A Medicare-enrolled CMHC must serve at least 40 percent of its clients without Medicare paying, measured as clients not paid for by Medicare divided by all clients treated in each 12-month enrollment period. An independent entity must certify it at initial enrollment and every revalidation, or enrollment is denied or revoked.
Medicare's definition of a community mental health center (CMHC) has a feature no other provider type shares: a test of who the center serves. A CMHC must provide "at least 40 percent of its services to individuals who are not eligible for benefits under title XVIII of the Social Security Act" (42 CFR 410.2), and it must prove it through someone else. The proof is a certification statement from an independent entity, and without it Medicare enrollment is denied or revoked.
How does the rule measure 40 percent?
The condition of participation sets the method. The CMHC "provides at least 40 percent of its items and services to individuals who are not eligible for benefits under title XVIII of the Act, as measured by the total number of CMHC clients treated by the CMHC for whom services are not paid for by Medicare, divided by the total number of clients treated by the CMHC for each 12-month period of enrollment" (42 CFR 485.918(b)(1)(v)).
Three features of that sentence matter in practice:
- It counts clients, not visits or revenue. The numerator is clients whose services Medicare does not pay for; the denominator is all clients treated.
- It runs by 12-month period of enrollment. The period follows the CMHC's enrollment, so the center should know which 12-month window will be measured.
- It covers all clients served by the CMHC, consistent with 485.918(b)(1), which requires the center to provide its core services "to all clients served by the CMHC regardless of payer type."
When is the certification needed?
The CMHC "is required to submit to CMS a certification statement provided by an independent entity that certifies that the CMHC's client population meets the 40 percent requirement." The statement is required "upon initial application to enroll in Medicare, and as a part of revalidation, including any off cycle revalidation." The consequence is spelled out: "Medicare enrollment will be denied or revoked in instances where the CMHC fails to provide the certification statement as required. Medicare enrollment will also be denied or revoked if the 40 percent requirement as specified in this paragraph (b)(1)(v) is not met" (485.918(b)(1)(v)(A)-(B)).
Revalidation for most providers comes every five years (42 CFR 424.515), so a CMHC should expect to obtain a fresh statement at least that often, and any time CMS calls for an off-cycle revalidation.
Who counts as an independent entity?
The rule does not define the term, but its plain sense excludes anyone whose interests are tied to the CMHC's enrollment. That is why we never act as the certifier for a program we work for. A firm that prepares a CMHC's enrollment, or is paid by the CMHC for its enrollment work, is not the independent voice the rule asks for. Choose the certifier with that test in mind, document its independence, and engage it early enough that the statement is ready when the 855A goes in.
Which steps prepare the numbers?
- Define the period. Identify the 12-month enrollment period the statement will cover.
- Define "client treated." Use a consistent rule for who counts in the denominator, applied the same way every period.
- Classify by payer. Count clients whose services were not paid for by Medicare. Keep the classification method written down so the certifier can test it.
- Produce aggregate reports. The certifier's procedures decide what it reviews, but the CMHC can prepare summary counts and the method behind them from its own systems.
- Watch the trend between revalidations. A center that drifts below 40 percent risks revocation at the next statement, so track the ratio each year.
Client-level detail stays inside the CMHC and goes only to the certifier under the CMHC's own privacy obligations. Our work uses aggregate figures and the written method; we never receive patient-identifying records.
Where does the rule fit in CMHC enrollment?
The 40 percent test is one of six parts of the CMHC definition, next to outpatient services, 24-hour emergency care, partial hospitalization or intensive outpatient or psychosocial rehabilitation services, state hospital admission screening, and state licensing (42 CFR 410.2). CMHCs are also screened at the moderate risk level with an on-site visit (42 CFR 424.518(b)). See Medicare enrollment for community mental health centers.
How do we help?
Our Medicare CMHC Enrollment service ($1,995 per CMHC) includes organizing the 40 percent documentation, the written counting method and the aggregate reports, for your own independent certifier. We prepare the 855A and submit it as your PECOS surrogate once your authorized official approves us; your official signs. We are never the independent certifier. Renewal Tracking ($299 per credential per year) puts the revalidation date, and the certifier's lead time, on your calendar. See pricing.
Common questions
- How is the CMHC 40 percent requirement calculated?
- By clients: the number of CMHC clients whose services are not paid for by Medicare, divided by the total number of clients treated, for each 12-month period of enrollment, under 42 CFR 485.918(b)(1)(v).
- When does a CMHC need the 40 percent certification?
- With the initial Medicare enrollment application and as part of every revalidation, including off-cycle revalidations. Without it, enrollment is denied or revoked.
- Can our enrollment consultant certify our 40 percent ratio?
- It should not. The rule requires an independent entity. We organize the documentation for the program's own independent certifier and are never that certifier.
Need Help with Enrollment or Licensing?
We prepare your Medicare enrollment, accreditation survey and state licenses in the order CMS requires, for your official to sign, and track every one to a decision.