Establish a Psychiatric Hospital and/or Substance Abuse Hospital

Purpose: This procedure describes the steps to establish a new psychiatric and substance abuse hospital in North Carolina. N.C. General Statutes Chapter 122C Article 2 and Article 3 contain applicable statutory provisions. Pursuant to G.S. 122C-26, the Commission for Mental Health, Developmental Disabilities and Substance Abuse Services has rulemaking jurisdiction for these hospitals. Rules in Title 10A of the North Carolina Administrative Code (10A NCAC 27G) apply. Rules governing Medicare-Medicaid standards and certification are contained in the Code of Federal Regulations at 42 CFR 482.1 through 482.66 "Conditions of Participation for Hospitals".

This flow chart is intended to be a general guide to aid the applicant in getting the approvals needed for licensure and certification.

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

Acute and Home Care Licensure and Certification Section 919-855-4620
Certificate of Need Section 919-855-3873
Construction Section 919-855-3893
Medical Facilities Planning Section 919-855-3865

Procedure Summary: In order to operate a psychiatric or substance abuse hospital in North Carolina, applicants first consult the State Medical Facilities Plan to determine if there is a demonstrated need for such a facility. They then obtain a certificate of need. They must get approval for the construction of the facility, and then apply for and obtain a license. If Medicare or Medicaid patients will be treated, steps to obtain certification are taken after the facility is in operation.

Procedures:

  1. Review the State Medical Facilities Plan: Medical Facilities Planning Section
    1. Applicants can learn the number of inpatient psychiatric and substance abuse beds needed by reviewing the annual State Medical Facilities Plan, which is published for each calendar year and which specifies where in the state the beds are needed. This plan is available by request or online from the Medical Facilities Planning Section.
    2. Applicants can also find the certificate of need review schedule and deadline for submittal of applications for these beds, if available, in the State Medical Facilities Plan. No one may develop new inpatient psychiatric or substance abuse beds without first obtaining a certificate of need. A certificate of need cannot be issued for inpatient psychiatric or substance abuse beds if the plan does not show a need for those beds.
  2. Obtain a Certificate of Need: Certificate of Need Section
    1. The applicant submits a certificate of need (CON) application for the proposed inpatient psychiatric or substance abuse 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.
    6. After a certificate of need is issued, the applicant contacts the Construction Section and the Acute and Home Care Licensure and Certification Section about their respective requirements for the development of the project.
  3. Obtain construction approval: Construction Section
    1. The applicant sends two sets of floor plans and specifications to the Construction Section.
    2. The Construction Section reviews the floor plans and writes the applicant with requirements or review comments and instructions. The Construction Section acts as the control point for distribution of plans and specifications to the N.C. Department of Insurance. Plans are generally reviewed in three stages: schematic, design development, and final working drawings.
    3. 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 code and licensure compliant, and, if certification for Medicare is desired, certification compliant.
    4. At least two weeks before construction is complete, the applicant sends a letter to the Construction Section requesting a final construction inspection with project information and local approvals. The facility must be ready with all systems operational and all construction completed by the final construction inspection date. The Construction Section does not do punchlist inspections; they are the responsibility of the designer, contractor, and owner.
    5. The Construction Section sends a copy of the final inspection requirements document list and inspects the facility for licensure and, if not accredited by the Joint Commission for the Accreditation of Healthcare Organizations (JCAHO) for certification and reviews the required final documentation.
    6. If some minor deficiencies are found, the applicant submits a plan of correction.
    7. When all items are acceptable, the Construction Section sends the construction approval transmittal form (form 4086) to the Acute and Home Care Licensure and Certification Section.
  4. Obtain a license: Acute and Home Care Licensure and Certification Section
    1. At least three months before operation, the applicant contacts the Acute and Home Care Licensure and Certification Section for a licensure and certification application packet. The applicant completes and returns all forms.
    2. On request, the Acute and Home Care Licensure and Certification Section outlines the applicable rules and provides a listing of similar operating facilities. Consultations are also available for the facility in the section’s Raleigh office or at the facility to discuss any questions the facility may have concerning compliance with licensure rules.
    3. The applicant requests an initial licensing survey from the Acute and Home Care Licensure and Certification Section when the facility is complete and ready to operate.
    4. The section schedules an on-site initial licensure survey to coordinate with the Construction Section's projected approval for site occupancy.
  5. Obtain certification: Acute and Home Care Licensure and Certification Section
    1. After building approval notification by the Construction Section and after the facility is licensed and has patients, the hospital requests a certification survey.
    2. Pending approval of the certification application packet by the Acute and Home Care Licensure and Certification Section and the agency’s fiscal intermediary, a survey is scheduled, generally within three weeks of the request if the packet has been approved.
    3. The Acute and Home Care Licensure and Certification Section conducts the general survey. If the facility has deficiencies during the initial survey, the effective date of certification will be one of the following: the last date of either the certification general survey or the life safety code survey, or the last date of a acceptable plan of correction from either of these surveys.
    4. If the hospital is JCAHO-accredited, an on-site survey visit will not be required. However, it is unlikely that JCAHO accreditation will be possible prior to hospital opening.
    5. The section forwards all information to the Atlanta Centers for Medicare & Medicaid Services Regional Office for approval.
    6. The regional office assigns the Medicare provider number and notifies the facility's fiscal intermediary.