DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-
12 Baltimore, MD 21244-1850 
 
 
CMCS Informational Bulletin 
 
DATE:  June 20, 2018 
 
FROM:  Timothy B. Hill, Acting Director 
Center for Medicaid and CHIP Services 
SUBJECT:  Requirements of Section 12005 of the 21st Century Cures Act 
 
The Center for Medicaid and CHIP Services (CMCS) is issuing this Informational Bulletin (CIB) 
to bring to the States attention section 12005 of the 21st Century Cures Act (the Cures Act), 
entitled, Providing EPSDT Services to Children in IMDs.  Section 12005(a) of the Cures Act 
amends the Medicaid benefit at section 1905(a)(16) of the Social Security Act (the Act) to 
require Medicaid reimbursement for Early and Periodic Screening, Diagnostic, and Treatment 
(EPSDT) services for children under age 21 who are receiving inpatient psychiatric hospital 
services.  Per section 12005(b) of the Cures Act, the amendments made by section 12005(a) shall 
apply to items and services furnished on or after January 1, 2019.  
 
Background 
 
Institution for Mental Diseases (IMD) Exclusion and Inpatient Psychiatric Hospital Services for 
Individuals Under Age 21 Exception 
 
An institution for mental diseases (IMD) is defined in section 1905(i) of the Act to mean a 
hospital, nursing facility, or other institution of more than 16 beds, that is primarily engaged in 
providing diagnosis, treatment, or care of persons with mental diseases, including medical 
attention, nursing care, and related services. 
 
Under section 1905(a) of the Act, there is a general prohibition on Medicaid payment for any 
services provided to any individual who is under age 65 and who is residing in an IMD.1  There 
are two exceptions to the IMD exclusion.  First, inpatient hospital services, nursing facility 
services, and intermediate care facility services for individuals age 65 and older in IMDs can be 
reimbursed (42 C.F.R.  440.140).  Second, inpatient psychiatric hospital services for individuals 
under age 21, referred to as the psych under 21 benefit, furnished by a psychiatric hospital, a 
general hospital with a psychiatric program that meets the applicable conditions of participation, 
or an accredited psychiatric facility that meets certain requirements, commonly referred to as a 
Psychiatric Residential Treatment Facility (PRTF) can be reimbursed (42 C.F.R.  440.160).  
                                                 
1 Clause (B) following section 1905(a) of the Act.  Page 2  State Medicaid Director 
 
This bulletin addresses the psych under 21 benefit, and how section 12005 of the Cures Act 
impacts it. 
  
Early and Periodic, Screening, Diagnostic, and Treatment (EPSDT) Services  
 
The Medicaid programs benefit for enrolled children and adolescents is known as the Early and 
Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit.  EPSDT provides a 
comprehensive array of prevention, diagnostic, and treatment services for low-income 
individuals under age 21 as specified in section 1905(r) of the Act.  Section 1905(r) of the Act 
requires states to have available medically necessary health care, diagnostic services, treatment, 
and other measures defined in section 1905(a) of the Act in order to correct or ameliorate defects 
and physical and mental illnesses and conditions discovered by screening services whether or not 
such services are covered in the state plan.  Individuals under age 21 are entitled to EPSDT 
services whether they are enrolled in a managed care plan or receive services in a fee-for-service 
(FFS) delivery system. 
  
The Centers for Medicare & Medicaid Services (CMS) has historically prohibited states from 
claiming expenditures under the inpatient psychiatric hospital services benefit unless the 
expenditures were made to qualified providers of such services.  This prohibition had the effect 
of denying coverage for other medically necessary items and services covered for children under 
EPSDT, such as prescription drugs or practitioner services, that were not included by the state as 
part of the rate paid to the facility for care.  These items and services would be available under 
other benefit categories for individuals under age 21 who did not reside in an IMD. 
  
A CIB released November 28, 2012 entitled Inpatient Psychiatric Services for Individuals under 
Age 212 discussed several Department of Appeals Board (DAB) decisions that clarified that 
other covered services not provided by or in the psych under 21 hospital or facility can be 
reimbursed when the services are 1) provided to a child residing in an inpatient psychiatric 
hospital or facility, 2) authorized under the childs plan of care, and 3) provided by individual 
practitioners or suppliers under an arrangement with the hospital or facility.  This CIB clarified 
that CMS was applying the flexibility addressed in the DAB decisions in approving State Plan 
amendments.  Even though this flexibility was given to states, individuals under 21 in qualified 
inpatient psychiatric hospitals and facilities were still not guaranteed access to the full range of 
EPSDT services.  Specifically, individuals in these facilities received psychiatric services and 
were not assured all other medically necessary services.  Even though this CIB allowed other 
medically necessary services under arrangement to be included in the plan of care, hospitals and 
facilities were not obligated to enter into such arrangements. 
  
Section 12005 of the Cures Act requires that individuals under 21 in qualified inpatient 
psychiatric hospitals and facilities are guaranteed access to the full range of EPSDT services.  A 
plan of care is not necessary to authorize any other medically necessary services and Medicaid 
services may be provided by community practitioners not affiliated with the facility. 
  
Implementation 
 
                                                 
2 https://www.medicaid.gov/Federal-Policy-Guidance/downloads/CIB-11-28-12.pdf  Page 3  State Medicaid Director 
 
Section 12005(a) of the Cures Act amends the Medicaid benefit at section 1905(a)(16) of the Act 
to require Medicaid reimbursement for EPSDT services for children under age 21 who are 
receiving inpatient psychiatric services.  Per section 12005(b) of the Cures Act, the amendments 
made by section 12005(a) shall apply to items and services furnished on or after January 1, 2019.  
States must make available any services coverable under the EPSDT benefit and under section 
1905(a) of the Act that children under age 21 who are residing in an inpatient psychiatric hospital 
or facility are determined to need in order to correct or ameliorate health conditions, regardless 
of whether such services are identified in the childs plan of care.  These EPSDT services may be 
provided by the hospital or facility, under arrangement with a qualified non-facility provider, 
and/or by a qualified provider in the community not affiliated with or under arrangement with 
the facility. 
  
42 C.F.R.  455.1(a)(2) requires that the state has a method to verify whether services 
reimbursed by Medicaid were actually furnished to beneficiaries.  Additionally, 42 C.F.R.  
431.107(b)(1) requires that the Medicaid agency have an agreement with each provider 
furnishing services under the plan in which the provider agrees to keep all records necessary to 
disclose the extent (amount) of services the provider furnished to Medicaid beneficiaries.  To 
ensure accountability for program expenditures pertaining to services furnished under section 
1905(a)(16) of the Act, as discussed in this bulletin, the Medicaid agency will need to ensure 1) 
the item or service furnished qualifies as an EPSDT service as defined in section 1905(r) of the 
Act; 2) the billing for the EPSDT service does not duplicate billing for inpatient psychiatric 
services under section 1905(a)(16)(A) of the Act by the inpatient psychiatric hospital or facility 
or a provider furnishing inpatient psychiatric services under arrangement with the inpatient 
psychiatric hospital or facility; 3) the rate of payment is authorized under the state plan; and 4) 
there is sufficient information to support the states proper claiming of such expenditures for 
federal financial participation (FFP) in accordance with the CMS-64 form claiming guidance for 
EPSDT services.  
 
Inpatient psychiatric services provided by the hospital or facility or under arrangement with the 
hospital or facility must be claimed on the Mental Health Facility Services line item of the CMS-
64 form.  EPSDT services not provided directly by or under arrangement with the inpatient 
psychiatric hospital or facility must be claimed as any other service covered under the EPSDT 
benefit.  For example, EPSDT screening services should be reported in line 15 of the CMS-64 
form, while other EPSDT services should be reported under their respective section 1905(a) state 
plan benefits in accordance with the CMS-64 form claiming guidance for EPSDT services. 
  
In summary, section 12005 of the Cures Act amends section 1905(a)(16) of the Act to require 
Medicaid reimbursement for all medically necessary section 1905(a) services furnished to 
children under age 21 in inpatient psychiatric hospitals and facilities, not just the inpatient 
psychiatric services identified in the childs treatment plan and provided by the hospital or 
facility or under arrangement with the hospital or facility.  States are not required to submit 
revisions to their state plans, but are expected to be providing all medically necessary services to 
children under age 21 who are residing in an inpatient psychiatric hospital or facility, consistent 
with the requirements described in this guidance, by the effective date of section 12005 of the 
Cures Act, which is January 1, 2019.  Page 4  State Medicaid Director 
 
CMS is available to work with states in implementing this requirement as needed, and CMS 
looks forward to continuing collaboration.  If you have any questions, please contact Kirsten 
Jensen, Director of Division of Benefits and Coverage, at Kirsten.Jensen@cms.hhs.gov.