CMS Finds That Some QRTPs are Excluded IMDs

As earlier reported, the Children’s Bureau at the Administration for Children and Families (ACF) instructed states to contact their regional HHS office, not ACF headquarters, with questions about state-specific plans for implementing the Family First Prevention Services Act.  In June 2019, a CMS regional office responded to an inquiry from the Commonwealth of Kentucky, saying that Qualified Residential Treatment Programs (QRTPs) with more than 16 beds that do not meet the federal definition of a Psychiatric Residential Treatment Facility (PRTF) would be excluded Institutions for Mental Diseases (IMDs).  At that point, Kentucky began planning to create QRTPs that would not claim a federal Medicaid match for health services provided to children in their care, in order not to violate the IMD exclusion.  Recently, NACBH heard that Kentucky may be revisiting that decision.

Whatever Kentucky’s position, we are aware of another state where about 20 QRTPs have been operating since last year, at least some of them with more than 16 beds, after the state made a blanket declaration that its QRTPs are not IMDs.  The state did not consult with CMS, did not conduct a facility-by-facility determination as CMS says is required, and is at risk of a federal IMD compliance action.  A third state, Oklahoma, has recently submitted a Section 1115 waiver request to CMS, asking for permission to bill Medicaid for the health services provided to children in QRTPs, in apparent recognition that they are otherwise excluded IMDs.  That waiver request is now under review at CMS.

Against this messy backdrop, it appears that CMS has now taken a national position in line with the Atlanta regional office’s response last summer.  On July 3, the California Department of Health Care Services wrote to the regional office in Kansas City, asking for a determination that its QRTPs would not be considered excluded IMDs.  On July 30, the reply came from CMS headquarters in Baltimore:  QRTPs with more than 16 beds that do not met federal requirements for PRTFs are excluded IMDs. 

It’s worth reading both letters, along with the “section 4390” guidance they reference, to understand why NACBH has been advocating since Family First was being drafted, for federal clarity at the intersection of Medicaid IMD policy and IV-E congregate care settings.  That is Section 4390 of the State Medicaid Manual, which provides sub-regulatory guidance to states on every facet of federal Medicaid policy.  Unfortunately, the State Medicaid Manual has not been available online for many years; the version we are posting was downloaded in 2008 but appears to be consistent with the language that both California and CMS reference in their letters. 

The federal response flatly states that “CMS does not have the statutory or regulatory authority to exempt QRTPs from the IMD exclusion.”  It offers a choice of using certified PRTFs as QRTPs or pursuing a Section 1115 waiver to legally claim federal Medicaid matching payments.  That is a clear signal to states, providers, advocates, ACF, and Congressional members and staff who might prefer a quiet resolution of the policy conflict, that none is coming from CMS.

We hope you will all join us for NACBH’s upcoming Public Policy Webinar Series.  Key CMS staff will join us for webinar #2 to address our highest priority Medicaid questions.  In the interim, several resources on this issue are posted on our website: