(d) Applications for admission or transfer of an individual to a residential treatment facility for children and youth must document that there has been an evaluation of the needs of the individual and a determination of the individual's need for treatment in a residential treatment facility for children and youth and the appropriateness of such treatment. In the case of individuals who are applicants or recipients of medical assistance pursuant to title eleven of article five of the social services law, such determination shall also include certification of need for residential treatment facility services in accordance with this section. Where certification is required, an individual will be certified for admission if:

1. (1) Available ambulatory care resources and other residential placements do not meet the treatment needs of the individual;
2. (2) Proper treatment of the individual's psychiatric condition requires in-patient care and treatment under the direction of a physician; and
3. (3) Care and treatment in a residential treatment facility for children and youth can reasonably be expected to improve the individual's condition or prevent further regression so that services will no longer be needed, provided that a poor prognosis shall not in itself constitute grounds for a denial of certification if treatment can be expected to effect a change in prognosis. Decisions to recommend admission or priority admission shall occur in consultation with the residential treatment facility and be based on a determination of appropriateness including consideration of facility staffing, patient mix and acuity and the impact on the safety of other residents. In the event the office evaluates a child who is the subject of a proceeding currently pending in the family court, the office shall report its decision to the family court. Prior to admission and no sooner than fourteen days after admission, the office or its designee may evaluate the medical necessity and quality of services for each Medicaid member. If the office or its designee determines that residential treatment services are no longer appropriate, the determination of the office or its designee shall be reported to the facility and the person, or the person's legally authorized representative. Such determination shall not be effective retroactively. No residential treatment facility for children and youth shall admit a person who has not been determined appropriate and where appropriate, certified for such admission. Residential treatment facilities shall admit individuals who have been designated as priority admissions by the office or commissioner's designee.