay. (If the facility is a day program, this step is excluded).

When the applicant has successfully completed the physical plant review (no plant review by DHSR construction if a day treatment program), the application is sent to the L&T team for the program review. The L&T team will schedule a time to begin the process program review within 5-10 days after the application is received.

We provide the applicant six months to complete the program review of the application process successfully; however, we are ready to license much sooner. Please understand that the amount of time it takes to process an application for the program review weighs heavily if the licensee is prepared and has all the necessary material completed for the application process.

Change of Ownership Requirements

Sometimes a provider chooses to relinquish their ownership of a license and move it to another provider. This is called a "Change of Ownership" and requires the completion of a Change Application and a review by the MHLC Section. Change of ownership of the license is entirely separate from any business transaction between providers. Until the license has officially been transferred to the new prospective provider, the original owner/licensee is responsible for their facility and consumers.

The Change Application can be found online. (PDF, 115 KB) Follow the instructions outlined in the application.

Note: There are other reasons why a change application needs to be completed (i.e. change in capacity, location, name of facility, service category). This list does not include all of those reasons. Please refer to 10A NCAC 27G.0404 (i)(j)(k) for more information.