How to run a dual diagnosis program in Texas: licenses, staff, treatment plans and billing

The short answer: a Texas chemical dependency treatment facility (CDTF) can treat a client's co-occurring mental health condition as part of their substance use treatment. Texas calls these clients COPSD (co-occurring psychiatric and substance use disorders), and 26 TAC 564 requires that services address both disorders (564.907), that the treatment plan carry measurable outcomes for both (564.909), and that staff have specific competencies (564.908). Two limits matter. Every CDTF client must have a substance use disorder (564.801(a)), so mental-health-only clients need a different program. And the mental health treatment must come from clinicians whose license covers it: LPCs, LCSWs, LMFTs, psychologists, psychiatric NPs and physicians. Texas's LCDC rules say LCDCs aren't qualified to treat mental health disorders (26 TAC 562.3).

1. Which clients a CDTF can serve

The CDTF license under Health and Safety Code chapter 464 is a substance use license. To be eligible for a licensed program's services, a client must meet current DSM criteria for a substance use disorder (26 TAC 564.801(a)). Inside that, the program can't turn people away for their mental health:

Client	Can a CDTF serve them?	What applies
SUD with depression, anxiety or PTSD, stable enough for outpatient care	Yes	Treat both (564.907); plan goals for both (564.909)
SUD with a serious mental illness (bipolar disorder, a psychotic disorder)	Yes, if the program can treat them safely at this level	Can't be excluded because of mental illness, medications, a presumed inability to benefit or past treatment outcomes (564.906). Admission still turns on safety and level of care
Possible mental health problem found at assessment	Yes	Obtain a mental health assessment and seek mental health services, in-house or by referral (564.803(e))
Mental health only, no SUD	Not under the CDTF license	A mental health program; see licensing a mental health IOP or PHP in Texas
Imminent risk to self or others, or needs inpatient care	Not at outpatient level	Refer to the right level and document the referral (564.802(f))

2. What 26 TAC 564 requires for co-occurring care

We audit charts against these sections, with the evidence a surveyor looks for. HHSC moved the chapter from 25 TAC 448 in 2024, which is why the text of 564.907 still cross-references "§148.908".

Requirement	Rule	Proof in the chart
Assessment covers mental and emotional functioning among its 11 areas, with a DSM diagnostic impression within the assessor's scope	564.803(a), (d)	QCC-signed assessment within 3 individual service days
A possible mental health problem leads to a mental health assessment and mental health services, in-house or by referral	564.803(e)	A positive screen followed by an assessment or referral note. A positive screen with no follow-up is a finding
No exclusion for mental illness, prescribed medications, a presumed inability to benefit or prior outcomes; no discharge for taking prescribed medication	564.906; 564.901(h)	Admission and discharge reasons that never cite psychiatric history or medication
Services address both the psychiatric and substance use disorders, follow practice guidelines for the population, and help clients reach the services they need, including self-help	564.907(a)	Notes that work on both; linkage to psychiatric care
Staff competencies, including the higher risk of self-harm, suicide and violence and age-appropriate assessment	564.907(b); 564.908	Training records and job descriptions for COPSD staff
Measurable outcomes for both disorders in the treatment plan; family education and support needs identified; a copy to the client, and to family if requested	564.909	Plan goals for each disorder; family education noted

Chapter 564 doesn't name a suicide-screening instrument; risk falls under the mental and emotional functioning area and the referral duty. Use a validated tool anyway. Our plain-English map of 26 TAC 564 has the rest of the chapter.

3. Three program models

The ASAM Criteria describe programs as co-occurring capable (they routinely screen and treat stable co-occurring conditions) or co-occurring enhanced (they're staffed to treat less stable psychiatric conditions in an integrated way). SAMHSA's TIP 42 (updated 2020) is the standard practice guide for both. In Texas they map to three models:

Model	License	Mental health staffing	Fits
1. SUD program, co-occurring capable	CDTF	At least one licensed mental health clinician, a prescriber by contract or referral, and referral paths for complex cases	Most new IOPs
2. Integrated co-occurring program	CDTF	Primary counselors who hold an MH license (LPC, LCSW, LMFT), many also LCDCs; a psychiatric NP or psychiatrist on site; weekly integrated case review	PHP, and IOPs that market co-occurring care
3. Two tracks under one roof	CDTF for the SUD track; the mental health track has its own licensing question	An MH-only track for clients without SUD, staffed by MH licensees	Programs that want to serve mental-health-only clients too

Model 2 is what payers and referral sources usually mean by a dual diagnosis program. Model 3 brings separate admission criteria, codes (S9480 for mental health IOP) and payer contracts, and the licensing answer for the mental health track belongs in writing from HHSC before you build it.

4. Who may treat the mental health side

Credential	Substance use counseling	Mental health treatment
LCDC (HHSC)	Yes; a QCC by license	No. The scope rule says LCDCs aren't qualified to treat mental health disorders and that their services address substance use and its impact (26 TAC 562.3)
LPC, LCSW, LMFT (BHEC)	Yes within their license; a QCC with 1,000 hours of documented SUD treatment experience	Yes, within their license
LPC Associate, LMSW	Under supervision. In a CDTF, counseling is by a QCC, a graduate or a counselor intern (564.901(p)), so confirm how your associates fit before scheduling them	Under their board's supervision rules; an LMSW's clinical work is supervised toward the LCSW
Psychologist	Yes; a QCC with 1,000 hours of SUD experience	Yes, including psychological testing
Psychiatric NP (Board of Nursing)	A QCC with 1,000 hours (psychiatric APRN)	Evaluation and medication management under a prescriptive authority agreement (Occupations Code ch. 157)
Psychiatrist or other physician	A QCC with 1,000 hours	Full scope

The QCC definition and its 1,000-hour rule are in 26 TAC 564.1. Dual-licensed clinicians (an LPC or LCSW who is also an LCDC) are the easiest way to staff model 2, because the same counselor can carry both halves of the plan. More on roles and supervision: IOP staffing requirements in Texas and supervising associates and interns.

5. Integrated assessment

• Screen everyone at intake with standard measures you repeat over time: the PHQ-9 and GAD-7 in most programs, plus a suicide-risk screen. In Cima EHR for IOP and PHP, clients complete the PHQ-9 and GAD-7 on their phone, and any answer above "Not at all" on the PHQ-9 self-harm question puts a red safety card on the clinician's screen.
• Assess both in the psychosocial assessment's 11 areas, and give a DSM diagnostic impression for each disorder within the assessor's license. An LCDC can diagnose substance use disorders; a mental health diagnosis needs a clinician licensed to make it.
• Separate substance-induced symptoms from an independent disorder over time. Early sobriety often changes the picture; reassess at plan reviews rather than locking a diagnosis on day 1.
• Refer when indicated, with a timeframe in policy, to the prescriber for evaluation. Psychiatric services in an IOP has sample referral triggers and a prescriber-time worksheet.

6. One treatment plan for both disorders

564.909 asks for measurable outcomes that address the co-occurring disorders, and every note should name the plan goal it worked on. Write one plan with goals for each disorder, not two plans in two places. An example in the format our program kit uses:

Problem	Goal	Measurable objective	Interventions
Drinks to cope with stress after work	Get through stressful days without drinking	Name 3 high-risk situations and a coping step for each; use one at least 4 times a week, tracked on a log, by the plan review	Relapse prevention group 3 times a week; weekly individual CBT for cravings (primary counselor)
Depressed mood and poor sleep (PHQ-9 of 16 at intake)	Lift mood enough to work and sleep	PHQ-9 below 10 within 6 weeks; sleep 6+ hours on 5 nights a week, by sleep log	Behavioral activation in individual sessions (LPC); psychiatric evaluation within the policy timeframe; medication management if prescribed
Family doesn't understand the depression or the drinking	Family can support recovery	Partner attends 2 family sessions by week 4	Family education on both disorders (564.909(b)), with the client's consent

An illustration, not a real client. Our sister site's SUD treatment plan guide covers the rest of the plan.

Review progress on both at every plan review and continued-stay review. Payers' reviewers for a dual diagnosis client want to see both: the ASAM dimension 3 (emotional, behavioral or cognitive conditions) picture and the substance use picture. See ASAM continued-stay documentation.

7. Prescribers and medications

• A psychiatric NP working with a physician medical director is a common outpatient setup; a psychiatrist on staff fits PHP and complex caseloads. Texas APRNs prescribe under a prescriptive authority agreement, and Schedule II delegation is limited outside hospital settings, which matters for ADHD stimulants.
• Medications for opioid and alcohol use disorders sit beside psychiatric medications in the same plan. A client can't be refused admission or discharged for taking a prescribed medication (564.901(h)). See adding MAT to an IOP.
• Reconcile medications at admission, at each level change and at discharge, and check the Texas prescription monitoring program before prescribing benzodiazepines or opioids.
• The physician's oversight role, policy sign-off and fair-market-value pay are covered in the medical director for an IOP or PHP.

8. Billing both sides

"Billing both sides" doesn't mean two program days. It means coding the program day right and billing the separately payable professional services the contract allows:

Service	Common billing	Check
SUD IOP day	H0015, or revenue code 0906 on a UB-04, with the SUD diagnosis first and the mental health diagnosis as secondary	The plan's IOP code and claim form
Mental health IOP day (a separate MH track, model 3)	S9480, or revenue code 0905, with the mental health diagnosis first	A separate contract or program line with the plan
PHP day	S0201 or H0035, or revenue codes 0912 and 0913	Which code the plan accepts
Psychiatric evaluation and medication visits	The prescriber's evaluation or E/M codes under the prescriber's NPI	Whether the contract pays them separately or includes them in the per diem
Individual therapy on a program day	Usually part of the per diem	Contracts differ, so ask. Never bill the same time twice

• One day, one program per diem. A client in your SUD IOP isn't also in your MH IOP the same day. If the primary problem changes, change the level or the track and get a new authorization.
• Credential every clinician who bills. LPCs, LCSWs, LMFTs, psychologists and NPs each need their own credentialing with every plan whose clients they'll bill for, linked to the program. Our credentialing service files and follows up each one.
• Behavioral health companies often manage both the mental health and substance use benefits for a plan; see behavioral health carve-outs.
• Medicare doesn't pay a freestanding program for an IOP or PHP day at all; see Medicare coverage of IOP and PHP. Codes and units are in IOP and PHP billing codes.

9. Part 2 when two programs share a building

• The SUD program's records are Part 2 records, including the mental health notes written in them, when the program is federally assisted (42 CFR Part 2). Chapter 564 makes Part 2 a licensing requirement (564.508(f)).
• Within the program, staff who need the information to provide care can share it. Sharing with a separate mental health program, an outside psychiatrist or a primary care doctor is a disclosure that needs a valid consent unless an exception applies. The 2024 rule allows a single consent for treatment, payment and health care operations; our sister site's Part 2 guide explains it.
• Model 3 programs should decide, with their attorney, whether the two tracks keep separate records and how a client moving from one to the other consents to the transfer.

10. Marketing "dual diagnosis" honestly

Say "dual diagnosis" or "co-occurring" only if you meet 564.907 to 564.909 and have licensed mental health clinicians and a prescriber path in place. Advertising addiction treatment on search and social ads generally needs LegitScript certification, and the Texas Patient Solicitation Act and EKRA bar paying for referrals for any payer. How to market a treatment center legally covers the rest.

Or book a free 30-minute call.

11. The dual diagnosis program checklist

• Program description naming the model (capable, integrated or two tracks) and the co-occurring conditions you treat and refer.
• Admission criteria requiring a substance use disorder for the CDTF track; no exclusion for mental illness or medications (564.906).
• At least one licensed mental health clinician; ideally dual-licensed primary counselors.
• Prescriber by staff, contract or coordinated referral, with written referral triggers and timeframes.
• Intake screens (PHQ-9, GAD-7, suicide risk) and a rule that every positive screen leads to an assessment or referral (564.803(e)).
• Treatment plan template with goals for both disorders and family education (564.909).
• COPSD competency training for staff (564.908), with dated records.
• Billing guide per plan: program codes, which professional services pay separately, diagnosis order.
• Part 2 consents for every outside prescriber, primary care doctor and separate program.
• Marketing that matches what you actually provide.

Serving teens with co-occurring disorders too? See adolescent IOPs in Texas. Running part of the program by video? See how to run a virtual IOP.

Questions

What is a dual diagnosis program?

A treatment program for people who have both a substance use disorder and a mental health disorder, treating both together with one assessment, one treatment plan and one team. Texas rules call these clients COPSD (co-occurring psychiatric and substance use disorders) and require services and plan outcomes that address both.

Can a Texas substance use facility treat mental health conditions?

Yes, for clients who also have a substance use disorder. 26 TAC 564.907 requires a licensed facility's services for co-occurring clients to address both disorders. A client with only a mental health condition isn't eligible for a CDTF's services, so a mental-health-only track raises a separate licensing question.

Can an LCDC treat mental health disorders?

No. Texas's LCDC scope rule, 26 TAC 562.3, says LCDCs aren't qualified to treat mental health disorders; their services address substance use and its impact. The mental health treatment in a co-occurring program comes from LPCs, LCSWs, LMFTs, psychologists, psychiatric NPs or physicians.

Do you need a separate license for a dual diagnosis program in Texas?

Not for a CDTF treating co-occurring conditions in clients who have a substance use disorder; the CDTF license and chapter 564's COPSD rules cover it. Serving clients with only mental health conditions is different, so get HHSC's answer in writing for that track.

How do you bill for dual diagnosis treatment?

Bill the program day once, with the code that matches the program (H0015 for SUD IOP) and both diagnoses on the claim, the SUD first. Prescriber visits are usually billed separately under the prescriber's NPI if the contract allows it. Individual therapy on a program day is usually part of the per diem.

Can a mental health IOP treat substance use?

Treating substance use disorders as a program points to the Texas CDTF license, and then the CDTF rules apply. A mental health program that screens for substance use and refers out when it's the main problem is different from one that treats it. Write down which one you are.

Sources

• 26 TAC 564.801, 564.906, 564.907 and chapter 564; 26 TAC 562.3, LCDC scope of practice (Cornell LII)
• Texas Health and Safety Code ch. 464; Occupations Code ch. 157; Occupations Code ch. 102
• SAMHSA, TIP 42: Substance Use Disorder Treatment for People With Co-Occurring Disorders (2020)
• eCFR, 42 CFR Part 2; Texas Behavioral Health Executive Council; Texas Board of Nursing

Cima Consulting isn't a law firm and doesn't give legal advice. This page paraphrases the rules; the official text controls.