(a) On or before December 1, 2003, the Department shall submit an application to the Centers for Medicare and Medicaid Services to amend the State Medical Assistance Program to allow the Department to receive federal matching funds for part of the nonroom-and-board portion of the costs of all eligible residential care that are related to the therapeutic components of care provided by State and local agencies through public or private providers to individuals under the age of 21 years.

(b) The application submitted by the Department under subsection (a) of this section:

(1) Shall apply to a residential care placement providing therapeutic or rehabilitative services in addition to room and board services to an individual who is:

(i) Under the age of 21 years; and

(ii) In the care or custody of, committed to, or voluntarily placed by any State or local agency in the State; and

(2) Shall include placements in residential programs that have rates set by the interagency rates committee.

(c) (1) For each fiscal year, the Governor may provide funds in the budget for the Children’s Cabinet Fund established under Title 8, Subtitle 5 of the Human Services Article, to be used by the Children’s Cabinet to create an interagency pool of funds to provide services to children with disabilities.

(2) The pool of interagency funds established under this subsection shall be used to fund the community-based services and community-based out-of-home placements needed by children with mental or developmental disabilities not in State custody, regardless of eligibility for the State Medical Assistance Program, if:

(i) The child is in an out-of-home placement and has been recommended for discharge but the child’s family is unwilling or unable to have the child return home; or

(ii) The child remains in the home but the child’s family is unable to provide appropriate care for the child without additional services and the child is either at risk of requiring an out-of-home placement or the treating professionals have recommended an out-of-home placement.

(d) (1) The Governor’s Office of Crime Prevention, Youth, and Victim Services shall adopt regulations to carry out the provisions of subsection (c)(2) of this section.

(2) The regulations shall:

(i) Include the criteria for eligibility and for prioritization of eligible children; and

(ii) Be developed with input from parents of a child with disabilities, groups representing families of potentially eligible children, advocacy organizations, the protection and advocacy system for persons with disabilities, providers, local agencies serving children with disabilities, and Subcabinet agencies.

(e) (1) Nothing in this section is intended to result in the reduction of federal funds available to the Department of Human Services or the Department of Juvenile Services under Title IV-E of the Social Security Act for the room and board costs of eligible residential care.

(2) If, as a result of actions taken under this section, the federal matching funds available to the Department of Human Services and the Department of Juvenile Services under Title IV-E of the Social Security Act are reduced because the percentage of residential care costs allocated to Title IV-E is reduced, the Governor shall adjust the amount of funds provided under subsection (c) of this section to prevent any resulting loss to the Department of Human Services and the Department of Juvenile Services.

(3) The adjustment of funds under paragraph (2) of this subsection shall be based on determining the amount of Title IV-E reimbursement that would have been received by the Department of Human Services and the Department of Juvenile Services prior to October 1, 2003 using the current percentage of residential care costs that is allocated to Title IV-E.