North Carolina's 122C Facility License

North Carolina regulates mental health, developmental disability and substance use facilities under one statute. Section 122C-23 of the General Statutes says: "No person shall establish, maintain, or operate a licensable facility for individuals with mental illnesses, individuals with intellectual or other developmental disabilities, or substance abusers without a current license issued by the Secretary" of the Department of Health and Human Services. The section is short but packs in the license's term, its fees, the provisional license, an ownership history screen and a detox admission rule.

What does the license cover?

"Each license is issued to the person only for the premises named in the application and is not transferrable or assignable except with prior written approval of the Secretary" (122C-23(b)). Two things follow. A move to a new building is a new license question, not a change of address. And a sale needs the Secretary's written approval before it closes, not after.

The applicant applies to the Secretary on forms whose contents are set by rule, and the Secretary issues the license on finding compliance with the statute and the rules of the Commission and the Secretary (122C-23(c)-(d)).

How long does a 122C license last?

An initial license is valid for not more than 15 months. After that, licenses "shall be renewed annually thereafter and shall expire at the end of the calendar year" (122C-23(e)). Every 122C facility in the state therefore shares the same December 31 expiration, which makes the end of the year the busy season for renewals.

One renewal rule is easy to overlook: "Licenses for facilities that have not served any clients during the previous 12 months are not eligible for renewal." A program that licenses a site and then delays opening for a year can lose the license and have to start over.

When does North Carolina issue a provisional license?

The statute uses provisional licenses in two ways (122C-23(e)):

• For a new facility. The Secretary may issue a provisional license for up to six months to a person obtaining an initial license, and the licensee "must demonstrate substantial compliance prior to being issued a full license."
• For temporary noncompliance. A licensee temporarily unable to comply with a rule, where the noncompliance is not an immediate threat to health and safety, may receive a provisional license of up to six months while it corrects the problem under an approved plan. No further provisional period is allowed for the same noncompliance.

What are the fees?

Section 122C-23(h) sets a nonrefundable annual base fee plus a per-bed fee. For facilities other than intermediate care facilities for individuals with intellectual disabilities:

• No beds: $215 base, no per-bed fee;
• 1 to 6 beds: $305 base, no per-bed fee;
• more than 6 beds: $475 base plus $17.50 per bed.

An outpatient program with no beds therefore pays the $215 base each year. The statute's table does not say whether the per-bed fee counts every bed or only those above six, so confirm the calculation with the department before paying for a larger residential site.

Which ownership histories block a new license?

Section 122C-23(e1) bars the Secretary from issuing a license for a new facility or a new service, enrolling a new Medicaid provider, or revalidating a Medicaid provider during a revocation or suspension, when the applicant is the owner, principal or affiliate of a facility that:

1. had its license revoked, for 60 months after the revocation;
2. was assessed penalties for Type A or Type B violations within set look-back windows (one violation in six months, two in 18 months, three in 36 months, or four or more in 60 months); or
3. had its license summarily suspended or downgraded to provisional status for certain violations, for 60 months after reinstatement.

Separately, licensure or enrollment "shall be denied" if the applicant's history as a provider leads the Secretary to conclude it will likely be unable to comply (122C-23(e3)). Because the bar reaches affiliates, a group that owns several facilities needs to know every facility's enforcement history before it applies for a new one. Our post on owner and director background screening covers how states look at principals.

Are there rules on admissions and detox?

Two. The Secretary may suspend the admission of new clients to a licensed facility whose conditions are detrimental to clients' health or safety; the facility can contest it by filing a contested case within 20 days of the notice (122C-23(g)). And a licensed social setting or medical detoxification facility "shall not deny admission or treatment to an individual based solely on the individual's inability to pay" (122C-23(i)). That second rule belongs in a detox program's admission policy.

Does a substance use facility need a certificate of need in North Carolina?

Under the current definitions, no. North Carolina's certificate of need law defines a "chemical dependency treatment facility" as a facility or unit providing 24-hour treatment for chemical dependency or substance use disorder (G.S. 131E-176(5c)), but chemical dependency treatment facilities do not appear in the list of "health service facilities" that triggers certificate of need review (131E-176(9b)). That is a statement about this statute only; other states, and opioid treatment programs elsewhere, have their own need reviews. See certificate of need and need review for new OTPs.

How do we help with a 122C license?

We prepare the license application for the named premises, write policies to the applicable rules, check every owner, principal and affiliate against the history bars before you file, and track the December 31 renewal and the 12-month service rule. Your owner or officer signs and pays the state. The State License package is $1,995 for an outpatient site or $2,995 for residential or detox, and Renewal Tracking is $299 a year per license. Sources are on the North Carolina page.