Kentucky - Residential Care Service — Licensing, Medicaid Enrollment and Startup Requirements

Last reviewed: 2026-08-16

In Kentucky, 24-hour residential care services delivering habilitation, supervision, and personal care are primarily covered under the Supports for Community Living (SCL) and Acquired Brain Injury (ABI) Medicaid Home and Community-Based Services (HCBS) waivers. These services are officially designated as "Residential Support Services" or "Supervised Residential Care" (Levels I, II, and III). Because Kentucky Medicaid does not pay for room and board in licensed Personal Care Homes or Assisted Living Communities, HCBS residential providers operate provider-owned or controlled settings that must be certified specifically for waiver service delivery rather than relying solely on a standard facility license.

The single biggest structural barrier to entry for this service in Kentucky is the mandatory Department for Behavioral Health, Developmental and Intellectual Disabilities (DBHDID) Provider Certification process, which acts as a strict gatekeeper before Medicaid enrollment. Applicants cannot simply enroll via the Medicaid portal; they must first submit a Letter of Intent to DBHDID, complete mandatory pre-application training, pass a rigorous programmatic Readiness Review, and prove full compliance with the CMS HCBS Settings Final Rule before the Cabinet for Health and Family Services (CHFS) will accept a Medicaid application.

1. Service Definition and Scope

Kentucky defines these services under the SCL waiver (907 KAR 12:010) as Residential Support Services and under the ABI waiver (907 KAR 3:090) as Supervised Residential Care. These services provide 24-hour supervision, habilitation, and support with activities of daily living (ADLs) in a provider-owned, leased, or controlled community setting.

The service is tiered by acuity (Level I, II, and III), with Level III requiring intensive behavioral or medical supports. Medicaid reimburses the habilitative and personal care components, while the participant is responsible for room and board costs.

• Service Name: Residential Support Services (SCL Waiver) and Supervised Residential Care (ABI Waiver)
• Regulatory Citation: 907 KAR 12:010 (SCL Waiver) and 907 KAR 3:090 (ABI Waiver)
• Scope of Coverage: Includes 24-hour supervision, personal care, adaptive skills training, and community integration
• Exclusions: Medicaid funds cannot be used for room and board, property maintenance, or standard housing costs
• Setting Limits: Provider-controlled settings must comply with the HCBS Settings Final Rule, ensuring privacy, lockable doors, and choice of roommates
• Acuity Tiers: Level I (basic support), Level II (moderate support), Level III (intensive medical/behavioral support)

2. Regulatory and Oversight Agencies

Oversight is divided between the Cabinet for Health and Family Services (CHFS) (https://chfs.ky.gov) Department for Medicaid Services (DMS) (https://chfs.ky.gov/agencies/dms), which handles financial enrollment, and the Department for Behavioral Health, Developmental and Intellectual Disabilities (DBHDID) (https://chfs.ky.gov/agencies/dbhdid), which manages programmatic certification.

Additionally, the Office of Inspector General (OIG) (https://chfs.ky.gov/agencies/os/oig) may be involved if the physical setting meets the threshold for a licensed Personal Care Home or Family Care Home, though many waiver homes operate under DBHDID certification alone if under the bed-count threshold.

• Cabinet for Health and Family Services (CHFS) (https://chfs.ky.gov): Serves as the umbrella agency for Medicaid and behavioral health in Kentucky
• Department for Medicaid Services (DMS) (https://chfs.ky.gov/agencies/dms): Administers the Medicaid program, oversees the MPPA portal, and handles final provider enrollment
• Department for Behavioral Health, Developmental and Intellectual Disabilities (DBHDID) (https://chfs.ky.gov/agencies/dbhdid): Conducts the mandatory provider certification, readiness reviews, and ongoing programmatic surveys
• Office of Inspector General (OIG) (https://chfs.ky.gov/agencies/os/oig): Licenses physical facilities such as Personal Care Homes if the setting requires formal facility licensure
• Centers for Medicare & Medicaid Services (CMS) (https://www.medicaid.gov): Federal agency enforcing the HCBS Settings Rule and waiver compliance

3. Gatekeeping Prerequisites: Who Can Even Apply

Kentucky does not currently have a Certificate of Need (CON) requirement or a moratorium specifically for SCL/ABI waiver residential providers. However, DBHDID Provider Certification is a mandatory, structural precondition.

A provider cannot submit a Medicaid enrollment application through the KY MPPA system without first obtaining an approved DBHDID Certification letter. This requires passing a Readiness Review and proving HCBS Settings Rule compliance.

• DBHDID Certification Prerequisite: Providers must be certified by DBHDID before DMS will process a Medicaid enrollment application
• Letter of Intent (LOI): Applicants must submit an LOI to DBHDID to initiate the certification process
• Mandatory Provider Orientation: Key agency personnel must attend DBHDID-sponsored provider orientation before the application is accepted
• HCBS Settings Rule Compliance: The proposed residential setting must pass a site-specific validation to ensure it is not institutional and meets all CMS community integration standards
• Readiness Review: DBHDID conducts a comprehensive review of the agency's policies, financial stability, and staffing plans before granting initial certification
• Certificate of Need (CON): Genuinely none exists for SCL/ABI waiver residential support agencies, though it is required for institutional ICF/IID facilities

4. Licensure and Certification Requirements

For HCBS waiver residential services, DBHDID certification acts as the primary operating authority. If the provider operates a setting with four or more beds, they may also need a Personal Care Home or Family Care Home license from the CHFS OIG.

The DBHDID certification process requires submission of a detailed provider application, organizational charts, financial projections, and comprehensive policy manuals.

• DBHDID Provider Application: Requires submission of business plans, organizational structure, and proof of financial viability
• OIG Facility Licensure: Required only if the physical setting meets the statutory definition of a Personal Care Home (4+ beds) or Family Care Home (2-3 beds) under KRS 216B
• Financial Solvency: Applicants must demonstrate at least three months of operating capital without reliance on Medicaid revenue
• Policy Manual Submission: Must submit comprehensive policies covering incident management, human rights, medication administration, and behavioral supports
• Site Inspection: DBHDID (and OIG, if applicable) conducts an initial physical site inspection to ensure safety, accessibility, and HCBS compliance
• Certification Renewal: DBHDID certification is typically granted annually and requires a recertification survey

5. Medicaid Provider Enrollment

Once DBHDID certification is secured, providers must enroll via the Kentucky Medicaid Partner Portal Application (KY MPPA) (https://medicaidsystems.ky.gov/Partnerportal/home.aspx). The process requires linking the DBHDID certification to the Medicaid ID.

Providers must enroll with a Type 2 NPI and pay the federal application fee. Following FFS enrollment, providers may need to credential with Kentucky's Medicaid Managed Care Organizations (MCOs) if serving populations managed under those plans.

• Enrollment Portal: Applications must be submitted electronically through the KY MPPA (https://medicaidsystems.ky.gov/Partnerportal/home.aspx)
• Provider Type: Must enroll under the specific Provider Type designated for SCL or ABI waiver services (e.g., Provider Type 32 for SCL)
• Application Fee: Subject to the CMS institutional provider application fee ($731 for 2024/2025), unless waived by Medicare enrollment
• Required Identifiers: Must possess a Type 2 National Provider Identifier (NPI) and an IRS Employer Identification Number (EIN)
• MCO Credentialing: Must separately credential with Kentucky MCOs such as WellCare of Kentucky (https://www.wellcare.com/kentucky) or Passport by Molina Healthcare (https://www.molinahealthcare.com/providers/ky/medicaid/home.aspx) if the participant's waiver services are managed by an MCO
• Revalidation: Providers must revalidate their Medicaid enrollment every five years through the KY MPPA

6. Staffing, Training and Background Checks

Kentucky mandates strict staffing ratios and training requirements for Residential Support Services. Staff must be awake and on duty 24/7, and ratios are dictated by the participant's person-centered plan of care.

All direct support professionals (DSPs) must pass comprehensive background checks and complete DBHDID-approved training modules before providing unsupervised care.

• Minimum Qualifications: DSPs must be at least 18 years old, possess a high school diploma or GED, and have a valid driver's license
• Background Checks: Mandatory Kentucky State Police criminal record check, Child Abuse and Neglect (CAN) registry check, and Caregiver Misconduct Registry check
• Initial Training: Must complete DBHDID-approved training in CPR, First Aid, medication administration, and crisis intervention
• Waiver-Specific Training: Staff must complete specific modules on the SCL or ABI waiver, person-centered planning, and HCBS rights
• Staffing Ratios: Dictated by the participant's Plan of Care; Level III residential care often requires 1:1 or highly specialized staffing
• Tuberculosis (TB) Testing: All staff must have a negative TB test or risk assessment upon hire and annually thereafter

7. Documentation, Policies and Records

Providers must maintain exhaustive records to support claims and demonstrate compliance with DBHDID standards. This includes daily shift notes, medication administration records (MARs), and incident reports.

Policies must explicitly address the HCBS Settings Rule, ensuring participants have lease agreements (or residency agreements), control over their schedules, and access to food at any time.

• Person-Centered Service Plan (PCSP): Providers must maintain a copy of the participant's PCSP and document how daily activities align with its goals
• Daily Progress Notes: Must include the date, start/stop times, specific interventions provided, and the signature of the DSP
• Medication Administration Records (MAR): Strict documentation of all prescribed and over-the-counter medications administered by trained staff
• Residency Agreements: Participants must have a legally enforceable lease or residency agreement providing eviction protections comparable to Kentucky landlord-tenant law
• Incident Reporting: Critical incidents must be reported to the CHFS Medicaid Waiver Management Application (MWMA) (https://chfs.ky.gov/agencies/dms/dca/Pages/mwma.aspx) within 24 hours
• Record Retention: All clinical and financial records must be retained for a minimum of six years from the date of service

8. Billing, Rates and Claims

Residential Support Services are billed on a per diem (daily) basis. Rates are established by DMS and vary based on the acuity level (Level I, II, or III) of the participant.

Claims are submitted through the Kentucky Medicaid MMIS or the respective MCO's clearinghouse. Providers must ensure that the participant was present and received services on the billed day; bed-hold days for hospitalizations may have specific billing limits.

• Billing Unit: Services are billed as a per diem (daily) rate
• Rate Tiers: Reimbursement rates are tiered (Level I, II, III) based on the participant's assessed needs and the required staffing intensity
• Claim Submission: Claims are submitted electronically via the KY MPPA/MMIS portal or through MCO-specific portals using standard 837P or CMS-1500 formats
• Prior Authorization: All residential services must be prior-authorized by DBHDID or the MCO and reflected in the Medicaid Waiver Management Application (MWMA)
• Room and Board Exclusion: Providers must collect room and board payments directly from the participant (usually from SSI benefits); these cannot be billed to Medicaid
• Electronic Visit Verification (EVV): While EVV is required for many personal care services, 24-hour residential per diem services are generally exempt from standard EVV clock-in/out requirements in KY

9. Approval Sequence and Timeline

The end-to-end process for becoming a residential waiver provider in Kentucky is lengthy, typically taking 6 to 9 months due to the sequential nature of DBHDID certification and Medicaid enrollment.

Providers cannot begin delivering billable services until both the DBHDID certification is issued and the KY MPPA enrollment is fully approved with an effective date.

• Step 1: Submit Letter of Intent (LOI) to DBHDID and attend mandatory provider orientation (1-2 months)
• Step 2: Submit full DBHDID Provider Application, policies, and HCBS Settings Rule compliance documentation (2-3 months)
• Step 3: Undergo DBHDID Readiness Review and site inspection (1-2 months)
• Step 4: Receive DBHDID Certification letter
• Step 5: Submit Medicaid enrollment application via KY MPPA with the application fee and certification attached (30-60 days)
• Step 6: Complete MCO credentialing and contracting, if applicable (60-90 days)

10. Common Denials and Survey Findings

Applications are frequently delayed or denied during the DBHDID Readiness Review if policies are generic, lack Kentucky-specific regulatory citations, or fail to demonstrate financial solvency.

During ongoing surveys, the most common citations involve HCBS Settings Rule violations, such as restricting participant access to food or failing to provide lockable bedroom doors.

• HCBS Settings Violations: Citations for institutional practices, such as rigid house schedules, lack of privacy, or restricted access to the community
• Inadequate Financial Reserves: Application denial due to failure to prove three months of operating capital without Medicaid revenue
• Generic Policies: Rejection of policy manuals that are purchased online and not customized to Kentucky's 907 KAR regulations
• Background Check Failures: Citations for allowing staff to work before the KSP criminal background check and CAN registry results are fully returned
• Medication Errors: Survey findings related to incomplete MARs or staff administering medication without current DBHDID-approved training
• Missing Residency Agreements: Failure to execute legally binding lease agreements with participants, violating HCBS requirements

11. Key Contacts and Resources

Providers should rely on the official CHFS portals and DBHDID resources for the most current regulations, rate schedules, and training schedules.

The Medicaid Partner Portal Application (MPPA) help desk and the DBHDID Provider Enrollment branch are the primary contacts for application status updates.

• KY Medicaid Partner Portal Application (MPPA): https://medicaidsystems.ky.gov/Partnerportal/home.aspx
• CHFS Department for Medicaid Services (DMS): https://chfs.ky.gov/agencies/dms
• CHFS Department for Behavioral Health, Developmental and Intellectual Disabilities (DBHDID): https://chfs.ky.gov/agencies/dbhdid
• CHFS Office of Inspector General (OIG): https://chfs.ky.gov/agencies/os/oig
• Kentucky Administrative Regulations (KAR) Title 907: https://apps.legislature.ky.gov/law/kar/TITLE907.HTM
• KY MPPA Provider Enrollment Help Desk: 1-877-838-5085

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