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Minnesota - Transitional Assistance Services — Licensing, Medicaid Enrollment and Startup Requirements

Last reviewed: 2026-09-10

The Minnesota Department of Human Services (DHS) funds Transitional Services through the Brain Injury (BI), Community Alternative Care (CAC), Community Access for Disability Inclusion (CADI), and Developmental Disabilities (DD) waivers to cover one-time expenses and coordination when a person moves from an institution to a community setting. Providers must enroll through the Minnesota Provider Screening and Enrollment (MPSE) portal and receive a Service Authorization (SA) from a county, tribal nation, or Managed Care Organization (MCO) lead agency before delivering services.

Effective January 1, 2026, DHS implemented a 24-month moratorium on all new 245D Home and Community-Based Services (HCBS) licenses, which blocks new applicants from adding service lines or obtaining licensure unless they secure a specific lead agency exception. Providers of Transitional Services that require 245D Basic Support licensure are subject to this freeze, while vendors providing only physical goods or deposits must still pass lead agency vendor qualification and MHCP enrollment.

1. Service Definition and Scope

In Minnesota, Transitional Services cover the reasonable, one-time costs and coordination necessary to help a person transition from an eligible institution (such as a hospital, nursing facility, or ICF/DD) to their own home in the community. The service is divided into two components: the actual expenses (deposits, essential furniture, household supplies) and the coordination or support required to arrange the move.

The state distinguishes between providers who merely supply goods and those who provide direct coordination services. Direct coordination typically falls under 245D Basic Support Services, while vendors supplying goods may operate under standard MHCP vendor enrollment authorized by the lead agency.

2. Regulatory and Oversight Agencies

The Minnesota Department of Human Services (DHS) is the primary regulatory authority for all HCBS waiver services, managing both provider enrollment and licensure. Within DHS, the Licensing Division oversees 245D compliance, while the Minnesota Health Care Programs (MHCP) division handles billing and provider enrollment.

Lead agencies, which include county human service offices, tribal nations, and Managed Care Organizations (MCOs), act as the local oversight and authorizing bodies. They assess member needs, approve vendors, and issue the Service Authorizations required for payment.

3. Gatekeeping Prerequisites: Who Can Even Apply

The 245D HCBS Licensing Moratorium is an absolute structural precondition blocking new applicants. Effective January 1, 2026, through December 31, 2027, DHS stopped accepting new applications for 245D licenses and stopped adding new service lines to currently licensed providers. To bypass this, an applicant must obtain a formal exception request submitted directly by a lead agency demonstrating critical network need.

Even if exempt from 245D (e.g., a vendor only supplying goods), a provider cannot bill MHCP without a lead agency Service Authorization (SA). The lead agency acts as the gatekeeper for vendor approval, meaning a provider must have a relationship with a county, tribal nation, or MCO willing to authorize them for a specific member's transition.

4. Licensure and Certification Requirements

If the Transitional Services involve direct support, coordination, or contact with the member, the provider must hold a 245D HCBS license under the Basic Support Services category. This requires compliance with Minnesota Statutes, chapter 245D, which mandates specific organizational structures, policies, and background study clearances.

Providers acting solely as merchants or property managers (e.g., a landlord receiving a security deposit or a store selling furniture) do not require a 245D license. Instead, they must meet the lead agency's vendor requirements and maintain standard business documentation.

5. Medicaid Provider Enrollment

All providers must enroll in Minnesota Health Care Programs (MHCP) using the Minnesota Provider Screening and Enrollment (MPSE) portal. The portal allows providers to submit their HCBS Programs Service Request Form, track application status, and manage affiliations.

Upon approval, providers receive a welcome letter and must register for a MN-ITS account, which is the state's billing and clearinghouse system. Providers must keep their credentials up to date in MPSE to ensure Service Authorizations remain valid.

6. Staffing, Training and Background Checks

For 245D-licensed providers, all controlling individuals, designated managers, and direct support staff must clear a background study through the DHS NETStudy 2.0 system before having direct contact with members. The agency must designate a Coordinator and a Manager who meet specific competency requirements.

Staff must complete basic orientation and annual training on vulnerable adult reporting, maltreatment of minors, and the specific needs identified in the member's Community Support Plan.

7. Documentation, Policies and Records

Providers must maintain comprehensive documentation to support both 245D compliance and MHCP billing. This includes a Maltreatment of Minors Reporting and Internal Review Policy, data privacy procedures, and detailed receipts for all transitional expenses.

Because Transitional Services often involve purchasing goods, providers must retain itemized invoices, proof of payment, and documentation that the goods were delivered to the member's community home. Lead agencies audit these records to ensure funds were used exclusively for approved transition costs.

8. Billing, Rates and Claims

Transitional Services are billed through the MN-ITS system using the specific procedure codes and rates authorized on the member's Service Authorization (SA). MHCP will only pay for services that exactly match the approved SA line items, including the date span and unit count.

Rates for Transitional Services are typically market-based for goods and deposits, up to the waiver's maximum allowable limit. Providers must verify the SA in their MN-ITS mailbox before incurring expenses, as an approved SA is required but does not guarantee payment if the member loses MA eligibility.

9. Approval Sequence and Timeline

The approval sequence begins with securing a lead agency exception if applying for a 245D license during the moratorium. Once the exception is granted, the provider submits the 245D application to DHS Licensing, which takes up to 90 working days to process after all materials and background studies are received.

Following licensure, the provider submits the DHS-6638 form through the MPSE portal to enroll with MHCP. Finally, the provider must receive a Service Authorization from a lead agency case manager before delivering and billing for services.

10. Common Denials and Survey Findings

The most frequent cause for application denial is the 245D licensing moratorium; applications submitted without a pre-approved lead agency exception are immediately canceled and the fee refunded. Incomplete MPSE portal submissions, particularly missing the DHS-6638 form or failing to upload worker's compensation verification, also cause significant delays.

During post-payment audits, providers frequently face recoupment for billing Transitional Services without a valid, matching Service Authorization, or for failing to maintain itemized receipts proving that funds were spent on allowable household goods rather than excluded items like food or ongoing rent.

11. Key Contacts and Resources

The MHCP Provider Resource Center (PRC) is the primary contact for enrollment, claims, and policy questions, accessible via phone to ensure secure data management. Providers should utilize the MPSE portal training page for weekly Q&A sessions.

For licensing specific inquiries, the DHS Licensing help desk is available during standard business hours. Providers should also consult the Community-Based Services Manual (CBSM) for detailed service limitations and lead agency directories.

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