CMS Pub. 100-08, ch. 10, § 10.2.1.1

A. General Background Information

A CMHC is a facility that provides mental health services. A CMHC must perform certain “core

services.” These are:

1. Outpatient services (This includes services for (a) children, (b) the elderly, (c) persons who

are chronically mentally ill, and (d) certain persons who have been discharged from a mental

health facility for inpatient treatment.)

2. 24-hour-a-day emergency psychiatric services;

3. Day treatment or other partial hospitalization (PH) services, or psychosocial rehabilitation

services; and

4. Screening for patients being considered for admission to state mental health facilities.

NOTE: Partial hospitalization is the only core service for which a CMHC can bill Medicare as a

CMHC. Thus, while a facility must furnish certain “core” services in order to qualify as a

CMHC, it can only get reimbursed for one of them – partial hospitalization. However, the

facility may still be able to enroll in Medicare as a Part B clinic if it does not perform partial

hospitalization services.

In some instances, these core services can be furnished under arrangement. This generally

means that the facility can arrange for another facility to perform the service if, among other

things, CMS determines that the following conditions are met:

• The CMHC arranging for the particular service is authorized by State law to perform the

service itself;

• The arranging CMHC accepts full legal responsibility for the service; and

• There is a written agreement between the two entities

While the CMHC generally has the option to furnish services under arrangement, there is

actually an instance where the facility must do so. If the CMHC is located in a state that

prohibits CMHCs from furnishing screening services (service (4) above), it must contract with

another entity to have the latter perform the services. Any such arrangement must be approved

by the SOG Location. (See CMS Pub. 100-07, State Operations Manual, chapter 2, section 2250

for additional information on core services and arrangements.)

A CMHC must provide mental health services principally to individuals who reside in a defined

geographic area (service area); that is, it must service a distinct and definable community.

B. Initial Enrollment and Certification

1. Introduction

As of October 29, 2014, CMHCs are required to meet the conditions of participation outlined in

42 CFR Part 485, subpart J. CMHCs, like many other types of certified providers and certified

suppliers, are therefore required to undergo a state survey as part of the certification and

enrollment process. The SOG Location no longer performs the site visit nor does the CMHC

need to submit the previously-required attestation statement. Except as otherwise noted in this

chapter 10 or in another CMS directive, CMHC initial applications shall – on and after October

29, 2014 - be processed in the same manner as those for all other certified providers.

2. Processing Instructions for CMHC Initial Form CMS-855A Applications

In the past, the SOG Location had vital functions in reviewing CMHC requests for Medicare

participation and finalizing CMS’ decision. With the transition of certain SOG activities to the

state agencies, the contractors, and CMS PEOG, however, the operational process of reviewing

CMHC requests for participation and enrollment now generally involves (and with exceptions)

the following:

• The contractor sends the enrollment application (and all supporting documentation) and its

recommendation for approval to the state for review

• The state notifies the contractor of its recommendation

• A site visit is performed

• The contractor notifies PEOG of the recommendation. PEOG signs the provider agreement

and performs other administrative functions pertaining to the enrollment

• Once PEOG completes the required administrative actions, PEOG will notify the contractor

thereof

• The contractor completes processing and notifies the provider of the approval of the

transaction using the appropriate model letter (sending a copy thereof to the state).

(Thus, and except as otherwise stated, SOG Locations are no longer involved in the CMHC

initial application process for Form CMS-855As.)

Specific details on these steps are outlined in this section 10.2.1.1(B)(2). Said instructions take

precedence over any conflicting processing directives in this chapter.

i. Receipt of Application

Upon receipt of a CMHC initial Form CMS-855A application, the contractor shall undertake the

following (in whichever order the contractor prefers unless directed otherwise in this chapter):

(A) Perform all data validations otherwise required per this chapter.

(B) Ensure that the application(s) is complete consistent with the instructions in this chapter.

(C) Ensure that the CMHC has submitted all documentation otherwise required per this chapter.

For CMHC initial enrollment, this also includes the following:

• Form CMS-1561 (Health Insurance Benefit Agreement, also known as a “provider

agreement”)

• Evidence of successful electronic submission of the Form HHS-690 through the Office of

Civil Rights (OCR) portal, as applicable. (Evidence should be either written or electronic

documentation.) (See https://www.hhs.gov/sites/default/files/forms/hhs-690.pdf for more

information.)

(The CMHC must complete, sign, date, and include the Form CMS-1561, though the CMHC

need not complete those sections of the form reserved for CMS. For organizational CMHCs, an

authorized official (as defined in § 424.502) must sign the form; for sole proprietorships, the sole

proprietor must sign.)

Notwithstanding the foregoing, if the Form CMS-1561 or the Form HHS-690 evidence is

missing, unsigned, undated, or otherwise incomplete, the contractor need not develop for the

form(s) or the information thereon; the contractor shall instead notify the state in its

recommendation letter which document(s) was/were missing or otherwise incomplete. For all

other missing or incomplete required documentation, the contractor shall follow the normal

development instructions in this chapter.

ii. Conclusion of Initial Contractor Review

(Nothing in this section 10.2.1.1(B)(2) prohibits the contractor from returning or rejecting the

CMHC application if otherwise permitted to do so per this chapter. When returning or rejecting

the application, the contractor shall follow this chapter’s procedures for doing so.)

(A) Approval Recommendation

If, consistent with the instructions in section 10.2.1.1(B)(2) and this chapter, the contractor

believes an approval recommendation is warranted, the contractor shall send the

recommendation to the state pursuant to existing practice and this chapter’s instructions. The

contractor need not copy the SOG Location or PEOG on the recommendation. Unless CMS

directs otherwise, the contractor shall also send to the provider the notification letter in section

10.7.5.1(E) of this chapter.

The state will: (1) review the recommendation package for completeness; (2) review the

contractor’s recommendation for approval; (3) perform any state-specific functions; and (4)

contact the contractor with any questions. The contractor shall respond to any state inquiry in

Item (4) within 5 business days. If the inquiry involves the need for the contractor to obtain

additional data, documentation, or clarification from the CMHC, however, the timeframe is 15

business days; if the provider fails to respond to the contractor within this timeframe, it shall

notify the state thereof. The contractor may always contact its PEOG BFL should it need the

latter’s assistance with a particular state inquiry.

(B) Denial

If the contractor determines that a denial is warranted, it shall follow the denial procedures

outlined in this chapter. This includes: (1) using the appropriate denial letter format in section

10.7.8 of this chapter; and (2) if required under section 10.6.6 (or another CMS directive) of this

chapter, referring the matter to PEOG for review prior to denying the application.

iii. Completion of State Review

The state will notify the contractor once it has completed its review. There are two potential

outcomes:

(A) Approval Not Recommended

If the state does not recommend approval, it will notify the contractor thereof. (The contractor

may accept any notification that is in writing (e-mail is fine).) The site visit described in

subsection (B)(3)(a) below need not be performed. No later than 5 business days after receiving

this notification, therefore, the contractor shall commence the actions described in section

10.2.1.1(B)(2)(ii)(B) above.

(B) Approval Recommended

If the state recommends approval, it will typically (though not always) do so via a Form CMS-

1539; the contractor may accept any documentation from the state signifying that the latter

recommends approval. (Note that the contractor will not receive a formal tie-in notice.)

No later than 5 business days after receipt of the recommendation from the state, the contractor

shall order the site visit described in subsection (B)(3)(a) below.

If the CMHC fails the site visit, the contractor shall follow the denial procedures addressed in

subsection (B)(2)(ii)(B) above. If the CMHC passes the site visit, the contractor shall (within 3

business days of completing its review of the results) send an e-mail to

MedicareProviderEnrollment@cms.hhs.gov with the following information and documents:

• The Form CMS-855 application or PECOS Application Data Report and all application

attachments

• A copy of the Form CMS-1539 or similar documentation received from the state

• A copy of the provider-signed Form CMS-1561

• A copy of the draft approval letter, with the effective date shown on the Form CMS-1539 (or

similar documentation) included in the draft letter. (See section 10.7.5.1 for the model

approval letter.)

PEOG will countersign the provider agreement. Based on the information received from the

contractor, PEOG will also (1) assign an effective date, (2) assign a CCN, and (3) enter the

applicable data into ASPEN, and (4) approve (with possible edits) the approval letter.

Within 5 business days of receiving from PEOG the signed provider agreement, effective date,

and CCN, the contractor shall: (1) send the approval letter and a copy of the CMS-countersigned

provider agreement to the CMHC; (2) send a copy of both the approval letter and the provider

agreement to the state and/or AO (as applicable)); and (3) switch the PECOS record from

“approval recommended” to “approved” consistent with existing instructions.

3. Site Visits

a. Initial Enrollment

The scope of the site visit will be consistent with sections 10.6.20(A) and 10.6.20(B) of this

chapter; the National Site Visit Contractor (NSVC) will perform the site visit. The contractor

shall not convey Medicare billing privileges to the provider prior to the completion of the

NSVC’s site visit and the contractor’s review of the results.

b. Practice Locations

Each CMHC location must separately and independently meet the CMHC conditions of

participation in 42 CFR Part 485, subpart J. Accordingly, a CMHC must separately enroll each

of its practice locations. It cannot have multiple locations on a single application.

If a CMHC is changing its physical location, the contractor shall order a site visit of the

new/changed location through PECOS no later than 5 business days after the contractor receives

the approval recommendation from the state but before the contractor sends to PEOG the

applicable e-mail described in section 10.6.1.2(A)(3) of this chapter. (See the latter section for

more information.) This is to ensure that the new/changed location is in compliance with CMS’s

enrollment requirements. The scope of the site visit will be consistent with sections 10.6.20(A)

and 10.6.20(B) of this chapter. The NSVC will perform the site visit. The contractor shall not

switch the provider’s enrollment record to “Approved” prior to the completion of the NSVC’s

site visit and the contractor’s review of the results.

c. Revalidation Site Visits

If the CMHC submits a Form CMS-855A revalidation application, the contractor shall order a

site visit through PECOS. This is to ensure that the provider is still in compliance with CMS’s

enrollment requirements. The scope of the site visit will be consistent with section 10.6.20 of

this chapter. The NSVC will perform the site visit. The contractor shall not make a final

decision regarding the revalidation application prior to the completion of the NSVC’s site visit

and the contractor’s review of the results.

C. CMHC 40 Percent Rule

Effective October 29, 2014, under § 485.918(b)(1) a CMHC must provide at least 40 percent of

its items and services to individuals who are not eligible for benefits under title XVIII of the

Social Security Act; this is measured by the total number of CMHC clients treated by the CMHC

for whom services are not paid for by Medicare, divided by the total number of clients treated by

the CMHC in the applicable timeframe.

Pursuant to this requirement, a CMHC is required to submit to CMS a certification statement

provided by an independent entity (such as an accounting technician). The document must

certify that the entity has reviewed the CMHC’s client care data for:

• Initial enrollments: The CMHC meets the 40 percent requirement for the prior 3 months.

• Revalidations: The CMHC meets the 40 percent requirement for each of the intervening 12-month periods between initial enrollment and revalidation.

The statement must be submitted as part of any initial enrollment or revalidation (including off-cycle revalidations).

When processing the application, the contractor shall abide by the following:

1. Contractor Does Not Receive the Certification

If the contractor does not receive the certification with the Form CMS-855, the contractor shall

develop for the certification as it would with any other form of required supporting

documentation. If the CMHC fails to submit the certification within the applicable time period,

the contractor shall follow the instructions in section 10.4.1.4.3 of this chapter.

2. Contractor Receives the Certification

If the contractor receives the certification with the Form CMS-855 or timely receives the

certification as part of a development request, the contractor shall review the certification to

ensure that it complies with § 485.918(b)(1) and the provisions of this section 10.2.1.1(C). If the

certification is compliant, the contractor shall continue processing the application; if the

certification is not compliant, the contractor shall deny the application or, if it chooses, develop

for a revised certification.

Section 10.2.1.1(C) does not apply if the contractor determines that the Form CMS-855 can be

returned under section 10.4.1.4.2 of this chapter.

If the contractor exceeds applicable timeliness standards due to the instructions in this section

10.2.1.1(C), the contractor shall accordingly document the provider file consistent with section

10.6.19(H) of this chapter.

3. Special Guidelines

The following additional guidelines concerning certification apply:

(i) As previously indicated, an appropriate official of the certifying entity must sign the

document. (Notarization is not required unless CMS requests it.) Such persons may include

accounting technicians, CEOs, officers, directors, etc.

(ii) The certification should be on the certifying entity’s letterhead or should otherwise indicate

that the document is clearly from the entity.

(iii) The contractor shall include the certification in the recommendation package it sends to the

state agency.

Unless CMS instructs the contractor otherwise, the appropriate denial bases for failing to comply

with § 485.918(b)(1) are §§ 424.530(a)(1) and 485.918(b)(1). The appropriate revocation bases

are §§ 424.535(a)(1) and 485.918(b)(1). In cases involving the latter, CMS will determine the

appropriate re-enrollment bar length under § 424.535(c) and will notify the contractor thereof.

D. CHOWs and Changes of Information

For CMHC CHOWs, the contractor shall follow the instructions in section 10.6.1.1 of this

chapter. For CMHC changes of information, the contractor shall follow the instructions in

section 10.6.1.2 of this chapter.

E. Additional Information

For more information on CMHCs, refer to:

• Section 1861(ff) of the Social Security Act

• 42 CFR §§ 410.2, 410.43, and 410.110

• Pub. 100-07, chapter 2, sections 2250 - 2251F

• 42 CFR § 489.18(b)(1)