Most clinicians who open an IOP or PHP center in California assume the hardest part is getting licensed. It's not. The hardest part is getting paid. California's Medicaid system — Medi-Cal — is one of the most complex payer environments in the country, and if you don't set up your billing infrastructure correctly from day one, you'll spend months chasing reimbursements you should have collected automatically.
This guide breaks down how Medi-Cal billing for addiction treatment actually works, step by step, with the specific codes, timelines, and operational traps you need to know before you ever submit a claim.
Step 1: Understand How Medi-Cal Covers Addiction Treatment
Medi-Cal covers substance use disorder (SUD) treatment through the Drug Medi-Cal program and, in many counties, the Drug Medi-Cal Organized Delivery System (DMC-ODS), which is a county-organized Section 1115 demonstration waiver that expands and coordinates SUD services at the local level (DHCS). As the single state agency, the Department of Health Care Services (DHCS) oversees both the clinical and fiscal aspects of Drug Medi-Cal SUD treatment services statewide (DHCS).
Not all counties have DMC-ODS. California counties can elect to participate in DMC-ODS to offer an ASAM-based continuum of care beyond the standard Medi-Cal State Plan benefits, and participation, covered services, and reimbursement structures vary by county (DHCS; BHIN 23-001 PDF). In DMC-ODS counties, the county behavioral health plan (or its contracted plan) is the payer rather than the state fee-for-service system (Sacramento County DMC-ODS Overview PDF).
For IOP and PHP specifically, Medi-Cal reimburses for SUD services that fit within the covered continuum, which typically includes:
Intensive Outpatient Treatment (IOP), generally at least 3 hours per day on multiple days per week, consistent with ASAM Level 2.1 programming (CHCF – Medi-Cal Moves Addiction Treatment into the Mainstream PDF).
Partial Hospitalization-like services when authorized under the county’s DMC-ODS plan or associated managed care benefit, usually providing 20 or more hours per week of structured care, aligning with higher ASAM levels of care (BHIN 23-001 PDF).
Medication-Assisted Treatment (MAT) components, including medications and associated counseling/monitoring.
Case management and care coordination for beneficiaries in SUD treatment.
Recovery support and continuing care services when covered by the DMC-ODS benefit design.
Action step: Before doing anything else, call the behavioral health department in the county where your program will operate and ask if they're a DMC-ODS county and whether they accept new provider applications. In practice, that single call can save weeks of misdirected paperwork and help you understand the exact benefit design and contracting pathway in your county.
Step 2: Get Your NPI and CAQH Profile in Order
You cannot bill Medi-Cal — or any insurance — without a National Provider Identifier (NPI). Federal regulation requires health care providers who conduct standard transactions to obtain an NPI, with Type 1 NPIs for individuals and Type 2 NPIs for organizations (CMS NPPES). If your program is a facility, you need a Type 2 (organizational) NPI, and individual clinicians on staff each need a Type 1 NPI.
You can apply online at the official NPPES portal; there is no fee to obtain an NPI (CMS NPPES). Many providers report that NPIs are issued within about 1–2 weeks when applications are complete, though timelines can vary.
Once you have NPIs, set up your CAQH ProView profile. CAQH ProView is widely used as a centralized credentialing database that health plans access to verify provider information, and payers expect providers to re-attest their data every 120 days to keep credentials current (Priority Health – CAQH Attestation Reminder). Keeping your CAQH profile up to date and re-attesting on schedule helps prevent interruptions in contracting and claims payment when health plans re-credential you.
Missing or expired CAQH attestations are a common reason for delays or issues in payer credentialing and re-credentialing, so it’s worth building an internal reminder system around that 120‑day cycle (Priority Health – CAQH Attestation Reminder).
Step 3: Apply for Medi-Cal Provider Enrollment
This is where most new programs underestimate the timeline. Medi-Cal provider enrollment in California runs through DHCS’s Provider Enrollment Division, and enrollment processing can take several months depending on provider type and application completeness (DHCS Provider Enrollment). Many organizations plan for roughly 90–180 days from submission to approval, but you should confirm current expectations with DHCS and your local contacts.
Here's what you'll typically need:
Completed DHCS provider enrollment application (e.g., DHCS 6209 or the current form appropriate to your provider type).
Proof of licensure (facility and individual clinicians, as applicable).
NPI documentation.
Business entity documentation (articles of incorporation, EIN).
Facility inspection clearance, if required for your setting.
Any applicable DHCS Drug Medi-Cal certification documents if your program is SUD-specific (DHCS SUD Treatment Services).
Critical: For IOP and PHP programs treating SUDs, you will generally need both standard Medi-Cal provider enrollment and Drug Medi-Cal certification (and/or DMC-ODS contracting) if you intend to bill Medi-Cal for SUD services (DHCS SUD Treatment Services). These are separate processes, and DHCS notes that SUD treatment providers must be certified and contract with counties to deliver reimbursable Drug Medi-Cal services (DHCS SUD Treatment Services).
Submit as complete a package as possible, keep records of submissions and communications, and follow up regularly. Given the number of programs and provider types DHCS enrolls, it’s wise to treat documentation and follow‑up as part of your core startup operations.
Step 4: Contract with Medi-Cal Managed Care Plans
Another curveball for first-time operators: the majority of Medi-Cal beneficiaries are enrolled in Medi-Cal managed care plans (MCPs), not in the fee-for-service delivery system. As of 2024 data published by DHCS, about 94% of Medi-Cal certified eligibles are in managed care and only about 6% receive care through fee-for-service arrangements (DHCS Medi-Cal Enrollment Fast Facts – May 2024 PDF).
In California, Medi-Cal managed care is delivered through several models and plan types that vary by county, including county-organized health systems, two‑plan models, and regional plans (DHCS Medi-Cal Managed Care). The specific plans in your county may include entities such as LA Care, Health Net, Molina Healthcare, Anthem Blue Cross Medi-Cal, CalOptima, Inland Empire Health Plan, or others depending on the local model (DHCS Medi-Cal Managed Care).
Billing only traditional fee-for-service Medi-Cal will limit you to a small fraction of your potential patient base in most counties, since the overwhelming majority of members are enrolled in managed care plans (DHCS Medi-Cal Enrollment Fast Facts – May 2024 PDF). To access those members, you need to contract separately with each MCP operating in your service area, each of which has its own credentialing workflow, fee schedule, and prior authorization policies.
Plan for each MCP contracting process to take several months, and start those applications in parallel with your DHCS enrollment rather than waiting for one to finish before starting the other.
Step 5: Know Your CPT and HCPCS Codes for IOP and PHP Billing
Medi-Cal and DMC-ODS typically reimburse SUD services on a per-service or per‑day basis using HCPCS and CPT codes that align with the ASAM level of care and service definition. California’s DMC-ODS guidance and ASAM-aligned benefit design commonly reference the following codes for intensive outpatient and similar levels of care (CHCF – The Drug Medi-Cal Organized Delivery System PDF):
For IOP:
H0015 – Alcohol and/or drug services; intensive outpatient treatment program (often defined as at least 3 hours per day on at least 3 days per week for ASAM Level 2.1) (CHCF – The Drug Medi-Cal Organized Delivery System PDF).
90837 – Individual psychotherapy, 60 minutes, when billable under the county or plan’s mental health/SUD benefit and not already included in a bundled day rate.
90853 – Group psychotherapy, when covered separately or as a component of treatment under local policy.
For PHP and high-intensity structured services:
H0035 – Mental health partial hospitalization treatment, less than 24 hours, when recognized by the plan and tied to services that function like ASAM Level 2.5/3.x partial hospitalization.
S0201 – Partial hospitalization services, intensive (this code is not universally adopted by all Medi-Cal MCPs and may or may not be on the local fee schedule, so you should confirm with each plan).
MAT-related services:
99213 / 99214 – Evaluation and management visits in the office or outpatient setting for prescribers overseeing MAT, when covered under the medical or behavioral health benefit.
G2067 / G2068 – HCPCS codes that have been used for MAT services such as office-based buprenorphine, though code sets and billing requirements are periodically updated, so you need to review current DHCS and CMS guidance before submitting claims.
Specific reimbursement amounts for each of these codes vary by county, plan, and contract. DHCS and local county documents show that SUD IOP and residential services are commonly reimbursed on a daily or unit basis, with rates negotiated or set in county and plan fee schedules rather than at a single statewide rate (CHCF – Medi-Cal Moves Addiction Treatment into the Mainstream PDF). Because these rates shift over time and differ by jurisdiction, always obtain the latest fee schedule directly from your county behavioral health plan and each MCP before forecasting revenue.
Step 6: Prior Authorization — Build This Into Your Intake Process
Many Medi-Cal managed care plans require prior authorization (PA) or documented medical necessity review for higher-intensity services such as IOP, PHP-equivalent care, and residential SUD treatment. County DMC-ODS policies also emphasize medical necessity, ASAM criteria alignment, and documentation of clinical appropriateness as conditions for reimbursement (Sacramento County DMC-ODS Overview PDF).
To avoid denials, build PA into your intake workflow from the start:
Verify Medi-Cal eligibility on the day of intake through the DHCS online systems or your eligibility verification vendor so you know the member’s current plan and aid code (DHCS Medi-Cal Eligibility Statistics).
Submit a PA request with supporting clinical documentation, including an ASAM-based level-of-care assessment, biopsychosocial evaluation, and an initial treatment plan when required by your county’s DMC-ODS or MCP policy (BHIN 23-001 PDF).
Obtain written or electronic PA confirmation (with authorization number and dates) before you begin billing for IOP/PHP services whenever the plan requires prior authorization.
Track PA expiration dates and authorized units closely, since many plans issue time-limited authorizations that must be renewed with updated clinical documentation.
Many programs find that designating a utilization review (UR) or authorization coordinator, even part-time, pays for itself by preventing avoidable denials and write-offs when authorizations are missed or incomplete.
Step 7: Submit Clean Claims and Manage the Denial Cycle
Medi-Cal claims are submitted electronically via standard HIPAA transactions, typically the 837P (professional) or 837I (institutional) formats, depending on your provider type and contract (CMS EDI Standards. To do this, you’ll need billing software or a clearinghouse that can create and transmit compliant files and flag formatting issues before they reach the payer.
Common revenue‑cycle “gotchas” for SUD IOP/PHP programs include:
Missing or expired prior authorization for services that require PA under DMC-ODS or MCP policies.
NPI or taxonomy not yet fully loaded into the plan’s system because enrollment or contracting is still in process.
Incorrect place-of-service codes or billing locations not matching what’s on file with the payer.
Out-of-date or incomplete CAQH attestations that interfere with participation status (Priority Health – CAQH Attestation Reminder).
Diagnosis codes that don’t support the billed level of care or don’t match the SUD-focused benefit requirements under DMC-ODS (Sacramento County DMC-ODS Overview PDF).
Tracking your denial patterns by code, reason, and payer helps you quickly see whether you have a systemic issue (like a configuration error or missing documentation) versus one‑off mistakes. Many mature programs aim to keep denial rates in the single digits through proactive edits, training, and tight PA workflows.
Step 8: Understand the Reimbursement Timeline
Publicly available Medi-Cal and managed care materials show that clean claims are generally expected to be processed and paid within a few weeks to a couple of months, depending on the payer and contract terms, with many plans committing to timely payment standards in the 30–45 day range after receipt of a clean claim (DHCS Medi-Cal Managed Care). In practice, some managed care plans pay faster and others take closer to the outer limit of their timely payment standard, especially early in a new provider relationship.
When you’re modeling cash flow for a new IOP or PHP, it’s reasonable to plan around a 45‑day average receivables cycle and to build reserves for a start‑up lag while credentialing, contracting, and billing workflows stabilize. That usually means having enough working capital to cover at least 60–90 days of payroll, rent, and operating overhead before Medi-Cal and MCP reimbursements become predictable.
The exact revenue you’ll see from a given census depends on your contracted rates, payer mix, and denial/adjustment patterns, so any back‑of‑the‑envelope volume × day‑rate calculations should be treated as directional planning tools rather than guaranteed income.
FAQ: Billing Medi-Cal for Addiction Treatment in California
Q: Does Medi-Cal cover residential addiction treatment, or just IOP and PHP?
Yes, Medi-Cal covers residential SUD treatment under DMC-ODS in participating counties, including ASAM Level 3.1 through 3.7 services delivered in licensed, certified programs (BHIN 23-001 PDF; CHCF – Medi-Cal Moves Addiction Treatment into the Mainstream PDF). Residential services are typically reimbursed on a per‑day basis and generally require medical necessity review and, in many cases, prior authorization under county or plan policies.
Q: Can I bill Medi-Cal if I'm only licensed as a LCSW or MFT?
Individual LCSW and MFT providers may bill Medi-Cal for specific covered behavioral health services when enrolled appropriately and when working within recognized benefit structures, such as county mental health plans or certified programs, consistent with state scope‑of‑practice and Medi-Cal provider rules (California BBS for licensing; DHCS Behavioral Health Information Notices). In a facility setting, the organization typically bills under its Type 2 NPI while ensuring that individual clinician credentials meet plan requirements for the services provided.
Q: How long does it take to get credentialed with Medi-Cal MCPs in California?
Health plans often indicate that provider credentialing and contracting can take several months, especially for new organizations, and timelines can vary widely by plan and completeness of your application (NCQA Credentialing Standards). As a working assumption, many providers plan for roughly 90–150 days per Medi-Cal MCP and build in time for back‑and‑forth on missing documents or contracting details.
Q: What's the difference between DMC-ODS and standard Medi-Cal billing?
DMC-ODS is a county-organized Section 1115 waiver program focused specifically on SUD services, offering an ASAM-based continuum of care, expanded benefit design, and enhanced local management compared with the traditional Drug Medi-Cal State Plan (DHCS DMC-ODS). Standard Medi-Cal fee-for-service operates as a parallel system but serves a much smaller portion of Medi-Cal members, since the vast majority of beneficiaries receive services through managed care plans (DHCS Medi-Cal Enrollment Fast Facts – May 2024 PDF).
Q: Do I need a separate Drug Medi-Cal certification to bill for IOP?
In most cases, yes. DHCS specifies that SUD treatment providers must be certified and contract with counties to participate in Drug Medi-Cal and DMC-ODS, which applies to intensive outpatient and other SUD levels of care delivered to Medi-Cal beneficiaries (DHCS SUD Treatment Services). It’s common for programs to pursue both standard Medi-Cal provider enrollment and Drug Medi-Cal/DMC-ODS certification or contracting at the same time.
Q: What happens if I bill for services before my enrollment is complete?
If you submit claims for Medi-Cal services before your effective date of enrollment or before a managed care contract is active, those claims are generally not payable and can be denied or subject to recoupment under state and federal Medicaid rules (CMS Medicaid Provider Enrollment Guidance). In practice, that means you should wait to bill Medi-Cal until you have written confirmation of your enrollment and effective dates from DHCS and any contracted MCPs.
Ready to Build Your IOP or PHP Program?
ForwardCare is a behavioral health MSO (Management Services Organization) that partners with clinicians, sober living operators, healthcare entrepreneurs, and investors to launch and scale behavioral health treatment centers. We handle the business side — licensing support, insurance credentialing, billing, compliance, and operational infrastructure — so our partners can focus on growth and clinical quality.
If you’re serious about opening or expanding a behavioral health treatment center but don’t want to navigate the business side alone, ForwardCare may be worth a conversation.