How to start an IOP in California: DHCS certification, fees and steps

Who wrote this, honestly

We're Texas operators: we run a licensed Texas outpatient program, PHP through outpatient, and built our own EHR to run it. When we help an owner open in another state, the first step on that client's roadmap is finding the state's own rule and checking it against the agency's current text. This guide is that check for California, written up. It's the same work our IOP / PHP Program Launch does for a client opening outside Texas. Where we couldn't confirm a detail from DHCS or the code, we left it out or told you who to ask.

Comparing states? Read how to start an IOP or PHP in Texas and the any-state basics in how to start an IOP next to this one, or the guides for Florida, Arizona and Oklahoma.

California at a glance

Question	California's answer
Who regulates SUD programs	The Department of Health Care Services (DHCS), Licensing and Certification Division
What an outpatient program needs	DHCS alcohol and other drug (AOD) program certification. Mandatory since AB 118, under Health and Safety Code chapter 7.1 (from § 11832)
What a residential program needs	A DHCS license (a different process, not covered here)
Standards	DHCS Certification for Alcohol and Other Drug Programs, revised February 2025 (attachment 1 to BHIN 25-003)
Application forms	DHCS 6002 (Initial Treatment Provider Application) and DHCS 6040 (Initial Application for Certification), plus DHCS 5104 fire clearance
Initial fee	$5,824 initial outpatient certification application fee from July 1, 2026 (BHIN 26-004)
Term	Two years. Renew on DHCS 6043 at least 90 days before it expires
Counselors	Registered or certified with a DHCS-recognized certifying organization (Title 9, Division 4, Chapter 8), unless licensed
Medicaid	Medi-Cal. SUD care runs through Drug Medi-Cal: DMC certification from DHCS plus a county contract. 40 counties ran the DMC-ODS model as of January 1, 2025
Patient brokering	Health and Safety Code § 11831.6 (SB 1228, 2018) and § 11831.65 housing and transportation rules (AB 919, 2019)

Licensing vs. certification: the split that confuses everyone

Most states license an outpatient treatment program. California splits it. DHCS licenses residential facilities, the ones where people stay overnight. It certifies outpatient programs: outpatient, intensive outpatient and nonresidential detox. DHCS's own licensing and certification infographic lays the two paths side by side. An IOP is an outpatient program, so the word you're looking for in California is certification.

Certification used to be voluntary for outpatient programs. That changed with AB 118, which added chapter 7.1 to the Health and Safety Code. It requires every outpatient SUD program offering treatment, recovery, detox or medication for addiction treatment to be certified by DHCS. Existing programs had to apply by January 1, 2024 and be certified by January 1, 2025, and a new program must be certified before it provides SUD services (Fresno County's summary of the AB 118 rules).

The penalty is real. DHCS's AB 118 FAQs say a person or entity found operating without certification may be assessed civil penalties of $2,000 per day under § 11832.18. DHCS's FAQ also says an operator caught doing this is barred from applying for initial certification for five years from DHCS's notice. Don't see a single client before the certificate is issued.

Some settings are exempt from mandatory certification but may certify voluntarily, including facilities DHCS already licenses as adult residential programs, DUI programs and narcotic treatment programs. Mental-health-only programs aren't certified by this process; if you'll treat mental illness without a substance use diagnosis, ask DHCS and your attorney which rules apply.

The standards to read

DHCS's current standard is the DHCS Certification for Alcohol and Other Drug Programs, revised February 2025, issued as attachment 1 to Behavioral Health Information Notice 25-003. DHCS says those requirements took effect immediately and replace earlier versions, so don't build your policy manual from a 2020 copy you found online. Start from the DHCS program certification page, which links the current document.

Document	Why it matters
Health and Safety Code ch. 7.1 (from § 11832)	The statute: who must certify, exemptions, penalties
DHCS Certification for AOD Programs (Feb. 2025)	What you're surveyed against: program services, staff, records, client rights. County reviews of the 2025 version highlight new documentation items, such as telehealth progress notes that record where the client was and documented referrals to MAT
BHIN 25-003	DHCS's notice making the 2025 standards mandatory for outpatient programs; county summaries point to its critical-event reporting requirement and penalties
Title 9, Division 4, Chapter 8	Counselor registration and certification rules (next sections)
Health and Safety Code §§ 11831.6, 11831.65, 11831.7	Referral, housing and transportation rules every certified program must follow

Planning a PHP-style day? The certification standard doesn't use payers' "partial hospitalization" label. In ASAM's 4th edition, Level 2.5 is renamed high-intensity outpatient; our guide to IOP vs. PHP vs. outpatient explains the levels. Describe your full schedule to DHCS and confirm your certification covers what you'll provide.

Applying: forms, fire, zoning and fees

• The forms. A new outpatient program files the DHCS 6002 Initial Treatment Provider Application and the DHCS 6040 Initial Application for Certification (new in July 2024). DHCS's instructions are strict: no blank fields (write N/A), single-sided pages, 12-point font, no staples. Get every form fresh from DHCS's applications, forms and fees page.
• Where to send it. DHCS takes initial applications through its online portal or by email to [email protected]; questions go to [email protected].
• Fire clearance. DHCS requires a fire clearance from the local fire authority for the address where you'll provide services. The current form is DHCS 5104 (revised May 2025). This is often the slowest piece, because it depends on your local fire authority's schedule and DHCS doesn't control it. Ask for the inspection the week the build-out is done.
• Zoning. DHCS wants a local use permit, zoning approval, or a letter from the city or county saying zoning approval isn't required (DHCS SUD licensing and certification toolkit). California's "six or fewer is a residential use" rule in § 11834.23 is for small residential facilities, not outpatient clinics, so an IOP goes through ordinary local zoning. Some cities handle outpatient treatment through a conditional or administrative use permit with conditions attached, so ask in writing before you sign the lease.
• Fees. DHCS's fees rise each July under the 2023 budget legislation (SB 104), which directed increases of up to 20% a year through fiscal 2026–27. For fiscal 2024–25, BHIN 24-022 listed a $4,220 initial outpatient certification application fee, a $5,470 initial biennial outpatient certification fee and a $1,241 supplemental application fee per requested change. BHIN 26-004 raised all licensing and certification fees 15% from July 1, 2026, taking the initial outpatient application fee from $5,064 to $5,824. Confirm the biennial fee and every other line in BHIN 26-004's table before you pay.
• Renewal. Certification runs two years. File the renewal (DHCS 6043) with the biennial fee at least 90 days before it expires; DHCS says a late renewal means automatic termination at the end of the two-year period. Put the date on your compliance calendar the day the certificate arrives.
• Changes later. Moving, adding a service or a site, or changing ownership means a supplemental application to DHCS, with its own fee. Ask DHCS how far ahead to file, and don't make the change until it's approved.

Example: the government fees for one new California IOP site

Item	Amount	Source
DHCS initial outpatient certification application fee	$5,824	BHIN 26-004, from July 1, 2026
DHCS biennial certification fee	Check BHIN 26-004	Was $5,470 in fiscal 2024–25 (BHIN 24-022), before two increases
Fire clearance, zoning letter, business license	Set locally	Your city or county and fire authority
Drug Medi-Cal certification, if you'll serve Medi-Cal	Check DHCS	DHCS Provider Enrollment Division

State fees only. For the whole startup budget (rent, build-out, payroll before revenue), see what it costs to start an IOP.

Staffing and counselor rules

California doesn't license addiction counselors through a state board the way Texas licenses LCDCs. Instead, counselors in a DHCS-certified program register and certify with a private certifying organization that DHCS recognizes, under Title 9, Division 4, Chapter 8 of the California Code of Regulations.

• Three recognized organizations. DHCS's counselor certification organizations page lists CAADE (Certified Addiction Treatment Counselor), CADTP (Substance Use Disorder Certified Counselor) and CCAPP (Certified Alcohol Drug Counselor I). All are accredited by the National Commission for Certifying Agencies. Check each hire's status directly with the organization.
• Register before the first session. The old rule let a new hire counsel for up to six months before registering. DHCS's Information Notice 18-035 says Health and Safety Code § 11833 made that grace period inoperative: registration now comes before any counseling.
• Five years to certify. DHCS guidance has long required registered counselors to become certified within five years of first registering. Track each registrant's date in their staff file; confirm the current rule with their certifying organization.
• The 30% rule. Section 13010(a) requires at least 30% of the staff providing counseling in an AOD program to be licensed or certified; the rest must be registered. A program staffed entirely by new registrants fails this rule.
• Licensed clinicians don't need counselor certification. Physicians, psychologists, LCSWs, LMFTs, LPCCs and their registered associates work under their own licenses.
• For Drug Medi-Cal: the LPHA. Medi-Cal SUD services lean on the "licensed practitioner of the healing arts" (LPHA) to diagnose and confirm medical necessity. DHCS's DMC-ODS provider qualifications list physicians, nurse practitioners, physician assistants, registered nurses, registered pharmacists, licensed clinical psychologists, LCSWs, LPCCs, LMFTs and their registered associates, among others. Plan at least one LPHA into the staffing from day one if Medi-Cal is in your payer mix.

Map every position to the rule before you post the job: who must be registered, certified or licensed, who supervises whom, and how you'll keep the 30% ratio as you grow. Our staff credential file checklist covers what goes in each file.

Drug Medi-Cal and the counties

Medi-Cal is California's Medicaid program, and SUD treatment runs through Drug Medi-Cal (DMC). It's a separate track from your AOD certification, and it runs through the counties, which is what makes California different from almost every other state.

1. AOD certification first. DMC builds on your DHCS program certification.
2. Then DMC certification. DHCS's Drug Medi-Cal certification page names the DHCS 6001 as the main application, used for initial certification and for adding sites, relocating, adding services and changes of ownership; DHCS added intensive outpatient to the services the application covers. DHCS now requires DMC applications through PAVE, its online provider enrollment system, and recertification after a relocation, an added service or a change of ownership.
3. Then a contract. A DHCS notice says a prospective DMC provider needs DMC certification and an executed contract with the county (or the state) before it can bill, and that serving DMC clients before approval is at the provider's own risk (DHCS Information Notice 14-003). Even providers paid by a DMC-ODS county must be enrolled as DMC providers and certified by DHCS (BHIN 22-053).

DMC-ODS counties

Under the Drug Medi-Cal Organized Delivery System (DMC-ODS), the county runs the SUD benefit like a managed care plan: it builds a provider network, contracts with providers, authorizes and pays. Counties opt in by submitting an implementation plan approved by DHCS and CMS. DHCS's county plans and contracts page says 40 counties participated as of January 1, 2025, and lists them with their go-live dates. So in most of the state, the county behavioral health department is your Medi-Cal payer. Look up yours before you sign a lease, and ask its SUD office how and when it adds network providers.

In DMC-ODS, intensive outpatient treatment (ASAM Level 2.1) is a covered service: 9 to 19 hours a week for adults and 6 to 19 for adolescents, with more when the medical director or an LPHA documents medical necessity (DHCS DMC-ODS intensive outpatient FAQ). Build your weekly schedule inside that range; our IOP schedule template shows day and evening tracks that fit it.

Our credentialing service handles Medicaid enrollment and facility contracts in any state, and we'll tell you honestly when a county network isn't adding providers.

Commercial plans and Medicare

• Commercial plans. Since SB 855 took effect on January 1, 2021, Health and Safety Code § 1374.721 requires plans doing utilization review to use the most recent criteria from the relevant nonprofit professional association, which for SUD care means The ASAM Criteria (Manatt summary of the DMHC all plan letter). Write your admission, continued-stay and discharge criteria in ASAM's language and your authorizations will be argued on the plan's own terms; see ASAM continued-stay documentation.
• Contracts. Facility contracts with commercial plans follow the same pattern as in Texas: the certificate, liability insurance, often accreditation, a facility application and a site visit. Our guide to insurance contracts for treatment centers covers the packet. Verify benefits before every admission with the VOB checklist.
• Medicare pays for IOP and PHP only through hospitals, community mental health centers and a few other provider types, so most freestanding programs plan their payer mix without it (CMS 2024 outpatient rule).
• Accreditation is a payer matter: TRICARE requires IOP and PHP programs to be accredited, and many commercial plans contract only with accredited programs. Most new programs certify, open, build charts, then pursue Joint Commission or CARF; Program Launch + Accreditation carries the launch through the survey.

Patient brokering: SB 1228 and AB 919

California has its own patient brokering law on top of federal EKRA and the Anti-Kickback Statute, and it applies directly to DHCS-certified outpatient programs.

• SB 1228 (2018). It added Health and Safety Code §§ 11831.6 and 11831.7, in effect since January 1, 2019. Licensed or certified programs, and their owners, partners, directors, employees and shareholders, may not give or receive anything of value for the referral of a person to SUD treatment (DHCS Information Notice 19-002). DHCS's SB 1228 FAQ names kickbacks, commissions or bonuses tied to referrals, paying clients for referrals and recruiting clients at recovery meetings as examples. The sanctions it lists include revoking the program's certification, denying new applications for five years, and suspending or revoking a counselor's registration.
• AB 919 (2019). In effect since January 1, 2020, it added § 11831.65, which governs housing and transportation for outpatient clients. A program that leases, manages or owns housing offered to its outpatient clients needs a separate lease with the client that makes the client responsible for rent regardless of insurance, and must keep records proving it follows the housing and transportation rules (DHCS BHIN 20-001, AB 919 FAQ). This is the law aimed at the "free rent if you attend our IOP" model.

If you're planning any housing, transport, marketing vendor or referral relationship, read our patient brokering laws guide and run the deal past a California health-care attorney before you sign. For marketing that stays legal, see how to market a treatment center.

The steps, in order

1. Define the program: outpatient, intensive outpatient, a full-day schedule, adults or adolescents, in person or telehealth, MAT or not. Confirm with DHCS that AOD certification covers it.
2. Pick your payers before your county. If Medi-Cal matters, find out whether your county is DMC-ODS and whether its network is adding providers.
3. Form the business with the California Secretary of State, get the EIN and the organization NPI, and line up a California health-care attorney (ask about corporate practice rules before you hire a medical director) and a CPA.
4. Find a site the city or county will approve for outpatient treatment, get the zoning letter or use permit, and lease it with a way out.
5. Write the policy manual by matching every requirement in the February 2025 DHCS standards to a policy, form or record, and add 42 CFR Part 2, HIPAA, critical-event reporting and the SB 1228 and AB 919 rules. A state-rule crosswalk like this is part of the policy manual in our program launch package (or $4,500 for the manual on its own).
6. Hire the program director, at least one LPHA if you'll serve Medi-Cal, and counselors who are registered before their first session, keeping 30% licensed or certified.
7. Finish the build-out and get the fire clearance on DHCS 5104.
8. Apply to DHCS on forms 6002 and 6040 with the fee, the fire clearance and the zoning approval. Don't admit anyone until the certificate is issued.
9. Set up the EHR before your first client: Cima's IOP and PHP plan keeps levels of care, group notes, attendance and authorizations in one place.
10. Once certified, enroll and contract: DMC certification through PAVE and the county contract, commercial plans, and TRICARE if you're accredited.
11. Open, then accredit, and keep the renewal 90 days ahead of expiry.

Questions

Do you need a license to open an IOP in California?

Not a license: a certification. DHCS licenses residential facilities and certifies outpatient programs, including intensive outpatient. Since AB 118, certification is mandatory for outpatient programs offering treatment, recovery, detox or MAT, and operating without it can bring civil penalties of $2,000 per day under Health and Safety Code § 11832.18.

How much does DHCS outpatient certification cost?

From July 1, 2026, BHIN 26-004 lists $5,824 for the initial outpatient certification application fee, after a 15% increase. A biennial certification fee also applies; it was $5,470 in fiscal 2024–25 before two increases, so check the current table in BHIN 26-004.

What forms do I file for California AOD certification?

DHCS 6002 (Initial Treatment Provider Application) and DHCS 6040 (Initial Application for Certification), with a fire clearance on DHCS 5104 and local zoning approval or a letter saying none is needed. Send them through DHCS's portal or to [email protected].

Do counselors in a California IOP need to be certified?

They need to be registered with CAADE, CADTP or CCAPP before they provide any counseling, and to become certified within the time the rules allow, unless they're licensed clinicians. At least 30% of counseling staff must be licensed or certified (Title 9, § 13010).

How do I get a Medi-Cal contract for an IOP?

Get DHCS AOD certification, then Drug Medi-Cal certification (DHCS 6001, filed through PAVE), then a contract with your county. In the 40 DMC-ODS counties, the county behavioral health department builds the network and pays, so ask its SUD office how it adds providers.

Can a Texas company help with a California program?

Yes, if it's honest about how. We run a Texas program, so in California we work from DHCS's standards and the Health and Safety Code, check each against the current text, and tell you where DHCS, your county or your attorney has the final word. We don't guarantee a certificate, contract or date.

Just need the certification application? The state facility application is $4,500 on its own. Or book a free 30-minute call and we'll walk through what DHCS and your county will ask of you.

Cima Consulting isn't a law firm or an accounting firm. California agencies and counties make their own decisions; we don't guarantee approvals, rates or dates. We never refer patients or pay for referrals.

Sources

• DHCS, AB 118 requirements for certification of AOD programs: dhcs.ca.gov; AB 118 FAQs (penalties, § 11832.18): dhcs.ca.gov; Fresno County bulletin on AB 118 deadlines: fresnocountyca.gov
• DHCS program certification page and February 2025 standards: dhcs.ca.gov; BHIN 25-003: dhcs.ca.gov; licensing and certification infographic: dhcs.ca.gov
• DHCS forms: applications, forms and fees, DHCS 6002, DHCS 6040, DHCS 5104 fire clearance; SUD licensing and certification toolkit: dhcs.ca.gov
• DHCS fee notices: BHIN 24-022 (FY 2024–25), BHIN 26-004 (15% increase from July 1, 2026)
• Health and Safety Code § 11834.23: california.public.law
• Counselor rules: DHCS counselor certification organizations: dhcs.ca.gov; MHSUDS Information Notice 18-035: dhcs.ca.gov; 9 CCR § 13010: Justia; BHIN 24-001 enclosure 5, DMC-ODS provider qualifications: dhcs.ca.gov
• Drug Medi-Cal: DMC certification, DMC application information (PAVE), Information Notice 14-003, BHIN 22-053, county plans and contracts (DMC-ODS counties), DMC-ODS intensive outpatient FAQ
• Orange County Health Care Agency newsletter on the 2025 AOD standards: ochealthinfo.com
• SB 855 and § 1374.721: Manatt Health
• Patient brokering: DHCS Information Notice 19-002 (SB 1228), SB 1228 FAQ, BHIN 20-001 (AB 919), AB 919 FAQ
• CMS, CY 2024 outpatient rule (IOP and PHP in Medicare): cms.gov

Comparing states? See Texas and our guides for Florida, Arizona, Louisiana, Nevada, Oklahoma and Utah, or how to start an IOP for what every state has in common.