Ensuring Medicaid Continuity for Children in Foster Care Act of 2026

Summary

Allows Medicaid to pay for items and services furnished to children in foster care who are placed in qualified residential treatment programs by creating an exception to the Medicaid Institutions for Mental Diseases (IMD) exclusion. The change applies to services furnished in calendar quarters beginning on or after October 1, 2026, so those foster children can maintain Medicaid coverage while in these residential settings.

• Creates an exception to the Medicaid IMD exclusion for children in foster care placed in qualified residential treatment programs.
• Allows Medicaid payment for items and services furnished to those foster children beginning in calendar quarters on or after October 1, 2026.
• Affects how states, child welfare agencies, and residential providers bill and coordinate Medicaid coverage for foster youth in QRTPs.
• Intended to ensure continuity of Medicaid coverage for children in foster care while placed in qualified residential settings.
• May shift some costs for residential treatment from child welfare budgets to Medicaid, with budgetary implications for states and the federal government.
• States will likely need to update Medicaid plan documents, billing systems, and provider agreements to implement the change.
• Raises the need for clear definitions and oversight of QRTPs to prevent inappropriate use of institutional placements.
• Does not appropriate funds or change tax law; it modifies eligibility/payment rules within the Medicaid program.