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 
Qualified Residential Treatment Programs (QRTP) and Serious Mental Illness (SMI) and 
Serious Emotional Disturbance (SED) 
Demonstration Opportunity 
Technical Assistance Questions and Answers 
September 20, 2019 
The following guidance clarifies existing CMS policy regarding Institutions for Mental Diseases 
(IMDs) and its potential for impact on Qualified Residential Treatment Programs (QRTPs) 
defined in title IV-E of the Social Security Act (the Act) as amended by Division E, Title VII 
Family First Prevention Services Act of the Balanced Budget Act of 2018 (BBA of 2018, Pub. L. 
1115-123. CMS explains how states can provide Medicaid services to Medicaid-eligible children 
residing in these facilities.1
CMS has not made a determination that all QRTPs will be IMDs; rather, there are several 
options for states to consider regarding QRTPs. Consistent with current practices, states make an 
IMD assessment and determination on a facility by facility basis according to CMSs existing 
statute, regulation and sub-regulatory guidance.  QRTPs that are 16 beds or fewer would not 
meet the statutory Medicaid definition of an IMD. Additionally, states may consider QRTPs that 
meet Conditions of Participation and seek certification, as a psychiatric residential treatment 
facility (PRTF), which is one of the facility types in the inpatient psychiatric services benefit for 
individuals under 21 and which represents an exception to the IMD exclusion discussed below. 
Finally, states may consider an existing section 1115 option, which we further clarify in this 
document, for states to receive Medicaid reimbursement for services to individuals in QRTPs 
that would be considered IMDs. 
Q1: What is a Qualified Residential Treatment Program? 
A1: The Family First Prevention Services Act (FFPSA),2 that was signed into law on February 9, 
2018 as a part of the BBA of 2018, created limitations on title IV-E foster care maintenance 
payments (FCMPs) for children placed in child care institutions (CCIs) longer than 14 days, 
effective October 1, 2019. A QRTP placement is a specific category of a non-foster family home 
placement setting that is one of the few exceptions to those limitations on IV-E placements in 
CCIs established by the FFPSA.  A QRTP must meet the definition of a child-care institution at 
1 Guidance related to Section 8081 of the Substance Use Disorder Prevention that Promotes Opioid Recovery and 
Treatment (SUPPORT) for Patients and Communities Act (SUPPORT Act, P.L. 115-271) on how states may use 
Medicaid and Title IV-E program authorities to support substance use disorder (SUD) treatment in family-focused 
residential treatment programs is under development and not addressed in this document. 
2 See section 472 of the Act as amended by section 50741 of the BBA of 2018. 
1  sections 472(c)(2)(A) and (C) of the Act.3 A child-care institution is defined, in relevant part, as 
a private child-care institution, or a public childcare institution which accommodates no more 
than 25 children, which is licensed by the State in which it is situated or has been approved by 
the agency of the State responsible for licensing or approval of institutions of this type as 
meeting the standards established for the licensing.4 Title IV-E also generally specifies that a 
QRTP placement must meet the following criteria: 
 Provides a trauma-informed model of care designed to address the needs, including
clinical needs, of children with serious emotional or behavioral disorders or
disturbances;
 Has registered or licensed nursing staff and other licensed clinical staff who provide care
within the scope of their practice as defined by state law, who are on-site consistent with
the treatment model, and available 24 hours and 7 days a week (need not solely be direct
employees of the QRTP);
 Facilitates family participation in a childs treatment program (to the extent appropriate,
and in accordance with the childs best interest);
 Facilitates and documents family outreach and maintains contact information for any
known biological family and fictive kin of the child;
 Documents how the childs family is integrated into the childs treatment, including post
discharge, and how sibling connections are maintained;
 Provides discharge planning and family-based aftercare supports for at least 6 months
post discharge; and
 The program is licensed5 and nationally accredited by the Commission on Accreditation
of Rehabilitation Facilities (CARF), the Joint Commission on Accreditation of
Healthcare Organizations (the Joint Commission), the Council on Accreditation, or
another independent, not-for-profit accrediting organization approved by the Secretary. 6
Further, the title IV-E agencies must meet detailed assessment, case planning, documentation, 
judicial determinations and ongoing review and permanency hearing requirements for a child to 
be placed in and continue to receive title IV-E FCMPs for the placement (sections 472(k)(1)(B) 
and 475A(c) of the Social Security Act. 
Q2: What is the Institution for Mental Diseases (IMD) Exclusion? 
A2: Section 1905(i) of the Social Security Act (Act) defines an IMD as 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. 
3 See new section 472(k)(1) of the Act as set forth in section 50741 of the BBA of 2018. 
4 See new section 472(c)(2)(A) of the Act as set forth in section 50741 of the BBA of 2018. 
5 See section 471(a)(10) of the Act. 
6 See new section (k)(4), (k)(6) of Section 472 of the Act as set forth in section 50741 of the BBA of 2018. 
2  Under section 1905(a) of the Act7, there is a general prohibition on Medicaid payment for any 
services provided to an individual who has not yet attained 65 years of age who is residing in an 
IMD. This is commonly known as the IMD exclusion, and it applies to any care or services 
provided to patients residing in an IMD inside or outside of the IMD.  There are two 
longstanding statutory exceptions8 9 to the IMD exclusion under section 1905(a). First, inpatient 
hospital services, nursing facility services, and intermediate care facility services for individuals 
age 65 and older in IMDs can be reimbursed.10  Second, inpatient psychiatric hospital services 
for individuals under age 21 furnished by a psychiatric hospital, a general hospital with a 
psychiatric program that meets the applicable conditions of participation, or an accredited 
psychiatric facility, commonly referred to as a Psychiatric Residential Treatment Facility 
(PRTF), that meets certain requirements, can also be reimbursed. 11 This is commonly referred to 
as the psych under 21 benefit. 
Q3: Will QRTPs Qualify as IMDs? 
A3: Title IV-E specifies that QRTPs are to have a trauma-based treatment model that is 
designed to address the needs, including clinical needs as appropriate, of children with serious 
emotional or behavioral disorders or disturbances and, with respect to a child, are able to 
implement the treatment identified for the child by the assessment of the child . . .12 In addition, 
under title IV-E, QRTPs must be licensed as a child care institution.13 Therefore, QRTPs may 
qualify as IMDs if they are primarily engaged in providing diagnosis, treatment, or care of 
persons with mental diseases including medical attention, nursing care, and related services, and 
have more than 16 beds. 
Existing Medicaid IMD policy, which has not been changed as a result of the FFPSA, is 
applicable in this circumstance. State Medicaid agencies must review each QRTP, if over 16 
beds, to make a determination if the facility meets the definition of an IMD according to 
Medicaid statute, regulation and guidance in the State Medicaid Manual. If initial review is not 
7 Clause (B) following section 1905(a) of the Act. 
8 Section 1012 of the SUPPORT Act creates a limited exception. Specifically, section 1012(a) states that for a woman 
who is eligible on the basis of being pregnant (and up to 60-days postpartum), who is a patient in an IMD for purposes of 
receiving treatment for a substance use disorder (SUD), who is either enrolled under the state plan immediately before 
becoming a patient in the IMD, or who becomes eligible to enroll while a patient in an IMD, the IMD exclusion shall not 
be construed to prohibit federal financial participation for medical assistance for items and services provided outside of 
the IMD to such women. More information about this provision is available at https://www.medicaid.gov/federal-policy- 
guidance/downloads/cib072619-1012.pdf 
9 Section 5052 of the SUPPORT Act added a new section 1915(l) state plan option to the Act for Medicaid 
beneficiaries age 21 through 64 who are in an IMD for a SUD diagnosis to receive services from October 1, 2019 
through September 30, 2023. 
10 42 C.F.R. 440.140 
11 42 C.F.R. 440.160; Section 12005 of the 21st Century Cures Act  (P.L. 114-255) requires Medicaid 
reimbursement for Early and Periodic Screening, Diagnostic and Treatment (EPSDT) services for children under age 
21 who are receiving inpatient psychiatric hospital services. Otherwise, the IMD payment exclusion applies to 
reimbursement for services inside or outside the IMD, including EPSDT services.  More information on section 
12005 of the 21st Century Cures Act is available at https://www.medicaid.gov/federal-policy- 
guidance/downloads/cib062018.pdf 
12 See new section (k)(4) of Section 472 of the Act as set forth in section 50741 of the BBA of 2018. 
13 See new section 472(k)(1) of the Act as set forth in section 50741 of the BBA of 2018. 
3  clear whether the overall character of a facility is that of an IMD, then a thorough IMD 
assessment must be made.14 If the state Medicaid agency determines that the facility is an IMD, 
federal financial participation (FFP) generally would not be available for any Medicaid services 
provided inside or outside of the QRTP to Medicaid eligible children residing in the QRTP, 
unless one of the two exceptions to the IMD exclusion described above applies. Additionally, 
once a state Medicaid agency makes the determination that a facility is an IMD, it must cease 
claiming immediately for FFP for individuals residing in that facility. States may find that prior 
to becoming a QRTP, some of the facilities are already IMDs, in which case the state must also 
cease claiming immediately for FFP for individuals residing in that facility. If a state does not do 
so, it is at risk for an audit finding and CMS may take back FFP for claims for individuals 
residing in the facility that was determined to be an IMD. CMS is available to provide technical 
assistance to states on Medicaid IMD policy. 
Q4: Could QRTPs qualify for any of the exceptions to the IMD exclusion? 
A4: Because a QRTP is a child-care institution under Title IV-E of the Act and for purposes of 
Medicaid, the exception for inpatient hospital services, nursing facility services, and intermediate 
care facility services for individuals age 65 and older in IMDs would not apply. 
The psych under 21 benefit exception may or may not apply to a particular QRTP. The psych 
under 21 exception applies to inpatient psychiatric hospital services for individuals under age 21 
furnished by a psychiatric hospital, a general hospital with a psychiatric program that meets the 
applicable conditions of participation, or an accredited psychiatric facility, commonly referred to 
as a Psychiatric Residential Treatment Facility (PRTF), that meet certain requirements.15 A 
QRTP would not meet the definition of inpatient as set forth in the Medicaid regulations and 
therefore would not qualify as a psychiatric hospital or psychiatric program in an acute care 
hospital. Under 42 C.F.R.  435.1010, inpatient is defined, in relevant part, as a patient who 
has been admitted to a medical institution as an inpatient on the recommendation of a physician 
or dentist and who receives room and board and professional services in the institution for a 24 
hour period or longer.16  A medical institution is defined, in relevant part, as an institution  
that is organized to provide medical care, including nursing and convalescent care. . .17 A 
child-care institution is defined separately and distinctly from inpatient and medical institution in 
42 C.F.R.  435.1010 as a non-profit private or public child-care institution that accommodates 
no more than 25 children, which is licensed by the States in which it is situated....18 QRTPs 
must be licensed under title IV-E as child care institutions, with a definition similar to the 
definition in 42 C.F.R.  435.1010.  QRTPs also likely would not meet the requirements to 
qualify as PRTFs, which have more stringent standards, including meeting the requirements in 
42 CFR sections 441.151 through 441.182. If, however, a QRTP meets the applicable 
requirements and conditions of participation to qualify as a PRTF, then FFP would be available. 
14 State Medicaid Manual, Section 4390. 
15 42 C.F.R. 440.160 
16 42 CFR 435.1010 
17 Ibid. 
18 Ibid. 
4  There is some authority for states to receive FFP for monthly capitation payments paid to 
Medicaid managed care plans for coverage of Medicaid beneficiaries residing in IMDs. 
Medicaid managed care rules permit FFP for monthly capitation payments to managed care plans 
for enrollees that are inpatients in a residential setting that may qualify as an IMD when the stay 
is for no more than 15 days during the period of the monthly capitation payment and certain 
other conditions are met. 
Q5: Can a state include QRTPs in a section 1115 demonstration? 
A5: On November 13, 2018, CMS issued State Medicaid Director Letter (SMDL) #18-011 
regarding Opportunities to Design Innovative Service Delivery Systems for Adults with SMI or 
Children with SED.19  This SMDL allows for Federal Financial Participation (FFP) for 
Medicaid coverable services provided to beneficiaries with SMI or SED during short term stays 
for acute care in IMDs.  States participating in this demonstration opportunity are also expected 
to take a number of actions to ensure access to a continuum of care for beneficiaries with SMI or 
SED, including taking actions to improve community-based mental health care in addition to the 
short term stays in IMDs, and to improve care coordination and transitions between levels of 
care. For beneficiaries who are under 21 years of age, states may include services in IMDs that 
qualify as settings eligible to provide the psych under 21 benefit. 
In light of the FFPSA defining QRTPs as a specific category of allowable placement for IV-E 
funding under federal law, states may include QRTPs that meet the definition of and are 
determined by the state to be an IMD and are not PRTFs in a section 1115 demonstration 
application as described in SMDL #18-011. A state should specifically request to include 
QRTPs in such a SMI/SED demonstration application. 
In addition, the QRTPs that the state wishes to include in these demonstrations should meet the 
criteria for QRTPs described above and other requirements for QRTPs, including requirements 
regarding needs assessments and assurance of appropriateness of placement in those settings as 
specified in the FFPSA. QRTPs will also have to meet any guidance or regulations that may be 
issued by the Administration for Children and Families for these settings.20 Additionally, 
services provided by the QRTP would be eligible for FFP only when the billing provider is 
enrolled in Medicaid and the practitioner who furnishes a service meets federal and state 
qualifications to provide the service. Finally, QRTPs should also comply with CMS regulations 
regarding seclusion and restraint found in 42 CFR Part 483 Subpart G. 
19 State Medicaid Director on Opportunities to Design Innovative Service Delivery Systems for Adults with Serious 
Mental Illness or Children with Serious Emotional Disturbance, SMD 18-011, Nov. 18, 2018, available at 
https://www.medicaid.gov/federal-policy-guidance/downloads/smd18011.pdf. 
20See, e.g., Administration for Children and Families, Program Instruction on Public Law 115-123, the Family 
First Prevention Services Act: Implementation of Title IV-E Plan Requirements, issued July 9, 2018, pp. 10-12, 
available on-line at https://www.acf.hhs.gov/sites/default/files/cb/pi1807.pdf. 
5  Q6: Are there limitations on what can be covered by Medicaid in QRTPs included in 
section 1115 demonstrations? 
A6: FFP will not be available for room and board costs in QRTPs, unless they are also certified 
as PRTFs. The definition of medical assistance described in 1905(a) does not include room and 
board as a separate, coverable benefit. Instead, room and board costs are included in the 
definition of an inpatient in a medical institution.21 Medicaid coverage of room and board costs 
is limited to settings that qualify as inpatient settings under Section 1905(a) of the Act. 
Through the section 1115 SMI/SED 1115 demonstrations, FFP is available for services furnished 
to Medicaid beneficiaries during short-term stays for acute care in psychiatric hospitals or 
residential settings that qualify as IMDs. Accordingly, states are expected to achieve a statewide 
average length of stay of 30 days or less in the participating IMDs. States interested in including 
QRTPs in their section 1115(a) demonstrations will need to determine how best to include stays 
in QRTPs, recognizing that overall the state will be expected to achieve a statewide average of 30 
days as part of these demonstrations. 
States will also be expected to report data regarding any participating QRTPs as part of the 
monitoring and evaluation information states are expected to submit to CMS for these 
demonstrations. 
21 See 42 CFR 440.2. 
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