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

Last reviewed: 2026-08-16

In South Dakota, 24-hour residential care services encompassing habilitation, supervision, and personal care are primarily delivered through licensed Assisted Living Centers (ALCs), Community Living Homes (CLHs), and Residential Habilitation settings. These services are funded through Medicaid 1915(c) waivers, including the CHOICES Waiver for individuals with developmental disabilities and the HOPE Waiver for aging adults and those with physical disabilities, administered by the Department of Human Services (DHS) [Medicaid Home and Community Based Services](https://dss.sd.gov/medicaid/hcbs.aspx).

The single biggest structural barrier to entry for new providers is the strict sequential prerequisite process: applicants cannot simply enroll in Medicaid. They must first secure a physical facility, pass State Fire Marshal inspections, obtain a facility license from the Department of Health (DOH), and successfully pass the DHS LTSS Policy and Procedure Verification and HCBS Settings Rule compliance review before a Medicaid enrollment application will even be considered [LTSS HCBS Provider Enrollment Manual | South Dakota ...](https://dhs.sd.gov/content/dam/digital/united-states/south-dakota/sdo/pdf/long-term-services-and-supports/provider-portal/hcbs-provider-enrollment/LTSS-HCBS-Provider-Enrollment-Manual.pdf).

1. Service Definition and Scope

South Dakota does not have a single generic 'Residential Care Service' license. Instead, 24-hour residential services are defined by the facility type and the specific Medicaid waiver utilized. Assisted Living Centers (ALCs) and Community Living Homes (CLHs) provide housing, supervision, and personal care, while Residential Habilitation under the CHOICES waiver adds intensive skill-building and behavioral supports for individuals with intellectual and developmental disabilities.

These settings are designed to keep individuals integrated into their communities while receiving necessary daily living assistance. Medicaid covers the care and habilitation components, but federal rules strictly prohibit Medicaid from paying for the physical room and board.

• Assisted Living Centers (ALC): Licensed facilities providing personal care and services to four or more persons in a residential setting.
• Community Living Homes (CLH): Licensed residential settings providing care, supervision, and personal care for one to four individuals.
• Residential Habilitation: 24-hour support services authorized under the CHOICES Waiver focusing on skill acquisition, retention, and community integration.
• Target Populations: The HOPE Waiver serves seniors and adults with physical disabilities, while the CHOICES Waiver serves individuals with intellectual and developmental disabilities [Medicaid Home and Community Based Services](https://dss.sd.gov/medicaid/hcbs.aspx).
• Excluded Costs: Medicaid waiver funds cover the cost of care and habilitation; room and board costs are strictly excluded and must be paid by the resident's private funds or SSI.

2. Regulatory and Oversight Agencies

Oversight in South Dakota is bifurcated. The Department of Health (DOH) handles the physical facility licensure and life safety, while the Department of Human Services (DHS) manages waiver program rules, and the Department of Social Services (DSS) handles Medicaid billing and enrollment.

Providers must maintain active compliance with all three departments to operate and receive Medicaid reimbursement.

• South Dakota Department of Health (DOH) Office of Health Facilities Licensure and Certification: Inspects and licenses ALCs and CLHs (https://doh.sd.gov/providers/licensure/).
• South Dakota Department of Human Services (DHS) Division of Long-Term Services and Supports (LTSS): Administers the HOPE waiver and conducts HCBS compliance reviews (https://dhs.sd.gov/en/ltss).
• South Dakota DHS Division of Developmental Disabilities (DDD): Administers the CHOICES waiver and certifies Residential Habilitation providers (https://dhs.sd.gov/en/division-developmental-disabilities).
• South Dakota Department of Social Services (DSS): Manages the Medicaid Provider Enrollment (PE) Portal and MMIS claims system (https://dss.sd.gov/medicaid/providers/enrollment/enrollment.aspx).

3. Gatekeeping Prerequisites: Who Can Even Apply

South Dakota does not utilize a Certificate of Need (CON) program, closed networks, or moratoria for residential care facilities. However, there are absolute structural and sequential prerequisites that block Medicaid enrollment until satisfied.

A provider cannot initiate Medicaid enrollment without first securing a physical location, obtaining a state health license, and passing programmatic readiness reviews.

• No Certificate of Need: South Dakota explicitly does not require a CON to open an ALC or CLH; market demand dictates development.
• Facility Licensure Prerequisite: An applicant must hold an active, finalized DOH facility license (ALC or CLH) before DSS will process a Medicaid enrollment application.
• LTSS Policy and Procedure Verification: For LTSS waivers, providers must successfully complete this DHS verification process before an onsite readiness review is even scheduled [LTSS HCBS Provider Enrollment Manual | South Dakota ...](https://dhs.sd.gov/content/dam/digital/united-states/south-dakota/sdo/pdf/long-term-services-and-supports/provider-portal/hcbs-provider-enrollment/LTSS-HCBS-Provider-Enrollment-Manual.pdf).
• HCBS Settings Rule Compliance: The physical address must pass a DHS review proving it is integrated into the community and not institutional in nature before waiver services can be authorized.
• Organizational NPI: Applicants must obtain a Type 2 National Provider Identifier (NPI) tied to their registered South Dakota business entity prior to applying.

4. Licensure and Certification Requirements

Facility licensure is governed by the South Dakota Administrative Rules (ARSD). Providers must secure a physical location, pass life safety inspections, and submit a detailed application to the DOH Office of Health Facilities Licensure and Certification.

Different facility sizes and target populations dictate which specific ARSD chapter applies to the physical plant and basic care standards.

• ALC Regulations: Facilities serving four or more residents must comply with ARSD Article 44:70 for Assisted Living Centers [Residential Care/Assisted Living Compendium: South Dakota](https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/73141/15alcom-SD.pdf).
• CLH Regulations: Facilities serving one to four residents must comply with ARSD Article 44:82 for Community Living Homes.
• Life Safety Code: All facilities must pass an inspection by the South Dakota State Fire Marshal to ensure compliance with NFPA standards.
• Application Fees: DOH requires a non-refundable licensure fee submitted with the initial application, which varies based on facility type and bed count.
• DDD Certification: Providers seeking to offer Residential Habilitation under the CHOICES waiver must undergo a separate programmatic certification review by DHS-DDD.

5. Medicaid Provider Enrollment

Once licensed and certified, providers must enroll through the DSS Provider Enrollment (PE) Portal. South Dakota operates primarily on a fee-for-service basis for these waivers, so enrollment is directly with the state rather than managed care organizations.

The enrollment process requires submission of standard federal disclosures and proof of state licensure.

• Enrollment System: Applications must be submitted online via the South Dakota Medicaid Provider Enrollment (PE) Portal [South Dakota Medicaid Provider Enrollment](https://app-dss-sw85pc05dmsproviderenroll.azurewebsites.net/).
• Provider Agreement: Applicants must sign and upload the official SD Medicaid Provider Agreement [Medicaid Provider Enrollment & Maintenance](https://dss.sd.gov/medicaid/providers/enrollment/enrollment.aspx).
• Disclosure Form: Submission of the Ownership and Control Interest Disclosure form is mandatory to identify all managing employees and owners [Medicaid Provider Enrollment & Maintenance](https://dss.sd.gov/medicaid/providers/enrollment/enrollment.aspx).
• Financial Setup: Providers must submit a bank letter or voided check to establish Electronic Funds Transfer (EFT) for claims payment.
• Taxonomy Selection: Providers must select the correct taxonomy code matching their DOH license (e.g., Assisted Living Facility 314000000X).

6. Staffing, Training and Background Checks

South Dakota mandates strict background screening and training for all Direct Support Professionals (DSPs) and facility staff. Staff cannot provide unsupervised care until background checks are fully cleared.

Training requirements vary slightly depending on whether the facility serves aging adults or individuals with developmental disabilities.

• Criminal Background Checks: Mandatory fingerprint-based checks through the South Dakota Division of Criminal Investigation (DCI) for all direct care staff.
• Registry Screenings: Staff must be screened against the SD Medicaid Exclusion List, the OIG LEIE, and state abuse/neglect registries.
• Basic Training: All direct care staff must maintain current CPR and First Aid certifications.
• Medication Administration: Unlicensed staff who administer medications must complete the South Dakota Board of Nursing approved Unlicensed Assistive Personnel (UAP) training program.
• Waiver-Specific Training: Staff serving CHOICES waiver participants must complete DDD-approved curriculum on positive behavior supports and habilitation strategies.
• Staffing Ratios: While there is no strict statewide numerical ratio, facilities must maintain sufficient awake staff 24/7 to meet the documented needs in all residents' Individualized Service Plans.

7. Documentation, Policies and Records

Providers are subject to routine audits by both DOH and DHS. Maintaining compliant, individualized records and comprehensive facility policies is critical to retaining licensure and Medicaid billing privileges.

Documentation must clearly link the daily services provided to the goals outlined in the resident's state-approved care plan.

• Policy Manual: Must include comprehensive protocols for admission, discharge, grievance procedures, and emergency preparedness.
• Individualized Service Plans (ISPs): Must be developed for each resident, detailing their specific care needs, habilitation goals, and risk mitigation strategies, updated at least annually.
• Daily Documentation: Staff must maintain daily logs of ADL assistance, progress toward habilitation goals, and Medication Administration Records (MARs).
• Incident Reporting: Critical incidents, including abuse, neglect, or severe injury, must be reported to DHS and DOH within 24 hours.
• Record Retention: All Medicaid billing and participant care records must be securely retained for a minimum of six years.

8. Billing, Rates and Claims

South Dakota Medicaid reimburses residential HCBS providers on a fee-for-service basis. Rates are standardized by DHS based on the specific waiver and the participant's assessed tier of need.

Providers must ensure they have an active authorization on file before rendering services, as retroactive authorizations are rarely granted.

• Claims Portal: Billing is conducted electronically through the South Dakota Medicaid Provider Online Portal [South Dakota Medicaid - Provider Online Portal](https://dss.sd.gov/medicaid/portal.aspx).
• Prior Authorization: Providers cannot bill until they receive an active service authorization from the DHS waiver case manager.
• Reimbursement Rates: DHS establishes daily or monthly tiered rates based on the participant's acuity and the specific waiver program.
• Room and Board: Medicaid does not pay for room and board; providers must execute separate residential agreements to collect these fees directly from the participant.
• Timely Filing: Claims must generally be submitted within six months of the date of service to be eligible for reimbursement.

9. Approval Sequence and Timeline

Becoming a fully approved residential provider in South Dakota is a lengthy, multi-agency process. Providers should expect the entire sequence to take 6 to 9 months from initial facility acquisition to billing readiness.

Because steps are strictly sequential, delays in physical plant inspections or policy reviews will halt the entire enrollment timeline.

• Phase 1: Business formation, securing a physical location, and submitting the DOH facility licensure application (2-3 months).
• Phase 2: State Fire Marshal inspection and DOH onsite health and life safety survey (1-2 months).
• Phase 3: DHS LTSS Policy and Procedure Verification and HCBS Settings Rule compliance review (30-60 days).
• Phase 4: Submission and processing of the DSS Medicaid Provider Enrollment application via the PE Portal (30-45 days).
• Phase 5: Receipt of the PE System ID, final DHS authorization, and acceptance of waiver participant referrals.

10. Common Denials and Survey Findings

Applications and ongoing surveys frequently fail due to physical plant deficiencies or failure to adhere to federal community integration standards.

Understanding these common pitfalls can help new providers avoid costly delays during the initial licensure and certification phases.

• HCBS Settings Rule Violations: Failing to provide residents with lockable bedroom doors, choice of roommates, or unrestricted access to food and visitors.
• Life Safety Code Failures: Deficiencies in fire exits, missing or uninspected fire extinguishers, or failed State Fire Marshal inspections.
• Incomplete Policy Manuals: DHS LTSS Policy and Procedure Verification denied due to missing mandatory abuse/neglect protocols or emergency plans.
• Background Check Lapses: Allowing new hires to provide direct care before DCI background check results are fully returned and cleared.
• Enrollment Mismatches: Medicaid enrollment delays caused by discrepancies between the legal business name on the IRS CP-575, the DOH license, and the PE Portal application.

11. Key Contacts and Resources

Prospective providers must navigate multiple state division websites to access the necessary rules, applications, and portals.

Below are the official state resources required to initiate the licensure and enrollment process in South Dakota.

• SD DOH Health Facilities Licensure: https://doh.sd.gov/providers/licensure/
• SD DHS Division of Long-Term Services and Supports (LTSS): https://dhs.sd.gov/en/ltss
• SD DHS Division of Developmental Disabilities (DDD): https://dhs.sd.gov/en/division-developmental-disabilities
• SD DSS Medicaid Provider Enrollment Portal: https://dss.sd.gov/medicaid/providers/enrollment/enrollment.aspx
• SD Medicaid Provider Online Portal (Claims): https://dss.sd.gov/medicaid/portal.aspx

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