DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland  21244-1850 
Centers for Medicare & Medicaid Services 
Serious Mental Illness (SMI) and Serious Emotional Disturbance (SED)  
Demonstration Opportunity 
Technical Assistance Questions and Answers 
November 4, 2019 
The Centers for Medicare & Medicaid Services (CMS) is committed to supporting states in 
improving access and quality of care for beneficiaries with serious mental illness (SMI) or 
serious emotional disturbance (SED).  On November 13, 2018, CMS announced a new SMI/SED 
demonstration opportunity in a State Medicaid Director Letter (SMDL). These technical 
assistance questions and answers are related to that SMI/SED demonstration opportunity, 
specifically clarifying the states ability to claim federal financial participation (FFP) for services 
delivered to individuals during short term stays for acute care in psychiatric hospitals or 
residential treatment settings that qualify as Institutions for Mental Diseases (IMD).   
Q1: What is the opportunity for claiming FFP under the SMI/SED demonstration 
authority? 
A1: Under the SMI/SED demonstration opportunity, upon CMS approval, a state can receive 
FFP for services furnished to Medicaid beneficiaries during short term stays for acute care in 
psychiatric hospitals or residential treatment settings that qualify as IMDs.1  The SMDL also 
states that states will be expected to achieve a statewide average length of stay of 30 days for 
beneficiaries receiving care in IMDs pursuant to this SMI/SED demonstration opportunity.2
For purposes of claiming FFP through a demonstration approved under this SMI/SED 
demonstration opportunity, a short term stay for acute care is limited to no more than 60 
consecutive days as long as the state continues to meet the statewide average length of stay of 30 
days or less.  States may not claim for any part of a stay (days 0 to 60) that exceeds 60 days. 
Q2: How is the state expected to demonstrate that it is meeting the expectation of a 
statewide average length of stay of 30 days or less?  
A2: A state will be expected to report on the average length of stay in each annual monitoring 
report.  Additionally, in the mid-point assessment, a state will need to show that it is meeting the 
expectation of a statewide average length of stay of 30 days or less.  
                                                            
1 https://www.medicaid.gov/federal-policy-guidance/downloads/smd18011.pdf, page 12. 
2 Id. 
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  Q3: What happens if a state does not show that it meets the expectation of a statewide 
average length of stay of 30 days or less at the mid-point assessment? 
A3: If the state does not show that it is meeting the expectation of a statewide average length of 
stay of 30 days or less at the mid-point assessment, CMS will notify the state as part of the mid-
point assessment process of CMSs determination that the state has not met the expectation.  As 
of CMSs notification, the state may only claim FFP for short-term stays up to a maximum of 45 
days.  The state should continue to report on the average length of stay in its annual monitoring 
reports for the demonstration years that follow the mid-point assessment whether it is or is not 
meeting the expectation at the mid-point assessment.  If the state shows in subsequent annual 
monitoring reports that the statewide average length of stay is 30 days or less, the state may 
resume claiming for short-term stays of up to 60 days.  CMS will expect the state to make 
changes, as needed, in order to meet the expectation of a statewide average length of stay of 30 
days or less.  If the state does not meet the expectation of a statewide average length of stay of 30 
days or less in subsequent annual monitoring reports, the state will continue to only be able to 
claim FFP for short-term stays up to a maximum of 45 days.  
Please see information in Q and A4 below that discusses what types of flexibility are available if 
the state is close to the 30 day or less average length of stay. 
Q4: If a states data show that the state is close to a statewide average length of stay of 30 
days, will CMS provide any flexibility regarding the length of stay expectation? 
A4: Yes.  CMS recognizes that the average length of stay is likely to vary by state, along with 
the spread of the data around the average (mean) for this measure, which is captured by the 
standard deviation.  To provide some flexibility to states, CMS will consider a state meeting this 
expectation of a 30-day or less average length of stay, so long as the measure falls within a 
specific range.  This range will be calculated using the standard deviation of the average of the 
statewide average length of stay measure.  While unlikely, if allowing one standard deviation 
results in more than 60 days, FFP will only be available for stays up to 60 days.  CMS intends to 
provide additional guidance and information to help states calculate the average length of stay 
and the standard deviation in the technical specifications for the monitoring metrics.  
Q5: Can CMS provide an example of how states may or may not claim FFP as they are 
related to the expectation to achieve a 30 day or less statewide average length of stay? 
A5: Please see the table below that shows an example of the requirements of FFP and the 
consequences of not meeting the expectation of a statewide average length of stay of 30 days or 
less.  In the example below, at the mid-point assessment, state A met the expectation of a 
statewide average length of stay of 30 days or less, and state B did not.   
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  Demonstration  Number of Days State A Can  Number of Days State B Can 
Year (DY)  Receive FFP  Receive FFP 
DY 1  Up to 60 days and No FFP for stays that exceed 60 days 
DY 2  Up to 60 days and No FFP for stays that exceed 60 days 
Mid-Point  Yes  No 
Assessment: Does 
the states 
midpoint- 
assessment (due 
around 2.5 years 
after 
implementation) 
meet the statewide 
average length of 
stay of 30 days or 
less? 
DY 3  Up to 60 days and No FFP for stays  Up to 45 days and No FFP for 
that exceed 60 days as long as state  stays that exceed 45 days 
continues to meet a statewide 
average length of stay of 30 days or 
less 
DY 4  Up to 60 days and No FFP for stays  Up to 45 days and No FFP for 
that exceed 60 days as long as state  stays that exceed 45 days 
continues to meet a statewide 
average length of stay of 30 days or 
less  
DY 5  Up to 60 days and No FFP for stays  If the state shows in its DY4 
that exceed 60 days as long as state  annual monitoring report that it 
continues to meet a statewide  now meets the 30 day or less 
average length of stay of 30 days or  average length of stay, CMS 
less  may consider allowing the 
state to claim up to 60 days for 
FFP as long as the state 
continues to meet a statewide 
average length of stay of 30 
days or less.  
If the state still does not meet 
the 30 day or less average 
length of stay in its DY4 
annual monitoring report, then 
the state may claim up to 45 
days and no FFP for stays that 
exceed 45 days and go up to 
60 days. 
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