On August 12, Senators Diane Feinstein (D-Calif.) and Richard Burr (R-N.C.) introduced legislation to ensure that counties and states do not lose federal Medicaid coverage for children placed in certain residential behavioral and mental health settings. The Ensuring Medicaid Continuity for Children in Foster Care Act of 2021 (S. 2689) is critically important legislation to ensure that counties implementing reforms under the Family First Prevention Services Act of 2018 (FFPSA; PL 115-123) do not experience the unintended consequence of forgoing federal health benefits for children in need of specialized services.  

Slated to take full effect October 1, 2021, FFPSA mandates significant reforms aimed at curtailing the use of congregate care in the foster care system. Under the law, very few residential settings for children in foster care are eligible for federal reimbursement. Those that do qualify for reimbursement must serve children independently assessed to have serious emotional or behavioral disorders or disturbances and meet rigorous qualifications around licensing, length of stay, and treatment. These facilities, designated as Qualified Residential Treatment Programs (QRTPs), represent an opportunity for providing safe, therapeutic, effective interventions to help children heal from trauma.

Unfortunately, by implementing FFPSA to place children in QRTPs, states and counties now risk losing Medicaid benefits for children in those settings. Guidance from the Center for Medicaid and Medicare Services (CMS) suggests that QRTPs with more than 16 beds may fall under the Institutions for Mental Disease (IMD) exclusion, a law that prohibits Medicaid from covering mental health and residential care in facilities. Without a change in law clarifying that QRTPs are not IMDs, children who require high-quality residential interventions will lose access to federal Medicaid coverage while placed in some QRTPs; and the entire cost of their medical, dental, behavioral, and mental health care will fall to states and counties.

County governments are fully or partially responsible for the child welfare system in 11 states. We strongly support FFPSA’s prioritization of prevention and non-congregate as well as the law’s explicit recognition that children with assessed behavioral and mental health needs must have access to trauma-responsive supports and services from qualified professionals in residential settings.

NACo strongly supports legislation clarifying the intent of FFPSA to protect children in QRTPs from losing their federal Medicaid benefits and urges Congress to resolve  this issue before the implementation deadline of October 1, 2021.