SMDL #01-013 
January 19, 2001 
Dear State Child Welfare and State Medicaid Director: 
The Department of Health and Human Services (HHS) is dedicated to providing 
support to children and other populations who receive case management services. 
We want to take this opportunity to clarify HHS policy on targeted case management 
services under the Medicaid program as it relates to an individual's participation in 
other social, educational, or other programs. 
When social programs or other programs are also the providers of Medicaid case 
management services, a number of complex issues may arise. This letter clarifies 
existing HHS policy regarding State plan case management and Title IV-E foster care 
programs. Specifically, this letter discusses: (1) the Medicaid definition of case 
management services, (2) whether services provided to individuals not eligible for 
Medicaid, or eligible but not part of the target population, can be covered, and (3) 
application of third party liability rules. 
Please note that we anticipate issuing additional guidance for State plan case 
management as it relates to all programs through notice and comment rulemaking in 
the future. 
I. Definition of Case Management Services
Sections 1905(a)(19) and 1915(g)(2) of the Social Security Act (the Act) define case 
management as services which will assist an individual eligible under the State plan 
in gaining access to needed medical, social, educational, and other services. Case 
management services are referred to as targeted case management (TCM) services 
when the services are not furnished in accordance with Medicaid statewideness or 
comparability requirements. This flexibility enables States to target case 
management services to specific classes of individuals and/or to individuals who 
reside in specified areas. 
Because the statute permits states flexibility to target Medicaid case management 
services based on any characteristic or combination of characteristics, States may 
use eligibility for, or participation in, a state social welfare program or other 
programs as the basis for defining the target population among Medicaid eligible 
individuals. Foster care programs employ their own case workers who, in addition to 
facilitating the delivery of foster care benefits and services, help individuals access 
and coordinate the delivery of other services. When foster case workers are also 
enrolled in Medicaid as providers of case management services, States must 
undertake a careful review to ensure the activities to be claimed under Medicaid 
meet the definition of case management and are not directly connected to the 
delivery of foster care benefits and services. 
Page 2 - State Child Welfare and State Medicaid Director  While HCFA has not further defined case management services in regulations, 
activities commonly understood to be allowable include: (1) assessment of the 
eligible individual to determine service needs, (2) development of a specific care 
plan, (3) referral and related activities to help the individual obtain needed services, 
and (4) monitoring and follow-up. When consistent with Medicaid requirements 
discussed below, Medicaid can be used to supplement these activities for Medicaid 
eligible individuals when they are embedded in another social or other program. We 
discuss below activities that are allowable case management as well as activities that 
would be unallowable as case management. In general, allowable activities are those 
that include assistance in accessing a medical or other service, but do not include the 
direct delivery of the underlying service. 
Assessment: This component includes activities that focus on needs identification. 
Activities include assessment of an eligible individual to determine the need for any 
medical, educational, social, and other services. Specific assessment activities 
include: taking client history, identifying the needs of the individual, and completing 
related documentation. It also includes gathering information from other sources 
such as family members, medical providers, and educators, if necessary, to form a 
complete assessment of the Medicaid eligible individual. 
Care Planning: This component builds on the information collected through the 
assessment phase and includes activities such as ensuring the active participation of 
the Medicaid-eligible individual and working with the individual and others to develop 
goals and identify a course of action to respond to the assessed needs of the 
Medicaid eligible individual. The goals and actions in the care plan should address 
medical, social, educational, and other services needed by the Medicaid eligible 
individual. 
Referral & Linkage: This component includes activities that help link Medicaid eligible 
individuals with medical, social, educational providers and/or other programs and 
services that are capable of providing needed services. For example, making 
referrals to providers for needed services and scheduling appointments may be 
considered case management. 
Monitoring/Follow-up: This component includes activities and contacts that are 
necessary to ensure the care plan is effectively implemented and adequately 
addressing the needs of the Medicaid eligible individual. The activities and contacts 
may be with the Medicaid eligible individual, family members, providers, or other 
entities. These may be as frequent as necessary to help determine such things as (i) 
whether services are being furnished in accordance with a Medicaid eligible 
individual's care plan, (ii) the adequacy of the services in the care plan, and (iii) 
changes in the needs or status of the Medicaid eligible individual. This function 
includes making necessary adjustments in the care plan and service arrangements 
with providers. 
Unallowable services: Medicaid case management services do not include payment 
for the provision of direct services (medical, educational, or social) to which the 
Medicaid eligible individual has been referred. For example, if a child has been 
referred to a state foster care program, any activities performed by the foster care 
case worker that relate directly to the provision of foster care services cannot be 
covered as case management. Since these activities are a component of the overall 
foster care service to which the child has been referred, the  Page 3 - State Child Welfare and State Medicaid Director 
activities do not qualify as case management. In the case of foster care programs, 
we view the following activities as part of the direct delivery of foster care services 
and therefore may not be billed to Medicaid as a case management activity. The 
following list is intended to be illustrative and not all inclusive: research gathering 
and completion of documentation required by the foster care program, assessing 
adoption placements, recruiting or interviewing potential foster care parents, serving 
legal papers, home investigations, providing transportation, administering foster care 
subsidies, and making placement arrangements. During the State plan approval 
process, HCFA will provide guidance to determine Medicaid billable activities. 
II. Contacts with Non-eligible or Non-targeted Individuals
There is confusion involving contact with individuals who are not eligible for Medicaid 
or, in the case of targeted services, individuals who are Medicaid eligible but not part 
of the target population specified in the State plan. HCFA policy permits contacts 
with non-eligible or non-targeted individuals to be considered a Medicaid case 
management activity, and to be billed to Medicaid, when the purpose of the contact 
is directly related to the management of the eligible individual's care. It may be 
appropriate to have family members involved in all components related to the 
eligible individual's case management because they may be able to help identify 
needs and supports, assist the eligible individual to obtain services, provide case 
workers with useful feedback, and alert them to changes. 
On the other hand, contacts with non-eligibles or non-targeted individuals that relate 
directly to the identification and management of the non-eligible or non-targeted 
individual's needs and care cannot be billed to Medicaid. While the nature of the 
contacts may squarely fall into one of the components of case management (i.e., 
assessments, care planning, referral and follow-up), Medicaid cannot be used to pay 
for them due to the fact that the individual is not Medicaid eligible or is eligible but 
does not meet the targeting criteria set by a State in its State plan amendment. 
III. Third Party Liability
In accordance with Medicaid third party liability policy, Medicaid would only be liable 
for the cost of these services if they fall within the definition of case management 
and there are no other third parties liable to pay. 
The Administration for Children and Families has clarified that the Title IV-E program 
does not authorize reimbursement for the assessment, care planning, and monitoring 
of medical care and services. Since the Title IV-E program is not liable for the 
assessment, care planning, and monitoring of medical care needs, the cost for such 
activities could be billed to the State Medicaid program if the activities are furnished 
to a Medicaid eligible individual who is a member of a target group defined in the 
State plan. This also assumes that there is not another third party payer available to 
cover the costs of medical case management services provided to a Medicaid eligible 
individual. 
Page 4 - State Child Welfare and State Medicaid Director  In contrast, referrals to medical care providers are Title IV-E reimbursable. This 
means that referrals are not billable to Medicaid. Because Title IV-E is liable for 
covering case management for a range of other services (including referrals to 
medical care), States which offer Medicaid case management services to foster care 
populations must properly allocate case management costs between the two 
programs in accordance with OMB Circular A-87 under an approved cost allocation 
program. 
If you have any questions, please contact Mary Jean Duckett, Director, Division of 
Benefits, Coverage and Payment, Disabled and Elderly Health Programs Group at 
410-786-3294. 
Sincerely, 
/s/  
Olivia A. Golden  
Assistant Secretary for Children and Families 
/s/  
Timothy M. Westmoreland  
Director  
Center for Medicaid and State Operations  
Health Care Financing Administration 
cc:  
ACF Regional Administrators 
HCFA Regional Administrators 
HCFA Associate Regional Administrators for Medicaid and State Operations 
Brent Ewig  
Senior Director, Access Policy  
Association of State and Territorial Health Officials 
Lee Partridge  
Director, Health Policy Unit  
American Public Human Services Association 
Joy Wilson  
Director, Health Committee  
National Conference of State Legislatures 
Matt Salo  
Director of Health Legislation  
National Governors Association