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Office of Mental Health

Home and Community Based Services Waiver
Guidance Document
Division of Children and Families


Phase III (Steps 7, 8, 9 and 10)

Step 7: The Initial Service Plan


Approval of the Initial Service Plan is one of five key events that must occur before the effective date of enrollment can be established.
All elements of the initial service plan (goals, objectives and methods) must be documented by the ICC for the case file in the service plans. Chapter 400/1 contains the policy and procedures related to developing a service plan and completing the service plan budget.

Once the body of the service plan is completed, it is important that the signature page is completely filled out, signed and dated by all involved parties, including the parent, child, ICC, ICC Supervisor and the LGU.

Step 8: Service Plan Budget Development


When developing the initial service plan, a budget must be completed by the ICC in coordination with the family and other providers to identify the anticipated yearly Medicaid costs associated with the service plan that is developed for the child. All anticipated costs must be identified and annualized, as if the child needed this preliminary package of services for an entire 12-month period. This information is necessary to assist the LGU in determining whether the specific applicant meets the fiscal eligibilityrequirements of the OMH HCBS Waiver program; and to assist the waiver provider in keeping expenditures within both the federal and state prescribed Medicaid caps. The initial budget is modified per actual service delivery as well as anticipated needs with every 90-day service plan review.

The budget must be documented on the Individualized Service Plan Budget and must list the type and number of all waiver services indicated in the service plan and estimate the cost for providing these services. The budget should also list the type, number and an estimate of the cost of all non-waiver medical and psychiatric services (referred to as "State Plan" services) which are expected to be utilized for the child during the year. Flex fund costs and in-kind are documented in the budget although the flex funds are not included in the budget’s total.

It is understood that the initial budget is an estimated budget and that it will change as the service plan changes. The budget is to be reviewed at each 90-day service plan review and compared to actual services delivered during the prior period as documented in the service plans and progress notes. The budget must then be adjusted to accurately reflect services that have been provided and are anticipated to be provided during the next 90 days. If additional services, an increase or decrease in any given service, or the removal of a service occurred during the prior period or is anticipated during the upcoming 90 days, this must be shown in the budget and explained in the accompanying 90-day service plan narrative.

Budget Categories

There are five categories of services broken out on the Individualized Service Plan Budget that must be considered and included in the budget, as applicable. These categories are:

  • Waiver Services - These are the six (6) waiver services. ICC’s work with the child and family to identify type and amount of waiver services needed and the preferred providers of these services. These are documented on the Budget form.
  • Non-Waiver Mental Health Services - These include both outpatient services (i.e. clinic, day treatment and partial hospitalization) and inpatient (i.e. acute, RTF and CPEP). Review with the child and family any mental health services currently being received/sought (outpatient and inpatient). Work with family/others (e.g. school) to determine continued need for these services if child has access to Waiver services. Identify types of services needed and preferred providers and estimate the amount of each service that will be needed. Document them on the Budget form.
  • Medical Services - Review the child's past levels of health care service utilization, identify any chronic physical/medical conditions (e.g. asthma, diabetes, HIV, drug or alcohol related problems) and discuss current and future medical needs. Identify types of medical services that will be needed in future and estimate amount of each. Document these on the Budget form. Services that should be included in this category are: pharmacy, physician, medical clinic (hospital based or stand-alone), laboratory, radiology, overnight hospital stays for medical care, dental, optical, drug/alcohol treatment, school-based special education health services (if known at this point), and any transport provided by a Medical enrolled transport provider that is related to getting child to medical appointments.
    Note: Since the area on the budget form for medical services is quite small, you will show the total inpatient and outpatient estimated medical costs on the front of the form and use the back of the form to itemize the types and amounts of services.

Please note that if a child is enrolled in a LDSS Medicaid Managed Care plan, the only medical services that you must identify individually and include in this section are those medical services that are not covered under the managed care plan contract. These services are billable to Medicaid on a fee for service basis and will be charged back against the Waiver budget. Likewise, if a child is covered under a private health insurance policy (e.g. coverage parent has through employment), the only medical services you must identify and determine cost for are the medical services/costs that will not be paid by the private health insurance carrier. However, in both situations, it is recommended that you identify all expected medical services needed by the child in this section (showing $0 estimated cost for those items covered by managed care plan or Health Insurance). This way they are known/captured in the event that the child is disenrolled from the Medicaid managed care plan or loses health insurance coverage and the services covered under these plans must be factored back into the budget.

  • Managed Care Premiums - If the child is enrolled in a Medicaid Managed Care Plan, show the name of the Plan and the amount of the monthly premium that Medicaid pays the Plan in this section.
  • Other - This section should detail any other needs/expenses that are identified by the child/family and are included in the service plan and are not included in the previous four categories. Flex fund expenditures are entered in this category. For example, a child needs a beeper to communicate with otherwise unreachable parent at work; family needs babysitting money to enable parent to attend parenting skills classes for parents of children with serious emotional disturbance; or child needs to attend a summer camp. Indicate the type and estimated amount needed of each service in this section. Also use this section to list out any "in-kind" services that the child needs and are included in the service plan but which are being reimbursed through a funding source other than Medicaid, e.g., a summer camp scholarship from YMCA. indicate the service and the funding source and show the estimated cost as $0.00.

Guidelines for Costing the Budget

How to Calculate Cost

As was mentioned earlier in this task, all anticipated costs must be identified and must be annualized, as if the child needed this preliminary package of services for an entire 12-month period. Following are guidelines for estimating and annualizing the cost of the service needs identified in the service plan and documented on the service plan budget:

Waiver Services - Cost out each of the six waiver services by determining the number of service units that you expect will be needed during the year and then multiplying the units by your agency's currently approved rate for that service.

  • Example 1: Child needs respite care 5 days/week for three hours/day. If the rate was $50/hour, then total annualized cost for anticipated respite service would be: 3 hrs x 2 days = 6 hours x 52 weeks = 312 hours x $50/hour = $15,600.
  • Example 2: Child receives monthly ICC services. If ICC rate is $2400/month, then total annualized ICC cost is 12 months x $2,400 = $28,800.
  • Example 3: Child needs ICC staff-provided intensive in-home services three hours/week for nine weeks at the start of the Waiver. The current tracking rate for intensive in-home service provided by ICC staff is $1/hour. Therefore, total annualized cost for this service is: 3 hours x 9 weeks = 27 hours x $1/hour = $27.

Non-Waiver Mental Health Services - Cost out the amount of mental health outpatient (clinic, day treatment, or partial hospitalization) services by determining the number of each type of visit/service that is expected to be needed during the year for that child and then multiplying the number of visits/services by their respective rates.

Note that rates may vary across the state.

  • Example 1: Child is expected to require day treatment service 5 days/week for the balance of the current school year, i.e. 20 weeks and does not expect to require day treatment after the end of this school year. Total annualized cost for day treatment is: 5 days x 20 weeks = 100 days x $74/day = $7,400.
  • Example 2: Child needs to visit the doctor at a mental health clinic for medication check once a month. Total annualized cost for Mental Health Clinic is: 1 visit/month x 12 months = 12 visits x $113/visit = $1356.

Determine the number (if any) of inpatient psychiatric days anticipated on an annual basis at the hospital identified in the service plan. Cost these days out by multiplying them by the hospital’s rate, a daily statewide average per diem or by the hospital's actual Medicaid approved psychiatric per diem, if known to you.

  • Example: Child is expected to need a 5-day inpatient stay two times at a hospital whose Medicaid psych per diem is $860/day. Total annualized cost for the anticipated inpatient mental health treatment is: 5 days x 2 stays = 10 days x $860/day = $8,600.

Medical Services - This is the most difficult area to cost since there is no single source that provides the Medicaid rates for all Medicaid reimbursable medical services. These services have to be costed using the best available cost information you can obtain, e.g. past bills, records maintained by the family; contact with actual provider to find out what their Medicaid approved rate is for the service in question; etc.

  • Example: Child has chronic asthma. His medical needs for this condition include: monthly visits to his pediatrician which cost $30/visit; monthly visits to an asthma management clinic at $40/visit; 2 types of medication costing $100/mo. Total annualization of the costs related to the child's asthma are: 12 doctor visits x $30 = $360; 12 clinic visits x $40 = $480; and 12 months x $100 in meds/month = $1200; or a total of $2040.

As noted above, if private health insurance is available through the family, list all services needed but only count in the total the costs that are not covered by the health insurance plan and will be billed to Medicaid, e.g. deductibles, coinsurance, non-covered services, etc.

If the child is enrolled in a Medicaid managed care plan, list all services that are needed but only assign cost to those services that are not covered under the Managed Care Plan contract.

Medicaid Managed Care Premiums - Calculate the total annualized cost of the managed care plan premium by multiplying the monthly premium by twelve.

Other - Estimate the cost of the services itemized in this section using whatever methods are available, e.g. calling provider/vendor, sale brochures, etc. Involve the family. Assist them in prioritizing these needs and where practical encourage them to shop for the lower prices. Also, where needed, assist them in balancing needs with available resources.

Also, document flex fund expenditures on the Budget form under ‘Other’ and count these funds in the total Waiver expenses. Before considering the use of Waiver flex funds, the family must be assisted in exploring other ways to meet their needs. Due to the short term nature of Flex Funds, discussions regarding future funding to sustain the expense that Flex Funds covered should be reviewed with the family (see Section 400.6 for Guidance pertaining to appropriate Flex Fund usage). For example:

  • see if family can find a way to absorb the cost themselves (e.g., help with utility bill in crisis but work with family to develop a plan to pay for it routinely);
  • look for alternative services available in the community at less or no cost to the family (e.g., after school program, church group recreational activity); or
  • look for scholarships or grant funds for which the child/family might be eligible (e.g. YMCA scholarship to summer camp).

Additional Guidelines

If any category threatens to cause the budget to exceed the budget cap, ask and answer such questions as the following (together with all parties involved, i.e. the LGU, ICC program director):

  • Will this service be effective for this child?
  • Can an alternative to the expensive service (program or provider) be found?
  • If inpatient psychiatric days are at issue, are the hospitalizations expected to be short, infrequent, just for "fine-tuning" and can alternatives to hospitalization be found?
  • Are the child's needs best met through the Waiver or would they be better served outside the Waiver?

Comparing the Estimated Budget to the Cap

Compare the "Projected Total Cost of Services" figure from the estimated budget to the Federally Approved Average Yearly Cost. If the estimated budget exceeds this figure, then the child does not meet the fiscal requirements for enrollment in the Waiver. If the child's budget cannot be reduced below this figure, then the child's application would be denied on the basis that "child cannot be served in the community at the federally approved average yearly cost".

Next, compare the "Projected Total Cost of Services" figure from the estimated budget to the State defined Program Expenditure Cap. If the projected total cost of services for the child is less than the Program Expenditure Cap, the child meets the fiscal requirements for enrollment.

If the estimated budget is above the Program Expenditure Cap (but below the Federally Approved Average Yearly Cost), examine the service plan and budget to look for ways to reduce the budget, e.g. less costly alternatives. If all costs appear justified and unavoidable, balance this child's budget against those of the other children enrolled in the Waiver. If by including this child in the program, the ICC agency's overall budget average remains at or below the Program Expenditure Cap, there should be no problem admitting the child.

Procedures for Forms Completion

Service Plan Budget

Purpose: The purpose of the Individualized Service Plan Budget is to:

  • identify and document the costs associated with the individualized service plan being developed; and
  • assist the LGU in assessing whether the child meets the fiscal eligibility criteria for the waiver.

Completed by: the Individualized Service Plan Budget is completed by the ICC in coordination with the individual service providers, the child and the family.

When Completed: Completed in conjunction with the service plan, development of which begins as soon as possible after the Waiver application is signed. Note: As the child's needs change and new goals and objectives are created, the service plan and the budget must be revised accordingly.

Distribution: Original in child’s record

Step 9: Approval of Service Plan and Budget

The Local Government Unit must review, approve and sign both the Initial Service Plan and accompanying budget following their completion. Once the LGU’s dated signature is received on both the initial Service Plan and Budget, the Transmittal 2 must be completed and sent to the OMH Operations Support Unit as soon as possible to prevent delays to the enrollment process

Timeframe for Approval of the Initial Service Plan/Budget

In order to ensure that the ICC agency receives maximum Medicaid reimbursement for the services it provides, the initial service plan and initial budget must be approved within 30 days of the date that the Waiver application is signed. Therefore, it is important that the ICC agency take a very pro-active role in making sure that the 30 day time frame is met. This should include sending the completed service plan and budget to the LGU with enough lead time to ensure that it is reviewed and signed within the 30 day time limit.

Step 10: Notification of Enrollment and Approval to Begin Billing

Operations Support Unit (OSU)

The OMH Operations Support Unit (OSU) plays a role in monitoring the completion of all enrollment steps and is responsible for:

  • establishing the effective date of enrollment for each child who meets all three sets eligibility criteria (i.e. clinical, Medicaid and fiscal) for the waiver;
  • issuing the appropriate Notice of Decision (i.e. Acceptance or Denial) to the family re. the outcome of their application to participate in the Waiver;
  • monitoring the Welfare Management System (WMS), i.e. the Medicaid computer system, to ensure that the LDSS has made the appropriate coding changes in the system to properly identify each new enrollee in the waiver (for claiming purposes and for proper identification on EMEVS); and
  • notifying the ICC Agency when they can begin billing for Waiver services.

Required Conditions for the Effective Date of Enrollment

All of the following conditions must be met before an effective date of waiver eligibility can be established:

  • Level of Care Determination approved by LGU;
  • HCBS Waiver Application Form signed by child, as appropriate, and Parents/Guardians;
  • Service Plan must be signed and approved by all participants including all youth over the age of 12. Younger children may also sign the document if indicated. The youth and the family members should be the first to sign since the plan begins with them. The ICC and ICC Supervisor may then sign. All signature lines should be complete and filled in prior to obtaining the signature of the LGU. If a child refuses or is unable to sign, this must be indicated with the reason why on the signature line.
  • The initial Service Plan and Budget must be approved and signed by the Local Government Unit (LGU).
  • Medicaid is Already Active - OR - Medicaid Application is filed with LDSS/HRA; and
  • Child is discharged from:
    • Inpatient Status, i.e., Children's Psychiatric Center (CPC), Psychiatric Center (PC), Residential Treatment Facility (RTF), general hospital or private psychiatric facility; or
    • OMH Residential Programs, i.e., State-Operated Community Residence (SOCR), Voluntary-Operated Community Residence (VOCR), Family-Based Treatment (FBT), Teaching Family Home (TFH); or
    • Office of Children and Families Services (OCFS) Residential Programs, i.e., Residential Treatment Center (RTC), Therapeutic Foster Care Home, Detention Center; or
    • Intensive Case Management (ICM) and Supportive Case Management (SCM)

How OSU Determines Effective Date of Enrollment

ICC’s are required to use CAIRS based electronic transmittals to send notifications to OMH’s Operations Support Unit indicating that key forms have been completed, dated and signed by parties involved in the enrollment process. OSU uses the dates on which key documents were signed to determine when the conditions for enrollment have been met. The effective date of waiver enrollment is determined by the latest date that all of the above conditions of enrollment have been met.


The following illustrates various enrollment situations and the corresponding eligibility dates.

Sample # Situation Eligibility Effective Date
  • Child Not Already Enrolled in Medicaid
  • 4/1/08 Waiver Application Signed
  • 4/15/08 Service Plan/Budget Approved by LGU
  • 4/15/08 MA Application Received by LDSS
  • Child Not Already Enrolled in Medicaid
  • 4/1/08 Waiver Application Signed
  • 4/15/08 Service Plan/Budget Approved by LGU
  • 4/15/08 MA Application Received by LDSS
  • 4/25/08 Child Discharged from RTF
  • Child Not Already Enrolled in Medicaid
  • 4/1/08 Waiver Application Signed
  • 5/15/08 Service Plan/Budget Approved by LGU
  • 6/15/08 MA Application Received by LDSS
  • Child Not Already Enrolled in Medicaid
  • 4/1/08 Waiver Application Signed
  • 5/15/08 Service Plan/Budget Approved by LGU
  • 4/15/08 MA Application Received by LDSS

Transmittals to be Sent to OSU for Enrollment

The forms listed below have been integrated into the CAIRS Waiver provider’s screens and are data entered by ICC’s or other appropriate Waiver provider staff. The introduction of electronic CAIRS based forms and transmittals has brought about significant improvements to the overall workflow that takes place between the participating Waiver providers and the OMH Operations Support Unit. In order to determine the effective date of enrollment and issue the Notice of Acceptance, OSU must receive electronic transmittals that contain information regarding client demographics, Medicaid coverage status and dates when signatures where obtained on the various required forms and documents involved with enrollment to the Waiver program. The date the last item is received by OSU becomes the enrollment date issued in the Notice of Acceptance by OSU to the ICC agency.

Important information contained within these forms is sent electronically to OSU by means of CAIRS. These transmittals should be sent as soon as possible after completed by providers to provide for maximum billing.

It is anticipated that for most cases, the transmittals will be sent to OSU following the completion of two groups of forms:

  • Transmittal 1 – following completion of Application/Freedom of Choice; Financial Information Form; Level of Care (907 MED); and the Medicaid application/documentation, if applicable to the case (See Note below)
  • Transmittal 2 – following receipt of signed/dated approved Initial Service Plan and Budget.

*Note: Please do not delay sending Transmittal 1 to OSU solely because the Medicaid application has not been filed, or there are other Medicaid related hold-ups occurring. Please note that receipt of the information contained within the Transmittal 1 by OSU is the official moment that Operations Support Unit becomes involved with the case, i.e. creates a case file and begins to monitor the enrollment process. Therefore, it is very important that Transmittal 1 be sent to OSU as soon as the Application to Participate has been completed.

Children Residing Out of the Home

In order to participate in the waiver, a child must reside with his parents/guardian/custodian. Even though children in OMH residential programs, residential treatment facilities or psychiatric centers, and recipients of OMH intensive case management services, and residents of OCFS residential treatment centers or therapeutic foster care homes, can apply for the Waiver, they cannot be enrolled in the waiver while they are still residents/recipients in these programs/facilities.

Because the effective date of enrollment in the Waiver cannot be established until a child has been discharged and is living with his/her parent(s), if an ICC wishes to receive maximum allowable reimbursement, it is important that the discharge, like all other conditions of eligibility, take place within 30 days of the date the family applies for the Waiver. It is also important that OSU be apprised of the specific date of discharge/termination from these programs as soon as they occur.

At the present time there is no one specific form used by all agencies to apprise OSU when an applicant who is in one of the programs/settings listed above is discharged/terminated from the program. Each Agency can choose the method used to notify OSU regarding this information, however, the use of phone, fax or email is strongly suggested so that the information is received as timely as possible.

Notice of Decision (Acceptance or Denial)

Once OSU has verified that all conditions for enrollment have been met and they have established the effective date of enrollment, they will issue the OMH HCBS Waiver - Notice of Decision - Acceptance form. This notification is the family's official notice regarding date of active HCBS Waiver enrollment. Copies of this form are also sent to the ICC, LGU, and LDSS (except NYC).

If a child is not approved for enrollment into the HCBS Waiver, OSU will issue an OMH HCBS Waiver - Notice of Decision - Denial form. The specific reason for the denial and the applicant's appeal (i.e. Fair Hearing) rights will be reflected on this notice.

LDSS Coding Requirements

All medical costs (both Waiver and State Plan services) paid by Medicaid for a Waiver enrollee in an OMH funded slot are paid by 50% Federal/50% State (OMH) funding, i.e. there is no local (i.e. county) share for these slots.

In order for the Medicaid claiming system to properly identify claims for enrollees in the OMH Waiver, the OMH Operations Support Unit must enter a specific State/Federal Charge Code and the Effective Date of Waiver enrollment in the Welfare Management System (WMS). Without this coding/date present, the respective counties handling our waiver clients’ Medicaid cases will be charged back with Waiver Costs.

When Billing Can Begin

ICC Agencies must not begin billing for Waiver services until specifically advised to do so by OSU. The notification of the Effective Billing Date is done electronically in a report through CAIRS via the Program Notes screen. The report is the HCBS-Waiver Date Advised to Bill Notices. ICC billing staff must wait for notification via this report advising of the enrollment date before initiating billing. Important Note: Receipt of the Notice of Decision - Acceptance form is not to be interpreted as an instruction to begin billing. Notification via the Effective Billing Date Report is required before billing may begin.

Billing can be for one month or for one half month or for two consecutive half-months between the date of signing of the Application/Freedom of Choice and the enrollment date issued by OSU, as long as the usual required numbers and types of ICC contacts have been made to bill for one month or to bill for half months (see Chapter 600 Billing).