How to close (or pause) a licensed treatment program in Texas

Close, pause or sell?

Option	When it fits	What it takes
Pause (inactive status)	A short stop: a move that slipped, a staffing gap, a building repair	A written request to HHSC before services have been stopped for 60 days; inactive status is limited to 60 days (26 TAC 564.406)
Move	The program works; the building doesn't	A new-site filing with HHSC and every payer updated. See how to move a licensed treatment program
Sell	The program has value: staff, referrals, contracts	A buyer, an attorney and diligence; the license doesn't transfer. See buying or selling a treatment center
Close one level	One level of care doesn't pay; the rest does	Notice to HHSC and the plans, updated policies, and clients at that level stepped down or referred. The reverse of adding a level of care
Close	None of the above	The rest of this page

1. What HHSC requires

• Every client discharged or transferred first. 26 TAC 564.406 requires that all clients are appropriately discharged or transferred before a program closes.
• The closure form. HHSC lists Form 3206, Chemical Dependency Treatment Facility Closure, on its chemical dependency treatment facility page. File it so the license is formally closed rather than retired by default.
• The 60-day rule. HHSC automatically retires the license of a site where services are suspended or not provided for more than 60 days, unless you've requested inactive status, which is limited to 60 days (564.406).
• Fees don't stop on their own. Under 26 TAC 564.408, a facility owes the full license fee for any licensure period in which it provided treatment, even if it fails to report a closure.
• Closing one of several sites? Report the site closure and keep the remaining sites' policies, emergency plans and license information current.

Incident and abuse reporting obligations don't pause while you wind down. A client crisis in the last week is reported on the same 24-hour clock as any other (26 TAC 564.509 and 564.703).

2. Discharging and transferring clients

A closure is a discharge for every client at once, and chapter 564's discharge rules (26 TAC 564.805, in chapter 564) still apply to each one:

• Tell clients early, in person and in writing, with the last day of services and the plan for each of them. Give referral partners and the plans the same date.
• Contact the receiving program before discharge to arrange the transfer, and document the coordination, including how soon the client can start there and any limits on the referral (564.805(c)).
• Send records only with valid consent. Substance use records need a 42 CFR Part 2 consent that names the receiving program; each disclosure carries the Part 2 notice.
• A discharge plan for every client, completed before discharge, with goals to sustain recovery, referrals and recovery maintenance services, signed by the counselor and the client and given to the client (564.805(e)–(h)).
• A discharge summary within 30 days, signed by a QCC, with the dates, the needs at admission and discharge, services, progress, the reason for discharge and the referrals (564.805(i)). The reason is "program closure"; the referrals are where clinical judgment shows.
• Authorizations: tell each plan's utilization review contact the last day of care and where the client is going, so the receiving program can request its own authorization without a gap. Quick VOB's prior authorization guide covers what the receiving program will need.
• Follow-up: the rule calls for a follow-up contact 60 to 90 days after discharge (564.805(j)). Decide who makes those calls after the doors close, or document why it isn't possible.

3. Records: who keeps them, and for how long

• Retention. Texas chemical dependency facilities keep records at least six years, and adolescent records at least five years after the client turns 18 (26 TAC 564.508). Originals stay in Texas, protected from loss and unauthorized access, and retrievable on request.
• Part 2 on discontinued programs. 42 CFR 2.19 covers records when a program stops operating or is taken over: without the patient's written consent to transfer them, records that the law requires to be kept are sealed, labeled and kept for that period, then destroyed.
• Name a custodian. Decide who holds the records after closing (an owner, a successor program with consent, or a records custodian under contract), where they are, and how a former client asks for a copy. Put that on the closure notices and the website.
• The EHR. Check your EHR contract for how long you can read and export records after you cancel, and export every chart before access ends. Cima EHR keeps records readable and exportable for at least 90 days after cancellation and exports a client's whole chart as a PDF; see how Cima protects records.
• Destruction, later. When the retention period ends, destroy records securely and keep the destruction log the rule requires (564.508(i)), unless an audit, investigation or lawsuit is pending.

4. Payers, enrollments and the last claims

• Give each plan written notice under its contract's termination clause. Notice periods differ by contract; read each one now, because the notice date may drive your last day.
• Keep billing running after the doors close. The clearinghouse, ERA and EFT enrollments, and the bank account stay open until the last claims are paid or written off. Know every plan's timely filing limit and work the denials.
• Expect records requests and audits after closing. Payers can review paid claims after the fact; the records custodian has to be able to produce charts. A chart audit of the final months tells you what a reviewer would find.
• Medicaid: update or end the enrollment through TMHP, and notify each Medicaid managed care plan. Medicare too, if the program or its clinicians are enrolled.
• NPPES and CAQH: update or deactivate the organization NPI in NPPES when it's no longer used, and remove the location from each clinician's CAQH profile so their own credentialing stays clean.
• Accreditor: tell Joint Commission or CARF; check your accreditation agreement for how to withdraw.
• Listings: FindTreatment.gov, Google Business Profile, directories and LegitScript, updated to say the program is closed and where former clients get records.

The closing checklist

When	What gets done
90 days before	Read every payer contract's notice clause, the lease and the EHR contract. Talk to your attorney and CPA. Decide the last day of services and the records custodian.
60 days before	Written notice to each plan. Stop new admissions to levels that won't finish in time. Line up receiving programs by level of care.
30–45 days before	Tell clients, staff and referral partners. Get Part 2 consents for transfers. Start transfer coordination for each client.
Last two weeks	Discharge plans signed; transfers confirmed; last authorizations closed with each plan's UR contact.
Last day	All clients discharged or transferred. Records secured. Form 3206 to HHSC.
Within 30 days after	Every discharge summary signed by a QCC. TMHP, accreditor, NPPES and listings updated. Charts exported from the EHR.
60–90 days after	Follow-up contacts. Last claims worked. Records custodian in place for the retention period.

Questions

How do I close a chemical dependency treatment facility in Texas?

Discharge or transfer every client appropriately, then file HHSC's closure form (Form 3206). Keep the records for the retention period, notify each payer under its contract, and keep billing open until the last claims are paid.

What happens if we just stop seeing clients?

HHSC retires a site's license automatically once services have stopped for more than 60 days, unless you asked for inactive status. You still owe the license fee for any period in which you provided treatment, and the client and records obligations don't go away.

Can we pause instead of closing?

Yes, briefly. Ask HHSC in writing to put the license on inactive status; it's limited to 60 days. For anything longer, plan a move, a sale or a closure.

How long do we keep client records after closing?

At least six years under 26 TAC 564.508, and for adolescents at least five years after they turn 18. Part 2 records that must be kept are sealed and kept for that period unless the client consents to a transfer.

Not ready to close? A mock survey or chart audit often shows whether the program can be fixed, and our credentialing service can add better-paying plans. If you'd rather start fresh elsewhere, see how to start an IOP or PHP in Texas.

Sources

• 26 TAC 564.406 (inactive status and closure) and 564.408 (fees); Cornell LII, 26 TAC chapter 564 (564.508 records, 564.509 incidents, 564.805 discharge)
• Texas HHSC, Chemical Dependency Treatment Facilities (Form 3206, closure)
• eCFR, 42 CFR Part 2 (2.19, discontinued programs; consent and disclosure notices)
• TMHP; CMS, NPPES