Establish a Substance Abuse Service Facility requiring a Certificate Of Need

Purpose: This procedure describes the steps to establish the substance abuse services in North Carolina that require a Certificate of Need (CON). The following service is licensed under G.S. 122C (PDF, 604 KB):

This flow chart is intended to be a general guide to aid the applicant in getting the approvals needed for licensing and certification. There may be variations in the process since individual projects may have special circumstances.

Contacts: For questions regarding any part of this process, please contact the appropriate sections of the N.C. Division of Health Service Regulation.

Mental Health Licensure and Certification Section 919-855-3795
Certificate of Need Section 919-855-3873
Construction Section 919-855-3893
Medical Facilities Planning Branch 919-855-3865
Communications and Training, Division of Mental Health,
Developmental Disabilities, and Substance Abuse

Medicaid Enrollment: Medicaid Enrollment is separate from the licensure process. Some services have requirements in addition to licensure requirements, in order to be reimbursable through Medicaid. Please see the following links for more information:

Our agency does not license Critical Access Behavioral Health Agencies (CABHA), however this service must be endorsed through your Local Management Entity. More information regarding CABHAs can be found on the Division of MH/DD/SAS web site.

Procedure Summary: Residential Treatment/Rehabilitation for Individuals with Substance Abuse Disorders (10A NCAC 27G .3400) is a service that requires a Certificate of Need and a Mental Health license. Applicants must first consult the State Medical Facilities Plan to determine if there is a demonstrated need for this service and then obtain a certificate of need. After a certificate of need is obtained, the applicant must obtain a license. Steps are outlined below. State licenses are required to be renewed every year.


  1. Check the State Medical Facilities Plan: Medical Facilities Planning Branch
    1. Applicants can learn about the number of residential treatment/rehabilitation beds needed by reviewing the annual State Medical Facilities Plan, which is published for each calendar year and which specifies where in the state they are needed.
    2. Applicants can also find the Certificate of Need (CON) review schedule and deadline for submittal of applications for these beds, if available, in the State Medical Facilities Plan. No one may develop new substance abuse residential treatment/rehabilitation beds in an existing or new facility or relocate existing beds without first obtaining a certificate of need. A certificate of need cannot be issued if the plan does not show a need for those beds.
  2. Obtain a Certificate of Need: Certificate of Need Section (CON)
    1. The applicant submits a certificate of need application for the proposed beds according to the review schedule outlined in the State Medical Facilities Plan. If the applicant is leasing the facility, both the prospective owner/lessor and the lessee of the facility must submit a joint application.
    2. The CON Section advertises a written public comment period and local public hearing. Written public comments on an application may be submitted during the first 30 days of the review period.
    3. The CON Section conducts a public hearing no more than 20 days from the conclusion of the written comment period at which time applicants are given an opportunity to respond to public comment on the application.
    4. A decision to approve or disapprove an application is made by the CON Section within 150 days of the beginning of the review period.
    5. A certificate of need is issued 35 days after the date of approval if a petition for a contested case hearing is not filed.
  3. Obtain necessary documents: Communications and Training, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (MH/DD/SAS)
    1. The applicant may download essential publications free of charge from the website. The publications may also be purchased for a fee from the Division of MH/DD/SAS Communications and Trainings Branch. These publications are essential in formulating the required operations and management policies, guidelines and procedures. The required publications are listed below:
  4. Apply for a license: Mental Health Licensure and Certification Section (MHL&C)
    1. An application (PDF, 283 KB) may be obtained by contacting the Mental Health Licensure and Certification Section. A separate license is required for each facility that is maintained on a separate site, even if the site is under the same ownership or management.
    2. Applicants complete the application.
    3. Take the completed application to your local zoning office to obtain zoning approval. Attach zoning approval letter to the application.
    4. Residential Facilities:  Take the completed application to your catchment area Local Management Entity (LME) office and obtain a Letter of Support as per Session Law 2005-276 (PDF, 1.43 MB). Attach LME support letter to the application. *Note: This step is not needed for Day Programs.
    5. Write a cover letter briefly describing the services to be offered by the facility.
    6. Submit items required by DHSR Construction Section listed below.
      For 24 hour Residential Programs – Existing Structures
      • A floor plan that specifies:
        1. all levels including basements and upstairs;
        2. identification of the use of all rooms/spaces;
        3. dimensions of all bedrooms, excluding any toilets, bathing areas and closets – clarify double or single occupancy;
        4. location of all doors and dimensions of all exterior doors;
        5. location of all windows including the dimensions of all bedroom windows and sill height of bedroom windows above the finished floor;
        6. location of all smoke detectors noting whether they are battery operated, wired into the house current with battery backup and if they are interconnected.
      • Exterior photos of each side of the building.
      • Interior photos of the kitchen, living areas, bedrooms and any other rooms.
      • Directions from Raleigh or a map from the nearest major highway, street or intersection clearly showing the location of the facility.
      • Local Zoning Department approval for the proposed use.

      For Day Programs
      • A floor plan of the entire building or floor within the building of the space to be licensed that specifies:
        1. identification and dimensions of rooms to be licensed;
        2. exits from the licensed space and building;
        3. toilet areas and other required support spaces.
      • Exterior photos of each side of the building.
      • Interior photos of the proposed licensed space.
      • Directions from Raleigh or a map from the nearest major highway, street or intersection clearly showing the location of the facility.
      • Local Zoning Department approval or verification the facility is classified under building/planning for intended use.
      • Current local Fire Marshal's Inspection Report for the building.
      • Current local Sanitation Inspection report if serving any food.
      • If new construction, the local Building Officials approval
      • If existing structure, if this is an existing Business Occupancy building (as classified under the North Carolina State Building Code) and it is only a change of tenant use (for a program that is classified as a "Business Occupancy use") approval from the local Building Official may not be required. Contact your local Building Official and provide them with a copy of your application to verify if your program is classified as a Business Occupancy and if they need to provide any type of documentation. *Note: Any Day Treatment Program 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.
    7. Include the annual fee upon submitting all items.
    8. Develop written policies and procedures for your services/programs based on N.C. Administrative Code rule. *Note: Do not submit the policies and procedures with the application as they will be reviewed at a later date.
    9. Residential Facilities: the MHL&C Section will forward the application to the Construction Section for their review and approval.

      Day Programs: the application is forwarded to the MHL&C Section consultant to process application (skip to step 6). 
  5. Obtain Construction Approval: Construction Section
    1. Facilities that have not been previously licensed as G.S-122C (PDF, 604 KB) facilities require Construction Section approval before a licensed is approved. Prospective facility operators are encouraged to consult with the Construction Section of DHSR prior to purchasing property intended for use as a facility.
    2. Requirements for New Structures
      • Before construction of a new facility the applicant must submit blueprints to the Construction Section.
      • The Construction Section will review blueprints and other information. After review, the Construction Section will provide a written review addressing building code and other licensure requirements. The Construction Section acts as the control point for distribution of plans and specifications to the N.C. Department of Insurance (where applicable). For large facilities, plans are generally reviewed in three stages: schematic, design development and final working drawings.
      • Applicants and their designers work closely with local building officials and fire prevention officials as well as with the Construction Section to ensure the facility is in compliance with building code and licensure requirements.
      • At least two weeks before construction is complete, the applicant sends a letter to the Construction Section requesting a final construction inspection with requested final documentation including local approvals. The facility must be ready with all systems operational and all construction completed by the final construction inspection date. *Note: The Construction Section does not do punch list inspections; punch list inspections are the responsibility of the designer, contractor, and owner.

      Requirements for Existing Structures
      • The MHL&C Section forwards the application to the Construction Section for approval.
      • The Construction Section reviews the information in the application and sends an invoice for the construction survey.
      • The applicant pays the fee for the construction survey. Once the invoice is paid, the Construction Section contacts the applicant to schedule a site inspection visit.
      • The Construction Section conducts a site inspection visit and notes any deficiencies.
      If deficiencies are found, a Statement of Deficiencies is created and mailed to the applicant. The applicant submits a plan of correction to the Construction Section addressing all items. All deficiencies must be corrected prior to the Construction Section’s final approval. *Note: An additional site visit may be required.
    3. When all items are acceptable, the Construction Section notifies the applicant the physical plant has been approved. *Note: This does not mean the facility can admit clients. The facility must still continue the steps to obtain a license by the MHL&C Section.  For new structures the facility must apply for a license (see step 4).
    4. When all items are acceptable, the Construction Section sends the construction approval transmittal form (form 4086) to the MHL&C Section.  *Note: once licensed, the facility must maintain documented evidence of compliance with applicable fire and sanitation codes, including current fire and sanitation inspections.
  6. Obtain the License: Mental Health Licensure and Certification Section (MHL&C)
    1. Residential Facilities: the Construction Section will send the MHL&C Section notification that they have approved the facility. Once the notification is received the MHL&C Section initial licensure consultant contacts the applicant.

      Day Programs: once the MHL&C Section receives a completed application, the MHL&C Section initial licensure consultant contacts the applicant.
    2. The MHL&C Section initial licensure consultant makes an office appointment with the applicant to review the application and determine compliance with all rules and statutes. The written policies and procedures for the services/programs will be reviewed at this appointment. The office appointments are located in Raleigh or Asheville, depending on the county the facility is located.
    3. The MHL&C Section initial licensure consultant conducts an on-site inspection of the facility to determine compliance with all rules and statutes.
    4. All required licensure documents are reviewed for completeness by the MHL&C Section initial licensure consultant. If acceptable, a license shall be issued to the specific premise for types of services indicated on the application.
    5. A license must be renewed every year.