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The short answer: two new hurdles before you file
Effective November 7, 2025, any operator seeking a Priority 1 or Priority 2 service license from the Virginia Department of Behavioral Health and Developmental Services (DBHDS) must complete a 16-module Initial Applicant Orientation and pass a proctored Comprehensive Knowledge Exam with a score of 85% or higher before the application will be reviewed on the priority timeline. Skip either step and your file drops onto the waitlist behind non-priority services.
Commissioner Nelson Smith’s Office of Licensing issued the memo in October 2025, and the materials went live on the DBHDS Office of Licensing website. Per that page, any applicant submitting a new application for a Priority 1 or Priority 2 service must complete the DBHDS Initial Applicant Orientation Training and successfully complete the proctored Comprehensive Knowledge Exam with a score of 85% or higher.
This is a real filter, not a paperwork formality. Per the October 2025 memo, applications submitted for Priority 1 or 2 services without prior completion of the orientation and Comprehensive Knowledge Exam will not be reviewed under the priority timeline; instead, they are placed on the waitlist with non-priority services and pulled in the order in which the application was received.
For SUD operators planning detox, residential, PHP (which is outpatient, ASAM Level 2.5), or IOP services in Virginia, the orientation-and-exam step now sits on the critical path to licensure, DMAS enrollment under ARTS, and MCO contracting. CARF and Joint Commission surveys come later. Founders who fail this DBHDS gate never get to the survey window.
What DBHDS is actually requiring
The new structure has two gates. First, the orientation. DBHDS built it as 16 self-paced modules, each with a video presentation and a self-assessment quiz. Larisa Terwilliger, the Office of Licensing Training Coordinator, leads the series, with Regional Manager Rebekah Greenfield and Regional Team Lead Christine Morris presenting the licensing framework. Quizzes are untimed and retake-able. At least one participant per organization must be the Main Authorized Contact (MAC) or the owner.
Then the exam. Per DBHDS Module 1: “The exam consists of 25 multiple-choice questions, and you must score 85% or higher to pass.” It runs 90 minutes, is proctored live over Microsoft Teams with cameras on the entire time, and admission locks at the scheduled start. Late arrivals reschedule, period.
DBHDS framed the purpose plainly in its October 2025 memo: the orientation is specifically designed to facilitate an understanding of DBHDS requirements and support applicants in successfully completing the application process. Translation for operators: the Office of Licensing got tired of vetting underprepared applicants and moved the screening upstream.
Which SUD services get caught by Priority 1 and Priority 2
DBHDS sorts services into three buckets. Priority 1 services are the ones with the biggest statewide unmet need; Priority 2 sits one step below; non-priority services wait.
Why so aggressive on the supply side? Look at the demand side. Per the Virginia Department of Health, preliminary 2025 data (as of April 2026) show 1,196 drug overdose deaths among Virginia residents, a 23% decrease from 2024. That sits on top of 1,548 drug overdose deaths among Virginia residents in 2024, a 37% decrease from 2023, with the drug overdose death peak of 2,622 recorded in 2021. Encouraging trend lines, still enormous demand. VDH also reports that in 2023, opioid misuse cost Virginia $5.2 billion in lost labor, healthcare costs, and other expenses.
The pipeline pressure on residential withdrawal management (Level 3.7 under the ASAM Criteria 4th Edition), residential SUD, and intensive outpatient beds is not theoretical. The Commonwealth wants more licensed providers, but only ones who can operate at the level CMS, SAMHSA, and the Virginia Department of Medical Assistance Services (DMAS) expect once Medicaid claims start flowing.
The proof point sits in the outcomes data. Andrew Barnes, Peter Cunningham and colleagues at VCU published a 2020 Health Affairs study assessing whether Virginia’s Addiction and Recovery Treatment Services (ARTS) program, implemented in April 2017, influenced emergency department and inpatient use. The authors found that after program implementation, the likelihood of having an emergency department visit in a quarter declined by 9.4 percentage points (a 21.1 percent relative decrease) among beneficiaries with opioid use disorder, compared to 0.9 percentage points among beneficiaries with no substance use disorder. Coverage exists. The gate is licensure.
How operators should sequence this
Founders should treat the 16 modules as a design exercise, not a checkbox. The orientation walks through eligibility, provider responsibilities, the application phases, and the regulatory frame under General Regulations 12VAC35-105. Use each module as a prompt to stress-test your policy manual, staffing plan, physical plant, and budget against the language DBHDS uses.
Pick the MAC carefully. This person should understand the proposed level of care, hold real authority over policy and budget, and be willing to own the DBHDS CONNECT Provider Portal, which DBHDS describes as a secure, paperless platform where authorized users submit applications, track application status, review the waitlist, renew licenses, respond to corrective action plans, review background check outcomes, and communicate directly with DBHDS Licensing staff. Whoever sits the exam also carries institutional memory into survey prep and the first EOC tour. Do not delegate this to a contractor who will disappear after licensure. Operators in Tennessee and Florida have regretted that choice when the surveyor focus shifts mid-application and no one inside the building actually understands the regulations.
Sequence the payer track in parallel, not after. Per the DMAS Medical Assistance Handbook, the ARTS benefit expands access to a comprehensive continuum of addiction treatment services for all enrolled members in Medicaid, FAMIS, and FAMIS MOMS, including expanded outpatient/community-based addiction and recovery treatment services and coverage of inpatient detoxification and residential substance use disorder treatment. Providers must submit a DBHDS license for the intended level of care to the DMAS Provider Services Solution (PRSS) vendor and each Medicaid MCO before credentialing and contracting can start.
One more sequencing point. Per the DBHDS Licensing Information page, initial applications and modification applications must be submitted within 90 days of beginning the application process. The clock is real. Plan the exam date around when policies, attachments, and staffing documentation will actually be ready for submission, not when the orientation finishes.
What this tells you about where Virginia is heading
Virginia is doing what a handful of states have started doing quietly: raising the floor on who gets to enter the behavioral health system. DBHDS oversees the licensing and regulatory compliance of providers delivering mental health, developmental disability, and substance use services across Virginia, and demand still outstrips supply in most regions for SUD residential and withdrawal management beds. Rather than open the gates wider, Nelson Smith’s Office of Licensing is narrowing the gate and grading on preparedness before anyone touches a license number.
This is not happening in isolation. The DBHDS Office of Licensing October 2025 memo series also included Initial Applicant Orientation for Priority 1 and Priority 2 Service Applications, License Renewal and DMAS Enrollment Alignment, Fast-Track Amendments for Medication for Opioid Use Disorder (MOUD), and an August 2025 Overhaul of DBHDS Licensing Regulations memo. That means the compliance surface for SUD operators is about to look very different from the compliance surface for developmental disability providers. Federally, the DEA is tightening buprenorphine prescriber oversight and the HHS Office of Inspector General continues to flag behavioral health enrollment fraud. The regulatory floor is rising in more than one direction at once.
The Medicaid backdrop also matters. Per Virginia Mercury, Virginia hospitals are bracing for a $2 billion hit as the One Big Beautiful Bill Act changes are fully implemented, and of Virginia’s roughly 1.9 million people on Medicaid, roughly 600,000 who became eligible when the state expanded in 2018 would be most affected. Payer pressure is coming for behavioral health operators too. Founders and CEOs at Atlantic Health Strategies client sites who treat the orientation as a design tool finish licensure faster, with cleaner policies and fewer policy-review revisions. Founders who treat it as a hurdle to clear with the cheapest available warm body lose months on the waitlist and rework.
If you are weighing Virginia against other states for the next site, run the math honestly. A failed exam plus a re-test window plus a 90-day application clock can push a planned January go-live to May. At roughly $80,000 to $120,000 per month in pre-revenue burn for a mid-sized residential SUD startup, that delta is the difference between a workable pro forma and a capital call.
Frequently asked questions
When does the new DBHDS orientation and exam requirement take effect, and who has to comply?
The requirement took effect November 7, 2025. Per the DBHDS Office of Licensing October 2025 memo, any organization submitting a new application for a Priority 1 or Priority 2 service must complete the Initial Applicant Orientation Training and pass the proctored Comprehensive Knowledge Exam with a score of 85% or higher. At least one participant per organization must be the Main Authorized Contact (MAC) or the owner.
What happens if we submit a Priority 1 or Priority 2 application without completing the exam?
Per the October 2025 DBHDS memo, applications submitted without prior completion of the orientation and Comprehensive Knowledge Exam will not be reviewed under the priority timeline. They are placed on the waitlist with non-priority services and pulled in the order the application was received.
How does the DBHDS licensure timeline affect Virginia Medicaid ARTS enrollment?
DBHDS licensure is a prerequisite to DMAS enrollment under ARTS, which DMAS launched in April 2017 as an enhanced substance use disorder treatment benefit aligned to ASAM levels of care and covering outpatient, community-based, inpatient detoxification, and residential SUD services. Providers must submit the DBHDS license for the intended level of care to the DMAS Provider Services Solution (PRSS) vendor and each Medicaid MCO before credentialing and contracting can start, and MCO credentialing routinely runs another 90 to 120 days per plan.
What exactly does the Comprehensive Knowledge Exam look like?
It is a 90-minute proctored virtual exam delivered through Microsoft Teams with cameras required on for the full session. Per DBHDS Module 1, the exam consists of 25 multiple-choice questions, requires 85% or higher to pass, and is scored automatically at completion. Late arrivals are not admitted and must reschedule.
References
- DBHDS Office of Licensing, Initial Applicant Orientation for Priority 1 and Priority 2 Service Applications Memo (October 2025)
- Virginia DBHDS, Licensing Information for Providers and Applicants
- DBHDS, Initial Applicant Orientation Module 1: Overview of the Initial Applicant Orientation Process
- DBHDS, Initial Applicant Orientation Module 2: Introduction to the Office of Licensing
- Virginia Department of Health, Drug Overdose and Substance Use Data
- Barnes AJ, Cunningham PJ, et al., “Hospital Use Declines After Implementation Of Virginia Medicaid’s Addiction And Recovery Treatment Services,” Health Affairs (2020)
- Virginia DMAS, Medical Assistance Handbook (ARTS benefit description)
- Virginia Mercury, “Virginia hospitals, clinics brace for federal health care changes” (October 21, 2025)