Targeted Case Management in KY: Regulations and Eligibility

Targeted Case Management in Kentucky is a Medicaid-funded service that pays qualified providers to connect eligible recipients with medical, behavioral, social, educational, and community resources. It is coordination work, not treatment. Kentucky governs it through three separate regulations under Title 907, Chapter 15 of the Kentucky Administrative Regulations, and which regulation applies depends on the recipient’s diagnosis and circumstances. Eligibility, provider qualifications, covered activities, and documentation rules all flow from that starting point.

Three Regulations, Three Populations

Kentucky does not have one unified TCM rule. It has three, each aimed at a different group:

907 KAR 15:040 covers individuals with a moderate or severe substance use disorder.
907 KAR 15:050 covers individuals who have both a behavioral health diagnosis and a chronic or complex physical health condition.
907 KAR 15:060 covers adults with a severe mental illness and children with a severe emotional disability.

The regulations share a similar internal structure, but the eligibility criteria diverge. Billing under the wrong KAR is a common route to claim denials, so identifying the right one is step one for both providers and recipients.

Who Qualifies to Receive TCM

All three regulations share a baseline: the service must be medically necessary and delivered by an enrolled Medicaid provider. Beyond that, the criteria are population-specific.

Substance Use Disorder (907 KAR 15:040)

A recipient must have a primary moderate or severe substance use disorder diagnosis, or co-occurring substance use and mental health diagnoses. On top of that, the recipient must meet at least one additional condition: lacking access to the supports needed for recovery, needing help accessing housing or community services, or having involvement with a child welfare or criminal justice agency. Inmates of a public institution and adults ages 21 to 64 receiving services in an institution for mental diseases are excluded.¹

Behavioral Health Plus Physical Health Condition (907 KAR 15:050)

This regulation reaches a narrower group. Adults must have either a moderate or severe substance use disorder or a severe mental illness, combined with a physical health issue such as a cardiovascular, respiratory, or genitourinary disorder. Children qualify if they have a severe emotional disability as defined under KRS 200.503(3) along with a chronic or complex physical health condition. Whether adult or child, the recipient must also need help accessing community services, have involvement with child welfare or criminal justice agencies, or be at risk of out-of-home placement or inpatient mental health treatment.²

For adults, severe mental illness under this regulation means a major mental disorder (schizophrenia spectrum, bipolar, depressive disorders, or PTSD, among others) that has caused persistent disability and significant impairment in major areas of community living, with symptoms persisting continuously for at least two years or more than one hospitalization for mental illness in the past two years.²

Severe Mental Illness and Severe Emotional Disability (907 KAR 15:060)

This regulation covers adults diagnosed with severe mental illness and children with severe emotional disability who do not have the co-occurring physical health condition required under 15:050. General coverage still requires medical necessity and an enrolled provider.³

Who Can Provide TCM

Kentucky separates the organization that bills for TCM from the individual case manager who delivers it, and both must meet their own standards.

Provider Organizations

An organization must be enrolled and participating in Kentucky Medicaid. Eligible types include community mental health centers, behavioral health services organizations, chemical dependency treatment centers (for SUD populations), outpatient hospitals, psychiatric hospitals, and psychiatric residential treatment facilities for recipients under 21. On top of licensure, each organization must show documented experience serving people with behavioral health disorders, administrative capacity to ensure service quality, a financial management system that tracks services and costs, capacity to maintain individual case records, and documented referral systems linking to essential health and social services.¹

Individual Case Managers

A case manager must hold at least a bachelor’s degree in a qualifying behavioral science field. The list is broad: psychology, sociology, social work, counseling, nursing, public health, special education, and more than a dozen others including faith-based education. A certified alcohol and drug counselor with a bachelor’s degree also qualifies. Individuals who were already providing or supervising TCM services between April 2014 and the regulation’s effective date may be grandfathered in.³

Beyond the degree, a case manager needs at least one year of full-time employment working directly with individuals in a human service setting after completing the degree. A master’s in a qualifying field substitutes for that year.¹

Initial training and ongoing continuing education are required under 908 KAR 2:260. The TCM regulations do not spell out hour counts; they incorporate 908 KAR 2:260 by reference.¹

What TCM Actually Covers

Federal Medicaid law defines four activities that make up case management, and Kentucky follows that framework. Billing for anything outside these four is not reimbursable.

Comprehensive assessment. The case manager takes a client history, identifies medical, social, and educational service needs, completes related documentation, and gathers information from family members, providers, and other sources.
Care plan development. Based on the assessment, the case manager creates a written care plan specifying goals and actions, developed with active participation from the recipient or their authorized decision maker. It is revised as circumstances change.
Referral and related activities. The case manager connects the recipient to the providers, programs, and community resources that deliver the services in the care plan, including scheduling appointments and helping the individual navigate the system.
Monitoring and follow-up. The case manager maintains contact with the recipient, family members, and service providers to verify implementation, service adequacy, and any change in needs. Monitoring must occur at least annually, though typically much more often.

These components come from 42 CFR 440.169 and set the outer edge of what Kentucky considers reimbursable TCM activity.⁴ Kentucky’s Department for Community Based Services also recognizes related work like advocacy, case consultation with other providers, and crisis assistance such as arranging emergency referrals.⁵

What Cannot Be Billed as TCM

TCM is coordination, not treatment, and the rules are firm about that line. Federal regulation 42 CFR 441.18 bars Medicaid reimbursement for case management activities that are actually the direct delivery of an underlying service, and it specifically excludes transportation. Federal rules also prohibit TCM providers from having authority to authorize or deny other Medicaid services, a conflict-of-interest safeguard against a case manager both recommending services and approving them.⁶

Kentucky’s DCBS manual carries those prohibitions into practice and adds more. The following cannot be billed as TCM:

Direct treatment such as therapy, counseling, or clinical services.
Transportation of a recipient for any reason.
Coordination already paid for under another program authority (no duplicate billing).
Investigations and family assessments (FINSAs).
Outreach to locate and engage potential clients.
Direct services like parenting or foster parent training.
Medicaid eligibility determinations and application processing.
Institutional discharge planning that hospitals or nursing facilities are already required to provide.

⁵

The discharge exclusion has a narrow opening worth knowing. A case manager may bill for TCM performed in the month before or the month of discharge to prepare the individual for a return to the community, even though the facility’s own discharge planning is not billable.

Documentation Rules That Trigger Audits

Recordkeeping is where TCM providers most often lose reimbursement. Kentucky specifies what must be in the case record and what happens when it isn’t there.

Providers must maintain a current record for each recipient, documenting every service with the date and time, the name of the provider agency, the name of the practitioner who delivered the service, the nature and content of the contact, whether care plan goals have been achieved, and whether the recipient declined any services in the plan. The record must include a timeline for obtaining needed services and for reevaluating the care plan.⁷

The case manager who provided the service must date and sign the record within 48 hours. Records must be kept in an organized and secure central file, available for inspection and copying by Cabinet for Health and Family Services staff or the applicable managed care organization. Providers must retain records for at least six years from the last date of service, or longer if an audit dispute is unresolved.⁷

When a recipient is discharged after at least three visits, the case manager completes a discharge summary with a final assessment of progress toward care plan goals and the recipient’s condition at termination. The record must be fully completed within ten business days of termination.⁷

For DCBS-provided TCM specifically, each documented contact must include the individual’s name, the exact contact date, the location (home, office, school, or placement setting), the contact type, and the specific TCM activity performed. Comments must be concise, professional, and tied to care plan goals. Only the qualified case manager of record may enter documentation. Unsuccessful contact attempts are not documented as TCM services. Records must be kept at least five years and are subject to post-payment review.⁵

Appeals When a Service Is Denied

If TCM is denied or terminated, the recipient can request a fair hearing. Under 907 KAR 1:560, the deadline to request a hearing is 30 days from the notice of denial, discontinuance, or increase in patient liability. An additional 30 days may be granted for good cause, which includes serious illness, being away from home throughout the filing period, moving and not receiving the notice, or another delay not the recipient’s fault.⁸

A hearing request can be filed in writing or verbally (followed up in writing) at a local or central office of the Department for Community Based Services. If the recipient disagrees with the hearing officer’s recommended order, they have 20 days from the postmark of that order to appeal to the designated appeal board.⁸

Federal rules add a protection: a recipient who files a hearing request within the timeframe specified in the notice generally cannot have services terminated or reduced until a decision is issued.⁹

1
Kentucky Legislative Research Commission. 907 KAR 15:040 – Coverage Provisions and Requirements Regarding Targeted Case Management for Individuals with a Substance Use Disorder
2
Kentucky Legislative Research Commission. 907 KAR 15:050 – Coverage Provisions and Requirements Regarding Targeted Case Management for Individuals with a Mental Health or Substance Use Disorder and Chronic or Complex Physical Health Issues
3
Kentucky Legislative Research Commission. 907 KAR 15:060 – Coverage Provisions and Requirements Regarding Targeted Case Management for Individuals with a Severe Mental Illness and Children with a Severe Emotional Disability
4
eCFR. 42 CFR 440.169 – Case Management Services
5
Kentucky Department for Community Based Services. G1.10 Targeted Case Management: TCM Contacts with a Family
6
eCFR. 42 CFR 441.18 – Case Management Services
7
Kentucky Legislative Research Commission. 907 KAR 15:040 – Coverage Provisions and Requirements Regarding Targeted Case Management for Individuals with a Substance Use Disorder
8
Kentucky Legislative Research Commission. 907 KAR 1:560 – Medicaid Eligibility Hearings and Appeals
9
eCFR. 42 CFR Part 431 Subpart E – Fair Hearings for Applicants and Beneficiaries