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

Last reviewed: 2026-09-10

South Dakota funds 24-hour residential habilitation through the CHOICES Waiver, requiring agencies to be certified as a Community Support Provider (CSP) under Administrative Rules of South Dakota (ARSD) Chapter 46:11 by the Department of Human Services (DHS) Division of Developmental Disabilities (DDD). Providers must secure national accreditation from CQL or CARF and execute a purchase of services agreement with DHS before the Department of Social Services (DSS) will accept a Medicaid provider enrollment application.

Services are delivered in provider-managed settings, ranging from supervised living to group homes, with reimbursement rates dynamically tied to the participant's Inventory for Client and Agency Planning (ICAP) score. Agencies must configure their operations to meet the federal HCBS Settings Final Rule and utilize the state-mandated Therap system for all service documentation and electronic visit verification.

1. Service Definition and Scope

Residential Habilitation Services in South Dakota provide continuous 24/7 supervision, adaptive skill-building, and personal care for individuals with intellectual and developmental disabilities (IDD) under the CHOICES Waiver. For older adults and individuals with physical disabilities, similar 24-hour care is delivered as Assisted Living under the HOPE Waiver.

These services are designed to optimize community inclusion while ensuring health and safety in a provider-managed setting.

• Service Name: Residential Habilitation Services (CHOICES Waiver) or Assisted Living (HOPE Waiver).
• Target Population: Individuals with IDD (CHOICES) or older adults and individuals with physical disabilities (HOPE).
• Setting Requirements: Provider-managed residential settings that are fully compliant with the federal HCBS Settings Final Rule.
• Excluded Costs: Room and board expenses, including building utility bills, rental lines, and food items, are strictly excluded from Medicaid reimbursement and must be collected via independent tenant leases.
• Service Components: Adaptive skill development, medical tracking, medication oversight, and community inclusion activities.

2. Regulatory and Oversight Agencies

Oversight is bifurcated between programmatic divisions within the Department of Human Services (DHS) and the financial and enrollment authority of the Department of Social Services (DSS). Facility licensure for Assisted Living is handled separately by the Department of Health (DOH).

Providers must maintain active compliance with the specific division overseeing their target population's waiver.

• Programmatic Authority (IDD): South Dakota Department of Human Services (DHS), Division of Developmental Disabilities (DDD) (https://dhs.sd.gov/developmental-disabilities).
• Programmatic Authority (Aging/Physical): South Dakota Department of Human Services (DHS), Division of Long Term Services and Supports (LTSS) (https://dhs.sd.gov/long-term-services-and-supports).
• Medicaid Authority: South Dakota Department of Social Services (DSS), Medical Services Division (https://dss.sd.gov/medicaid/providers/enrollment/enrollment.aspx).
• Facility Licensure: South Dakota Department of Health (DOH), Office of Health Care Facilities Licensure and Certification (https://doh.sd.gov/providers/licensure/).

3. Gatekeeping Prerequisites: Who Can Even Apply

South Dakota imposes strict sequential prerequisites before a Medicaid enrollment application is accepted. Providers cannot simply enroll as a Medicaid provider; they must first secure programmatic approval and a contract from the respective DHS division.

Attempting to bypass the DHS contracting phase will result in an immediate denial of the DSS Medicaid application.

• DHS Contract Prerequisite: Providers must receive approval of the LTSS or DDD Initial Enrollment process and have an active purchase of services agreement (contract) in place with DHS before submitting an application through the SD Medicaid Provider Enrollment portal.
• National Accreditation (CHOICES): Prospective Community Support Providers (CSPs) must file for and secure national quality accreditation from CQL (The Council on Quality and Leadership) or CARF.
• Prior Facility Licensure (HOPE): Assisted Living providers must obtain a license from the SD Department of Health (SDDOH) to operate an Assisted Living Center before submitting the LTSS HCBS Provider Enrollment Request.
• In-State Participant Requirement: Out-of-state providers seeking LTSS enrollment must submit the first and last name of an individual currently residing in South Dakota who needs their specific services.

4. Licensure and Certification Requirements

Residential Habilitation providers must be certified as a Community Support Provider (CSP) under ARSD Chapter 46:11. Assisted Living Centers must be licensed by the DOH and comply with specific building and life safety codes.

All physical locations must pass an HCBS Settings Final Rule review to ensure they do not have institutional characteristics.

• CSP Certification: Governed by ARSD Chapter 46:11, requiring compliance with DDD quality metrics and site-readiness evaluations.
• Assisted Living Licensure: Issued by DOH, requiring compliance with physical plant standards, life safety codes, and medication administration rules.
• HCBS Settings Rule: All residential settings must pass an HCBS Settings Final Rule Review to ensure community integration and participant rights, such as lockable doors and choice of roommates.
• Business Registration: Entities must legally incorporate and register with the South Dakota Secretary of State.
• Insurance Mandates: Providers must secure general commercial liability, structural liability, and auto liability insurance if transporting participants.

5. Medicaid Provider Enrollment

After securing the DHS contract and necessary DOH licenses or DDD certifications, agencies apply through the DSS Medical Services Division. The process requires specific documentation and adherence to the SD Medicaid Provider Enrollment Chart.

Enrollment is a distinct, secondary process to the DHS programmatic approval.

• Enrollment Portal: SD Medicaid Provider Enrollment portal (https://dss.sd.gov/medicaid/providers/enrollment/enrollment.aspx).
• Required Documentation: W-9, certificates of insurance, NPI, and the executed DHS purchase of services agreement.
• Provider Type: Must enroll as a recognized provider type on the SD Medicaid provider enrollment chart, such as Assisted Living or CSP.
• Ownership Disclosures: Must provide detailed ownership disclosure information, including individuals with ownership or controlling interest.
• Change of Ownership: Requires 30 days' advance written notice to DHS LTSS/DDD before the effective date of any sale or transfer.

6. Staffing, Training and Background Checks

Direct Support Professionals (DSPs) and facility staff must meet state-mandated competency requirements before working independently. Medication administration requires specific training and nursing oversight.

Agencies must maintain rigorous personnel files demonstrating compliance with these standards.

• Pre-Service Training: DSPs, house managers, and program directors must demonstrate proficiency in person-centered planning, positive behavioral interventions, and HCBS settings rules.
• Medication Administration: Unlicensed aides must pass required training provided by a registered nurse (RN) or pharmacist to administer medications.
• Nursing Oversight: Facilities serving individuals requiring medication administration must employ or contract with a licensed nurse for at least weekly resident care reviews.
• Background Checks: All staff with direct participant contact must clear state and federal criminal background checks and registry screenings.

7. Documentation, Policies and Records

South Dakota mandates the use of specific electronic systems for case management and service documentation. Providers must maintain distinct, secure administrative offices.

Policies and procedures are heavily scrutinized during the initial enrollment phase.

• Mandatory EHR/System: Providers must use Therap for service documentation, managing authorizations, and Electronic Visit Verification (EVV).
• Physical Office Requirements: If located in a residential setting, the administrative office must be a separate, private room with a door and lock, not shared with household living spaces.
• Shift Notes: The agency's electronic health record must be capable of logging 24/7 shift notes and face-to-face time minimums.
• Policy Review: LTSS and DDD require a comprehensive review of agency policies and procedures during the initial enrollment and QA review cycles, which occur annually or on a 3-year cycle depending on the service.

8. Billing, Rates and Claims

Billing for residential services is processed electronically through the DSS MMIS, but documentation and EVV originate in Therap. Rates are tiered based on participant acuity and setting type.

Providers must strictly adhere to face-to-face time minimums to justify daily billing codes.

• ICAP Pricing Infrastructure: CHOICES Waiver compensation rates are calculated dynamically using the participant's Inventory for Client and Agency Planning (ICAP) score combined with the home's physical capacity scale.
• Face-to-Face Minimums: Providers must meet mandatory on-site time minimums within a 24-hour cycle, such as the 10-hour rule for group homes versus the 6-hour rule for supervised living.
• Interpreter Services: LTSS provides Volatia interpreter services for authorized participants, which must be billed using specific participant details to avoid provider liability.
• Timely Filing: Claims must meet SD Medicaid's timely filing requirements and match the prior authorization generated in Therap.

9. Approval Sequence and Timeline

The end-to-end approval process requires sequential clearance from multiple state departments. Attempting to bypass the programmatic contract phase will result in immediate Medicaid application denial.

The entire process from corporate formation to final DSS approval can take several months.

• Step 1: Corporate formation, Secretary of State registration, and securing compliant residential properties.
• Step 2: Obtain DOH facility licensure for Assisted Living or initiate DDD CSP certification and national accreditation for Residential Habilitation.
• Step 3: Submit the LTSS HCBS Provider Enrollment Request or DDD equivalent to initiate policy review and HCBS Settings Final Rule validation.
• Step 4: Execute the purchase of services agreement (contract) with DHS.
• Step 5: Submit the formal Medicaid enrollment application to DSS via the online portal, which can take up to 45 to 90 days for review.

10. Common Denials and Survey Findings

Applications and ongoing certifications are frequently delayed or denied due to out-of-order submissions or failure to meet physical plant standards.

State surveyors strictly enforce the HCBS Settings Final Rule during site visits.

• Premature Medicaid Application: Submitting to the DSS Medicaid portal before securing the DHS LTSS or DDD contract results in automatic denial.
• HCBS Settings Violations: Failure to provide lockable bedroom doors, choice of roommates, or unrestricted access to food during site-readiness evaluations.
• Missing DOH Licensure: For Assisted Living, failure to complete SDDOH licensure prior to submitting the LTSS enrollment request halts the process.
• Inadequate Office Space: Operating an administrative office in a shared residential space, such as a living room, rather than a dedicated, lockable room.

11. Key Contacts and Resources

Providers must utilize the official state portals and division websites for the most current manuals, fee schedules, and enrollment forms.

Maintaining contact with the specific DHS division overseeing the waiver is critical for ongoing compliance.

• DHS Division of Developmental Disabilities: https://dhs.sd.gov/developmental-disabilities
• DHS Division of Long Term Services and Supports: https://dhs.sd.gov/long-term-services-and-supports
• DSS Medicaid Provider Enrollment: https://dss.sd.gov/medicaid/providers/enrollment/enrollment.aspx
• DOH Health Care Facilities Licensure: https://doh.sd.gov/providers/licensure/
• Therap Services (SD Portal): https://www.therapservices.net/

See all South Dakota services · South Dakota Medicaid consulting · book a consultation.