Frequently asked questions about DWRS framework rate exceptions

Yes, effective July 1, 2026, Minn Stat. 256B.4914, subd. 14a dictates limits on rate exceptions for the following residential services:

• Community residential services (CRS)
• Customized living (CL) and 24-hour CL
• Integrated community supports (ICS).

• If there is a rate exception request with a start date of July 1, 2026, or later for a person with extraordinary assessed needs for one of the above-mentioned residential services (i.e. CRS, CL/24-hour CL or ICS), the following restrictions apply:
  • Exceptions limits to the absence and utilization factor to people temporarily receiving hospital or crisis respite services.
  • When there is a rate exception related to a person’s behavioral needs, the lead agency must include documentation for one of the following in the rate exception request:
• A documented behavioral diagnosis
• Determined assessed needs for behavioral supports as identified in the person’s most recent assessment or reassessment under section 256B.0911.
• Exceptions for CRS cannot include positive support services costs.
• Rate exceptions cannot be approved related to increased community time or transportation.
• For rate exceptions for annual renewals, a person’s most recent assessment must indicate the person continues to have extraordinary needs in the areas cited in the exception request. If a person’s assessment continues to identify these extraordinary needs, the lead agency requesting an annual renewal of a rate exception must submit documentation supporting the continuation of the exception. At a minimum, the documentation must include:
  • Payroll records for direct care wages cited in the request.
  • Payment records or receipts for other costs cited in the request.
  • Documentation of expenses paid that were identified as necessary for the initial rate exception.
• Exception requests for renewals that include wages (direct care wage and supervisor wage), may not increase more than the most recent inflationary adjustment (not exceeding 8%). The inflationary adjustment for wages effective April 1, 2026, is 3.35%.

Yes, the commissioner must publish online an annual report detailing the impact of the limitations to residential rate exceptions on home and community-based services spending, including, but not limited to:

• The number and percentage of rate exceptions granted and denied.
• Total spending on community residential setting services and rate exceptions.
• Trends in the percentage of spending attributable to rate exceptions.
• An evaluation of the effectiveness of the limitations in controlling spending growth.

Tiered rates for FRS are not eligible for rate exceptions under Minn. Stat. §256B.4914, subd. 14a. The payment structure of FRS changed from a framework rate to a tiered rate under Minn. Stat. §256B.4914, subd. 19. DHS received approval from the federal Centers for Medicare & Medicaid Services (CMS) to make this change.  For FRS (adult and child) with a service renewal or new service start date of April 1, 2026, or later, the payment structure changes from a framework rate to a tiered rate and, as a result, the FRS tiered-rate is ineligible for a rate exception request.

No, the limitations to residential rate exceptions do not apply to rate exceptions approved by DHS with a start date of June 30, 2026, or earlier. However, if the lead agency submits a new rate exception request or renewal with an effective date of July 1, 2026, or later, the limitations to residential rate exceptions will apply (i.e. rolling implementation).

• Note: Effective July 1, 2026, there are limits to exceptions to the absence and utilization factor for residential services. For additional information, see the Limitations to exceptions for residential services effective July 1, 2026, section of this page.
• Absence and utilization requests are restricted to people temporarily receiving hospital or crisis respite services.

The absence and utilization percentage contained in the framework for community residential services is 3.9% or 14.29 days/year (365 x 3.9%).

Leave days must exceed this percentage at a rate that affects a provider’s ability to maintain its business. Providers must review the operation as a whole and take into account the number of people receiving services who don’t use the leave days accounted for in the framework. The request for leave days should not replace service planning to address the issue, resulting in an increased number of days away from the residential setting.

If a “leave day” exception is requested, the absence and utilization percentage in the framework will be adjusted by the DHS exceptions team.

For example: In addition to the 14 days in the community residential services calculated rate, the provider has requested 40 leave days because of the frequent hospital stays of the person served. Together these total 54 days, so the absence and utilization component value needed in the rate framework to account for additional leave days is 14.79% (54 / 365 = 14.79%). A new rate will be calculated by the DHS exceptions team based on the increased component value. Once the exception is approved, lead agencies will authorize the new rate multiplied by the planned number of authorized days (365 - 40 = 325 days, in this example). The 40 additional leave days requested are added to the existing 14 leave days in the framework when authorizing 365 days.

DWRS is a prospective system and not a cost-reimbursement system. Lead agencies should not add more days to the authorization once this calculation is done.

The start date for the rate exception will be the date of the person’s change in support or the date the request for an exception is received by the lead agency, whichever is later.

A provider may request an exception through the person’s lead agency. However, only lead agencies may submit the rate exception request to DHS.

No. The lead agency must submit all exception requests on the DWRS Exception Request Application, DHS-5820, and attach any supporting documentation that is not accounted for in the support plan. The provider should use the following forms to submit necessary cost documentation to the lead agency:

• Lead agency provider tool for DWRS exceptions (residential) (PDF)
• Lead agency provider tool for DWRS exceptions (day or unit) (PDF).

This process ensures that the lead agency is aware of, and in agreement with, the person’s extraordinary needs and the cost drivers behind a rate exception request.

If DHS receives an exception request directly from a provider, DHS will deny the request and notify the provider that all exception requests must be routed through the lead agency for submission to DHS. DHS will not review the request unless submitted by the lead agency.

State law requires lead agencies to submit exceptions. The provider and lead agency must work together to submit the Disability Waiver Rates System Exception Request Application, DHS-5820 (PDF). The lead agency must agree that the extraordinary need and the extraordinary costs incurred by the provider result in a rate necessary to meet the needs of the person. In addition, the lead agency must review its waiver budget in preparation to support the exception.

The lead agency will receive an email confirmation from DHS if the exception is approved. This email will have the approved rate and instructions for how to proceed in RMS to document the approved exception rate. The lead agency will then: 

• Notify the provider that the exception has been approved. 
• Follow the directions in the email to enter the non-framework rate information, using “Exception – Requires DHS Approval” as the non-framework reason type.  
• Authorize the exception rate in MMIS. This will generate a service agreement for the provider with the new rate. 
• Send the provider a copy of the RMS screenshot that correctly reflects the inputs and the approved exception rate.

Note: Effective July 1, 2026, there are additional documentation requirements for rate exception renewals for residential services. For more information, see the Limitations to exceptions for residential services effective July 1, 2026, section of this page. 

Lead agencies must renew service agreements annually. This renewal is meant to be a time to review a person’s needs and make any necessary changes. If a renewal does not occur annually, the person’s change in need may not be identified. A lead agency should fill out the DHS-5820; if the cost driver information and the rate is the same as the originally approved exception, the lead agency should check “renewal” on the DHS-5820. Lead agencies are responsible for tracking exceptions and ensuring that the service need and the service-based response has continued before renewing an exception.

Lead agencies must review service agreements annually at a minimum. Under DHS policy, an exception rate will expire after one year from the approved start date of the exception rate.

Yes. However, lead agencies must wait to receive the approval notice for the original exception request before submitting a renewal to line up MnCHOICES reassessment/renewal dates. If a lead agency submits a renewal request before the original exception is approved, DHS will deny the renewal and the lead agency will have to resubmit the renewal once it receives the approval letter for the original exception request.

If the change results in a rate that is lower than the approved exception rate, the lead agency may submit an abbreviated exception renewal stating what has changed. For example, “fewer hours of staffing are needed because the person now attends a day program but still needs staff with increased wages and/or training.” 

If the change results in a need for a rate that is higher than the approved exception rate, the lead agency must submit an exception request marked “renewal” with the increased cost drivers and supporting reasons for the increase.

If the requested rate, cost drivers or RMS inputs have changed, the request is still considered a renewal. The lead agency will submit a DHS-5820 to DHS with supporting documentation and cost driver information to support the change.

The lead agency may complete a new calculation in RMS showing the current (non-exceptional) need. The lead agency may then authorize the final rate produced by RMS, and the exception rate will automatically expire after one year. You do not need to notify DHS if the exception rate lapses before the one-year mark.

Any time an agency takes or does not take an action related to a person’s services being denied, stopped, suspended, reduced or changed, it must send a Notice of Action (Service Plan), DHS-2828B, (PDF) to the person.

Ultimately, the provider and lead agency should work together to address this through discussion and/or service planning. If a provider feels it is being treated unjustly, it may submit an inquiry on the DSD contact form.

Yes, but DHS makes every effort to work with the lead agency and provider to determine whether a person is eligible for an exception, if the person needs an exception and if the cost drivers match the extraordinary needs of the person. If those connections cannot be made, or if cost drivers contain benefits covered by another payer or are not covered by the waiver, DHS will deny the exception.

Denials at any level are only appealable by the person under Minnesota statute. A provider, however, may ask a lead agency to correct erroneous entries in RMS that affect a waiver rate.

The RMS framework rates include component values determined by extensive research. These costs reflect the costs determined by that research to provide specific services. If a person has needs that are outside of the determined component values, the provider must clearly identify and document those needs and how the RMS component values don’t meet the standard. For more information, see the Disability waivers rate setting frameworks page

Providers decide the wages they pay their staff as part of their business practice. The component values in the RMS do not set staff wage levels. Providers use the RMS as a tool to calculate what an entire service costs, so the component values do not reflect what providers actually pay their staff. 

At this time, minimum wage is not an eligible reason for an exception, as it is not directly related to the needs of the person.

The provider must provide written documentation of the incurred cost drivers that are not included or are above the cost drivers in the RMS framework. Specific costs related to the extraordinary needs of the person are necessary to support an exception request. See the Lead agency provider tool for DWRS exceptions (residential), DHS-5820C (PDF) or the Lead agency provider tool for DWRS exceptions (day or unit), DHS-5820D (PDF) for definitions and component values. Providers must provide cost driver documentation that speaks the language of the rate tool. For example: Use dollars for component values that are represented in dollars and use percentages where the component value is represented in percentages.

No. A service rate cannot be the sole reason for demission of a person from service. Minn. Stat. §245D.10, subd. 3 and 3a identify how and when services may be disrupted and what is required when a provider determines it can no longer serve a person. DHS encourages providers and lead agencies to work together to best meet the needs of the person and to involve DHS, as necessary, before demitting a person.

Statute outlines when a person is eligible for an exception. If these criteria are not met, DHS cannot approve an exception. Lead agencies, people or families with concerns should submit an inquiry on the DSD contact form.

Lead agencies have the authority to work on service planning and, if appropriate, depending on the type of service, increase units of service if there have been changes in the person’s need that do not require an increased rate.

The lead agency’s primary responsibility is to ensure that exception requests are made for people with extraordinary needs and the supports (goods and services) described in the requests are allowable and meet the person's needs.

No. DHS does not need to be notified of a service change. This is considered to be working within the RMS frameworks. If this change does not meet a person’s need, an exception might be appropriate.

The lead agency and DHS cannot process an exception request without documentation of cost drivers that are not included in or are above the RMS framework component values. The lead agency has the authority to request any necessary documentation to make a determination regarding the exception request. Ultimately, DHS must be able to show the federal Centers for Medicaid & Medicare Services (CMS) why the person’s service rate is outside of the state established methodology.

If the provider and lead agency agree that the framework rate is not needed to provide the service, they may authorize a lower rate, as long as the rate is less than the framework rate.

No. Providers and lead agencies will continue to follow the guidance provided on DHS – Disability waiver rate system, under the Exceptions tab.

It depends:

• If the person has an existing DWRS rate exception for the service, the lead agency should mark the application as a renewal. If there is a change in rate requested from the previous year, the lead agency must provide all appropriate cost driver documentation. For more information, see DHS – Disability waiver rate system, under the Exceptions tab.
• If the person has never had an exception for the service before the 2022 component value changes, the lead agency should mark the application as new. The lead agency must provide all appropriate cost driver information. For more information, see DHS – Disability waiver rate system, under the Exceptions tab.

Yes.

Yes. However, the exception request must meet the same criteria as any other exception. For more information, review the DWRS exceptions requests page in the Community-Based Services Manual (CBSM).

Recalculate rates if the waiver closes.

• DWRS exception requests page in CBSM.
• Submit an inquiry on the DSD contact form.
• Lead agency provider tool for DWRS exceptions (residential) (PDF).
• Lead agency provider tool for DWRS exceptions (day or unit) (PDF).