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? What Service Category?

  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.


  2. 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?

  3. 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 and 10A NCAC 27G .3400): 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 and 10A NCAC 27G .3400: 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. This includes providers with a certificate of need: ICF-IIDs and providers licensed for service category 10A NCAC 27G .3400.

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 Opiod 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.
    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
  4. Residential Treatment/Rehabilitation Facility for Individuals with Substance Abuse Disorders (10A NCAC 27G .3400)
    • This is the only substance abuse service that requires a certificate of need (CON) prior to applying for a DHSR mental health license
    • Prospective providers must contact the Healthcare Planning and Certificate of Need Section of DHSR to find out if there is a demonstrated need for this service in N.C. and to apply for a certificate of need.
    • This "3400" service does not require a letter of support from the LME/MCO; however, a contract is needed with the LME/MCO for you to bill Medicaid, or obtain state or county funding for services. This was mentioned above. See additional information in the next section.

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

Division of Medical Assistance (DMA) 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.

Frequently Asked Questions

1. Where do my client referrals come from?
The LME-MCO (Local Management Entity-Managed Care Organization) you contract with is the source for referrals. If you do not have a contract with an LME-MCO, you will need to market your facility to relevant community agencies or people.

2. Do I have to have a qualified professional or "QP"?
Twenty-four hour, day treatment, and outpatient treatment facilities are required to have a qualified professional assist in the development of client treatment/habilitation plans to ensure treatment outcomes. The type of service you are licensed to provide and the type of clients you serve will dictate the type of qualified professional you must have. 10A NCAC 27G Section .0100 includes definitions, education and experience requirements of qualified professionals.

3. Do I have to pay the qualified professional or "QP"?
There is no licensure rule requiring a mental health provider to pay for the services of a qualified professional. However, “QP”s are professionals who generally charge a fee for their services.

4. What are the requirements to be a qualified professional (QP) or associate professional (AP)?
A qualified professional or an associate professional must meet one of the criteria outlined in the staff definitions in 10A NCAC 27G .0104. If an individual meets the criteria for a QP or an AP, then they can market themselves as such. There may be further requirements for a QP or AP position from individual agencies or organizations.

10A NCAC 27G .0104 STAFF DEFINITIONS
The following credentials and qualifications apply to staff described in this Subchapter:

  1. "Associate Professional (AP)" within the mental health, developmental disabilities and substance abuse services (mh/dd/sas) system of care means an individual who is a:
    1. graduate of a college or university with a masters degree in a human service field with less than one year of full-time, post-graduate degree accumulated mh/dd/sa experience with the population served, or a substance abuse professional with less than one year of full-time, post-graduate degree accumulated supervised experience in alcoholism and drug abuse counseling. Supervision shall be provided by a qualified professional with the population served until the individual meets one year of experience. The supervisor and the employee shall develop an individualized supervision plan upon hiring. The parties shall review the plan annually; or
    2. graduate of a college or university with a bachelor's degree in a human service field with less than two years of full-time, post-bachelor's degree accumulated mh/dd/sa experience with the population served, or a substance abuse professional with less than two years of full-time, post-bachelor's degree accumulated supervised experience in alcoholism and drug abuse counseling. Supervision shall be provided by a qualified professional with the population served until the individual meets two years of experience. The supervisor and the employee shall develop an individualized supervision plan upon hiring. The parties shall review the plan annually; or
    3. graduate of a college or university with a bachelor's degree in a field other than human services with less than four years of full-time, post-bachelor's degree accumulated mh/dd/sa experience with the population served, or a substance abuse professional with less than four years of full-time, post-bachelor's degree accumulated supervised experience in alcoholism and drug abuse counseling. Supervision shall be provided by a qualified professional with the population served until the individual meets four years of experience. The supervisor and the employee shall develop an individualized supervision plan upon hiring. The parties shall review the plan annually; or
    4. registered nurse who is licensed to practice in the State of North Carolina by the North Carolina Board of Nursing with less than four years of full-time accumulated experience in mh/dd/sa with the population served. Supervision shall be provided by a qualified professional with the population served until the individual meets four years of experience. The supervisor and the employee shall develop an individualized supervision plan upon hiring. The parties shall review the plan annually.
  1. "Qualified professional" means, within the mh/dd/sas system of care:
    1. an individual who holds a license, provisional license, certificate, registration or permit issued by the governing board regulating a human service profession, except a registered nurse who is licensed to practice in the State of North Carolina by the North Carolina Board of Nursing who also has four years of full-time accumulated experience in mh/dd/sa with the population served; or
    2. a graduate of a college or university with a Masters degree in a human service field and has one year of full-time, post-graduate degree accumulated mh/dd/sa experience with the population served, or a substance abuse professional who has one year of full-time, post-graduate degree accumulated supervised experience in alcoholism and drug abuse counseling; or
    3. a graduate of a college or university with a bachelor's degree in a human service field and has two years of full-time, post-bachelor's degree accumulated mh/dd/sa experience with the population served, or a substance abuse professional who has two years of full-time, post-bachelor's degree accumulated supervised experience in alcoholism and drug abuse counseling; or
    4. a graduate of a college or university with a bachelor's degree in a field other than human services and has four years of full-time, post-bachelor's degree accumulated mh/dd/sa experience with the population served, or a substance abuse professional who has four years of full-time, post-bachelor's degree accumulated supervised experience in alcoholism and drug abuse counseling.

5. Do I have to be licensed before I can serve clients?
Yes. Serving most clients without first obtaining a license is a violation of the law. Specifically, North Carolina General Statute 122C-28 states: "Operating a licensable facility without a license is a Class 3 misdemeanor and is punishable only by a fine not to exceed fifty dollars ($50.00), for the first offense and a fine, not to exceed five hundred dollars ($500.00), for each subsequent offense. Each day's operation of a licensable facility without a license is a separate offense."

6. Do all staff need training to work in the facility or to provide services?
Yes. All staff must be trained and competent to provide services to the clients the facility serves.

7. How do I get people trained? Where can I send them?
Staff training should be provided by a person who is competent in the area in which staff need training. Training in medication administration, for example, must be conducted by a licensed registered nurse, pharmacist, or other legally qualified person as per 10A NCAC 27G .0209(c)(3). Training in client rights, including restrictive interventions, must be conducted by a person trained to train others. Your qualified professional may be a resource for assisting, developing or performing some of the required training. Your LME-MCO may also be a resource for training resources.

8. Do I need my staff in place for the initial licensure survey?
Yes. DHSR will not issue a license to a provider who does not have staff in place.

9. Do you know of any consultants who can write policies?
DHSR does not maintain information on consultants who write policies and procedures for mental health providers. To recommend consultants would be a conflict of interest for DHSR as a regulatory agency.

10. What are the fees charged to open a facility?
Please see the fee portion of the initial application packet for this information.

11. Can facilities be licensed in mobile/manufactured home?
Yes, but there are restrictions. These restrictions include: (1) 10A NCAC 27G .5600 and .5100 license categories are the only two licensure categories that allow mobile/manufactured homes, and (2) the maximum number of clients is three. In addition, a waiver is required for this setting (contact Construction Section).

12. How do I clarify to the local authorities the type of facility I am proposing to operate?
Take the completed service categories section in the licensure application to your zoning, building and/or fire officials. Providers of day, outpatient and residential need zoning approval. Twenty-four hour residential services must present completed application to their LME-MCO to request a letter of support.

13. Do I have to upgrade the facility to meet handicap accessibility?
Yes. If you provide residential services for handicapped clients, you need to provide proper accommodations. Contact your local building official for information.

14. Can someone from Construction come to look at a facility prior to my renting or leasing it?
No. You need to review the physical plant requirements in 10A NCAC 27G Section .0300 to verify the facility meets the construction, space and other physical plant requirements for the clients to be served. You may, however, contact the DHSR Construction Section for specific questions.

15. Can we use a rope ladder for a second escape?
No. A facility required to provide a second remote exit from any story must be a door with stairs meeting the North Carolina State Building Code.

16. What are the requirements for a day facility?
Physical plant requirements are listed in the initial application packet. No DHSR construction fees are required for a day facility.

17. How do I get a Letter of Support?
24-hour residential applicants must contact the LME-MCO in the catchment area to verify/review if there is a need for the particular twenty-four hour residential service (see 10A NCAC 27G .0406). The LME-MCO will issue the letter of support which needs to be enclosed with the initial licensure application or a change application if changing service category.

18. When do I need to renew my license?
All licenses expire at the end of the calendar year. A renewal application will be sent in October to be returned before the end of that year with the annual fee and appropriate inspections.

19. I have a licensed 5600B and 5600C group home. I serve Innovations Waiver consumers and was licensed before 6/15/2011. Therefore I was allowed to keep serving up to six consumers. If I change ownership to a new provider, will they be able to keep that capacity and serve Innovations consumers in those beds?
Under the current Innovations Waiver, as long as the facility was licensed for five or six beds prior to 6/15/2011, the new owner can continue to be licensed for five or six beds and serve Innovations consumers in those beds.

20. What is the National Provider Identifier (NPI)?
The National Provider Identifier (NPI) is a Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification Standard. The NPI is a unique identification number for covered health care providers. Covered health care providers and all health plans and health care clearinghouses must use the NPIs in the administrative and financial transactions adopted under HIPAA. If you have questions or need additional information regarding the NPI number, call the toll free number 1-800-465-3203 or visit the NPI website.

21. DWI: Do I need a license to provide driving while intoxicated (DWI) services?
No, you do not. You do need to be approved as a DWI provider through the Division of Mental Health/Developmental Disabilities/Substance Abuse Services.

How to Apply for a License

Retrieve the Mental Health Initial Licensure Packet (PDF, 523 KB) and follow the instructions listed.

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.