[Federal Register Volume 59, Number 221 (Thursday, November 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28318]


[[Page Unknown]]

[Federal Register: November 17, 1994]


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Part VII





Department of Health and Human Services





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Health Care Financing Administration



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42 CFR Part 440, et al.




Medicaid Program; Inpatient Psychiatric Services for Individuals Under 
Age 21; Proposed Rules
DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 440, 441, 447 and 483

[MB-60-P]
RIN: 0938-AF73

 
Medicaid Program; Inpatient Psychiatric Services for Individuals 
Under Age 21

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend our regulations to establish 
psychiatric residential treatment facilities as a new category of 
Medicaid facility, and establish standards that these facilities would 
have to meet; and specify that psychiatric units of general hospitals 
may be used for acute psychiatric care for individuals under age 21. It 
also would improve the regulatory implementation of the statutory 
requirements for State development of a comprehensive mental health 
program and coordination of various State authorities concerned with 
provision of mental health and related services. In addition, this 
proposed rule would ensure that representatives from agencies providing 
services to an individual develop and manage a coordinated plan of care 
whenever feasible.
    This rule would implement section 4755(a) of the Omnibus Budget 
Reconciliation Act of 1990 (Public Law 101-508).

DATES: Written comments will be considered if we receive them at the 
appropriate address, as provided below, and must be received no later 
than 5:00 p.m. on January 17, 1995.

ADDRESSES: Mail written comments (one original and two copies) to the 
following address:

Health Care Financing Administration, Department of Health and Human 
Services, Attention: MB-60-P, P.O. Box 7518, Baltimore, Maryland 21207-
0518.

If you prefer, you may deliver your written comments (one original and 
two copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Ave., SW., 
Washington, DC or
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore, 
Maryland.

    Due to staffing and resource limitations, we cannot accept comments 
by facsimile (FAX) transmissions.
    In commenting, please refer to file code MB-60-P. Written comments 
received timely will be available for public inspection as they are 
received, beginning approximately three weeks after publication of this 
document, in Room 309-G of the Department's offices at 200 Independence 
Ave., SW., Washington, DC on Monday through Friday of each week from 
8:30 a.m. to 5:00 p.m. (phone: 690-7890).
    If you wish to submit written comments on the information 
collection requirements contained in this proposed rule, you may submit 
written comments to:

Laura Oliven, HCFA Desk Officer, Office of Information and Regulatory 
Affairs, Room 3001, New Executive Office Building, Washington, D.C. 
20503.

FOR FURTHER INFORMATION CONTACT: Winona Hocutt, (410) 966-4625.

SUPPLEMENTARY INFORMATION:

I. Background

    Medicaid is the Federally assisted State program authorized under 
title XIX of the Social Security Act (the Act) to provide funding for 
medical care provided to certain needy aged, blind and disabled 
persons, families with dependent children, and low-income pregnant 
women and children. Each State determines the scope of its program, 
within limitations and guidelines established by the law and the 
implementing regulations at 42 CFR chapter IV, subchapter C. Each State 
submits a State plan that, when approved by HCFA, provides the basis 
for granting Federal funds to cover part of the expenditures incurred 
by the State for medical assistance and the administration of the 
program.
    Section 1902(a) of the Act specifies the eligibility requirements 
that individuals must meet in order to receive Medicaid. Other sections 
of the Act describe the eligibility groups in detail and specify 
limitations on what may be paid for as ``medical assistance.''

II. Statutory and Regulatory History--Inpatient Psychiatric 
Hospital Services Benefit for Individuals Under Age 21

    The Social Security Amendments of 1972 (Public Law 92-603) amended 
the Medicaid statute to, among other things, allow States the option of 
covering inpatient psychiatric hospital services for individuals under 
age 21. In this preamble, we will refer to inpatient psychiatric 
hospital services for individuals under age 21 as the ``psychiatric\21 
benefit.'' Originally the statute required that the psychiatric\21 
benefit be provided by psychiatric hospitals that were accredited by 
the Joint Commission on Accreditation of Hospitals. This organization 
is now called the Joint Commission on Accreditation of Healthcare 
Organizations. We will refer to this organization as the ``Joint 
Commission.''
    In 1976 the Social and Rehabilitation Service, one of the agencies 
that later merged to form HCFA, published final regulations in the 45 
CFR part 249 implementing the psychiatric\21 benefit. These regulations 
allowed the coverage of this benefit in psychiatric facilities that 
were accredited by the Joint Commission. The term ``psychiatric 
facility'' was used rather than the statutory term ``psychiatric 
hospital'' because the Joint Commission had modified its accrediting 
practices to encompass a broader range of settings providing 
psychiatric services. Since the statute at that time required Joint 
Commission accreditation, HCFA desired to keep its requirements 
consistent with Joint Commission practices.
    In 1981 HCFA received comments from the Joint Commission expressing 
concern about HCFA's regulatory requirement for Joint Commission 
accreditation. The Joint Commission indicated that this Federal 
requirement was in conflict with Joint Commission policy that 
facilities should seek accreditation voluntarily. In response, HCFA 
noted that the regulatory requirement for Joint Commission 
accreditation could not be removed because it was required by statute.
    In 1984, the Congress amended section 1905(h) of the Act, removing 
the requirement for Joint Commission accreditation and adding the 
requirement that providers of the psychiatric\21 benefit meet the 
definition of a ``psychiatric hospital'' under the Medicare program as 
specified in section 1861(f) of the Act (section 2340 of the Deficit 
Reduction Act of 1984 (Public Law 98-369)).
    Despite this statutory change, based on our understanding of 
Congressional intent, we did not remove the requirement for Joint 
Commission accreditation from HCFA regulations, which are in subpart D 
of 42 CFR part 441. Our reliance on Joint Commission accreditation was 
the only basis for coverage of the psychiatric\21 benefit in 
psychiatric facilities other than psychiatric hospitals. Our decision 
to retain the regulatory requirement for Joint Commission accreditation 
was based on the fact that, in enacting the 1984 amendment, the 
Congress gave no indication that it intended to narrow the 
psychiatric\21 benefit or alter HCFA policy that had been in effect 
since 1976.
    On November 5, 1990, the Omnibus Budget Reconciliation Act of 1990 
(OBRA '90), Public Law 101-508, was enacted. Consistent with HCFA's 
interpretation reflected in 42 CFR 441 et seq., section 4755 of OBRA 
'90 amended section 1905(h) of the Act to specify that the 
psychiatric\21 benefit can be provided in psychiatric hospitals that 
meet the definition of that term in section 1861(f) of the Act ``or in 
another inpatient setting that the Secretary has specified in 
regulations.'' This amendment, which was effective as if it had been 
enacted earlier as part of the Deficit Reduction Act of 1984, affirmed 
and effectively ratified preexisting HCFA policy as articulated in 
subpart D of 42 CFR part 441, which interpreted sections 1905(a)(16) 
and 1905(h) of the Act as not being limited solely to psychiatric 
hospital settings. OBRA '90, therefore, provides authority for HCFA to 
specify inpatient settings in addition to the psychiatric hospital 
setting for the psychiatric\21 benefit without continuing to require 
that providers obtain Joint Commission accreditation.

III. Related Provisions

    Under section 1905(a) of the Act, Medicaid payment is generally not 
available for any services provided to individuals under age 65 who are 
patients in ``institutions for mental diseases'' (IMDs). This statutory 
preclusion of Medicaid payment is commonly known as the ``IMD 
exclusion.'' The term ``IMD'', as defined in section 1905(i) of the 
Act, includes hospitals, nursing facilities, or other institutions of 
more than 16 beds that are primarily engaged in providing diagnosis, 
treatment, or care of persons with mental diseases, including medical 
attention, nursing care, and related services.
    The psychiatric\21 benefit, at section 1905(a)(16) of the Act, is 
the only statutory exception to the IMD exclusion. The psychiatric\21 
benefit is optional, and it is currently covered under 41 State plans. 
The psychiatric\21 benefit must, however, be provided in all States to 
those individuals who are determined during the course of an Early and 
Periodic Screening, Diagnosis, and Treatment (EPSDT) screen to need 
this type of inpatient psychiatric care. Under the EPSDT provisions at 
section 1905(r)(5) of the Act, as amended by section 6403 of the 
Omnibus Budget Reconciliation Act of 1989, Public Law 101-239, States 
must provide any service listed in section 1905(a) of the Act that is 
needed to correct or ameliorate defects and physical and mental 
conditions discovered by EPSDT screening services, whether or not the 
service is covered under the State plan.
    While some inpatient psychiatric services can be provided in the 
psychiatric units of general hospitals as ``inpatient hospital 
services'' under section 1905(a)(1) of the Act, the services provided 
under the psychiatric\21 benefit, and which meet the regulatory 
requirements in subpart D of part 441, must also be available for 
children and adolescents who are determined to need these services as a 
result of an EPSDT screen. Because of the section 1905(r)(5) 
requirement, even States that do not elect to include the optional 
psychiatric\21 benefit in their State plans must be aware of its 
provisions so that inpatient psychiatric services can be provided to 
EPSDT-eligible individuals who are determined to require them.
    Under current law, Medicaid payment for psychiatric services can be 
available under a variety of services and settings listed in section 
1905(a) of the Act. Optional inpatient psychiatric services are 
available for individuals age 65 or over in IMDs which are inpatient 
hospitals or nursing facilities (section 1905(a)(14) of the Act). 
Payment is available for medically necessary inpatient psychiatric 
services provided to Medicaid recipients of all ages in general 
hospitals, since such hospitals are typically not IMDs. Outpatient 
psychiatric services can be covered in the outpatient hospital setting 
or under the optional clinic or rehabilitative services benefits (see 
sections 1905(a)(2)(A), 1905(a)(9) and 1905(a)(13) of the Act). 
Finally, the physicians' service benefit under section 1905(a)(5)(A) of 
the Act can include psychiatrists' services.
    Under section 1905(a) of the Act, Medicaid payment is available for 
case management services, as defined in section 1915(g)(2) of the Act, 
which can be used to coordinate needed mental health services. Case 
management services assist individuals in gaining access to needed 
medical, social, educational, and other services. Moreover, under 
section 1915(g)(1), such case management services may be targeted to 
chronically mentally ill persons. Although coverage of case management 
services is generally optional for States, the case management services 
under section 1905(a)(19) must be provided under the EPSDT authority 
cited above if the need for these services is discovered during an 
EPSDT screen (see section 1905 (r)(5)).
    Section 4722 of OBRA '90 amended section 1905(a) of the Act to 
provide that no service shall be excluded from the definition of 
``medical assistance'' solely because it is provided as a treatment 
service for alcoholism or drug dependency. (Under the International 
Classification of Diseases, which HCFA relies on for classification 
purposes, alcoholism and chemical dependency are classified as mental 
disorders.) This provision does not override the IMD exclusion, nor 
does it require a State to include chemical dependency treatment under 
any other optional benefit unless it chooses to do so.
    Since the Medicaid statute was enacted in 1965, it has required 
that all State agencies involved with mental health care coordinate 
their activities. Specifically, section 1902(a)(20)(A) of the Act 
requires that the State Medicaid agency, in a State offering the 
optional IMD benefit under section 1905(a)(14), have agreements or 
other arrangements with other State authorities concerned with mental 
diseases. These include arrangements for joint planning and development 
of alternate methods of care, and arrangements providing assurance of 
immediate readmittance to institutions, where needed, for individuals 
under alternate plans of care. The IMD services authorized under 
section 1905(a)(14) currently are provided by 45 States.
    Section 1902(a)(20)(B) of the Act contains additional requirements 
regarding IMD benefits for individuals age 65 or older. Among other 
provisions, this section requires that the Medicaid State plan provide 
for an individual plan for each patient who may be in need of 
institutional care to ensure that any ``institutional care provided to 
him is in his best interests, including, to that end, assurances that 
there will be initial and periodic review of his medical and other 
needs.'' In addition, the State plan must include assurances that each 
patient will be given appropriate treatment within the institution, and 
that each patient will have a periodic assessment of the need for 
continued treatment in the institution.
    Section 1902(a)(20)(C) of the Act further requires States that 
offer the IMD benefit to provide for development of alternate plans of 
care, making maximum utilization of available resources, for recipients 
age 65 or older who would otherwise need institutional care, including 
appropriate medical treatment and other aid or assistance. This section 
also requires that States develop the methods of administration 
necessary to ensure that these responsibilities of the State agency for 
these recipients are effectively carried out.
    Section 1902(a)(21) of the Act requires that these States show that 
they are making satisfactory progress toward developing and 
implementing a comprehensive mental health program, including provision 
for utilization of community mental health centers and other 
alternatives to care in public IMDs. (The State's comprehensive mental 
health services plan, which a State has prepared in accordance with 
section 1912 of the Public Health Service Act, can serve as a basis for 
this process). These statutory requirements were designed to ensure 
that the mental health services covered by Medicaid are coordinated 
with all related services provided by other State authorities and that 
appropriate alternatives to institutional care are available. These 
requirements are implemented in our regulations at 42 CFR 441.106, 
which provides, among other things, that if a State plan includes 
services in public institutions for mental diseases, the State must 
implement a comprehensive mental health program which covers all ages. 
In this way, we make clear that a comprehensive program must include 
services for individuals under age 21 and over age 64 who are possible 
candidates for Medicaid coverage of inpatient psychiatric care as well 
as services for individuals age 22 through 64 who do not have a 
Medicaid benefit for inpatient psychiatric care.

IV. General Goal of Proposed Regulatory Revisions

    We are preparing the proposed regulations under the authority 
provided by section 1905(h) of the Act, as amended by section 4755 of 
OBRA '90, to specify alternative inpatient settings in which inpatient 
psychiatric services may be covered for individuals under age 21. We 
also propose to update our rules for the psychiatric\21 benefit to take 
into account changes that have taken place in the provision of 
psychiatric services since the existing regulations were published, and 
to make implementation of the psychiatric\21 benefit consistent with 
related Medicaid benefits and other statutory provisions.
    In the process of developing these proposed regulations, we have 
consulted with several other Federal agencies, including the Civilian 
Health and Medical Programs of the Uniformed Services (CHAMPUS) and the 
National Institutes of Mental Health (NIMH), a number of States, and 
with a wide array of private organizations concerned with the provision 
of mental health services to children and adolescents. We propose to 
establish a policy which will improve coordination of the 
psychiatric\21 benefit with other services generally being provided to 
mentally ill children and adolescents, such as educational services, 
child welfare services, and juvenile justice services.
    Amid widespread concern that the services provided for mentally ill 
children and adolescents and their families are often overlapping, 
duplicative, and sometimes at cross-purposes because they have not been 
coordinated with each other, many States have begun to coordinate the 
activities of the State and local authorities involved with caring for 
mentally ill children and adolescents to ensure joint planning and 
joint provision of services. In many cases these efforts have been 
based on the NIMH's Child and Adolescent Service System Program. In 
addition, the Robert Wood Johnson Foundation has funded coordinated 
``Mental Health Service Programs for Youth'' at 8 sites.
    It is especially critical that the possible need for inpatient 
services be considered in the context of all the services involved in a 
child's or adolescent's care because an unnecessary admission can put 
the individual at risk of a lifetime of public dependency. Inpatient 
admission also inevitably results in trauma and disruption of a child's 
normal support systems. Intensive services are increasingly available 
in the community to help resolve crisis situations. When inpatient 
admission is necessary, it is often needed because early intervention 
and treatment have been lacking. For this reason, fewer admissions to 
mental health facilities may be required when a comprehensive care 
system has been in place for a period of time.
    Coordinated programs are oriented toward the needs of children 
rather than being structured according to the requirements of various 
funding sources, and they result in a wider array of available 
services. Coordinated programs can lower overall costs because 
duplicative and unnecessary services can be eliminated, and optimal 
services can be made available. If the array of services available is 
uncoordinated, the patient runs the risk of an unnecessary admission 
because the alternative services that may have been more effective are 
not as readily available and the admission, therefore, occurs by 
default.
    Many studies have indicated that the most important factors in 
maintaining the beneficial effects of mental health treatment for 
children and adolescents are the availability and use of a wide range 
of post-treatment resources. Such resources include appropriate 
educational and vocational services and supportive services for the 
family members who will have ongoing responsibility for caring for the 
children. Many of these services are beyond the purview of the Medicaid 
program, but they are, nonetheless, vital to the mental health of 
Medicaid recipients and have direct bearing on future mental health 
service needs. These proposed regulations would support State 
coordination and planning efforts in this area (Sec. 441.106).

Psychiatric Treatment

    Many professionals contend that psychiatric treatment should be 
available in a wide array of settings, including office visits, clinic 
services, home-based treatment programs, day treatment programs, 
partial hospitalization (day hospital), therapeutic foster care 
provided by trained ``parents,'' residential treatment facility 
services, and acute psychiatric hospital care.
    Mental health professionals generally agree that it is best for the 
individual for services to be provided in the least restrictive setting 
possible. In addition, it is usually cost effective to do so. ``Least 
restrictive setting'' generally means that needed care should be 
provided on an outpatient basis in the community where the individual 
lives, as opposed to in an inpatient setting. This principle has been 
codified in Part B of the Education of the Handicapped Act, Public Law 
94-142 (20 U.S.C. 1400 et seq.).
    The Medicaid program has frequently been criticized for favoring 
institutional care over community-based care because the reimbursement 
rates are often viewed as being more adequate for inpatient care, and 
because eligibility may be more readily available for institutionalized 
individuals. As a result, institutional care may have been provided 
when it was not medically necessary, with possible detrimental effects 
on the patient, because alternative community care was not available. 
Various studies have estimated that from 39 to 95 percent of the 
psychiatric inpatient care provided is medically unnecessary. In fact, 
a wide array of outpatient mental health services can be funded under 
Medicaid, but for a variety of reasons these options have not been 
fully utilized by many States and outpatient providers.
    In recent years, however, many States have become concerned about 
dramatic increases in Medicaid expenditures for inpatient psychiatric 
care and have sought to assure that alternative care is available in 
the community. Many States have moved to increase funding for community 
services and instituted effective screening procedures for inpatient 
admissions. We are proposing revisions in Sec. 441.152, concerning 
certification of the need for inpatient care, that we believe will 
serve to support these efforts. These proposals are discussed in 
section V of this preamble.

Inpatient Settings

    As discussed in Section II Statutory and Regulatory History of this 
preamble, existing regulations allow the provision of psychiatric 
inpatient care for individuals under age 21 in any psychiatric facility 
that is accredited by the Joint Commission and meets the other 
requirements in subpart D of 42 CFR part 441. The Joint Commission 
accredits a wide variety of health care organizations which may provide 
inpatient or outpatient services. Inpatient psychiatric services are 
currently being provided for individuals under age 21 in psychiatric 
hospitals in all but 7 States. Psychiatric hospitals must, under 
section 1905(h)(1)(A), meet the Medicare definition of ``psychiatric 
hospital'' contained in section 1861(f) of the Act. The regulatory 
requirements relating to psychiatric hospitals are specified in 
Sec. 482.60, Special provisions applying to psychiatric hospitals.
    In addition, 14 States provide inpatient psychiatric services for 
individuals under age 21 in psychiatric units in general hospitals. 
Three States cover the psychiatric\21 benefit in nursing facilities, 
and 19 States cover this benefit in facilities called ``residential 
treatment facilities.''
    Although nursing facilities (NFs) are a recognized category of 
inpatient provider, we decided against designating NFs as an 
alternative setting for the psychiatric\21 benefit because NFs are 
primarily designed to provide geriatric nursing care and would not 
generally be appropriate for children and adolescents.
    In view of the fact that a number of States no longer use 
psychiatric hospitals to provide services to individuals under age 21 
and a significant number of States now provide this inpatient benefit 
in psychiatric units of general hospitals, we propose to specify in the 
proposed regulations that States may use psychiatric units of general 
hospitals to provide acute psychiatric inpatient care under the 
psychiatric\21 benefit either instead of, or in addition to, 
psychiatric hospitals.
    We propose to revise existing regulations to establish a definition 
of the term ``psychiatric residential treatment facility'' (PRTF) and 
conditions of participation for this type of facility. A PRTF is a 
community-based facility that provides a less medically intensive 
program of treatment than a psychiatric hospital or a psychiatric unit 
of a general hospital.
    The proposed PRTF standards are based on existing standards for 
these facilities developed by CHAMPUS, the Joint Commission, and a 
number of States and other organizations. We have tried to structure 
the PRTF conditions of participation to ensure practical outcome-
oriented benefit to patients, rather than establishing ``paper'' 
compliance with procedures and policies.
    We also would revise Sec. 441.152, which specifies the requirements 
for certification of the need for admission to all psychiatric\21 
providers. These provisions are discussed in detail in section V of 
this preamble.
    Any State that chooses to offer the psychiatric\21 benefit would be 
required, at a minimum, to provide acute psychiatric care in a 
psychiatric hospital or a psychiatric unit of a general hospital. 
States would have the further option of also providing inpatient 
psychiatric services in the freestanding PRTF setting. If a State does 
not choose to include PRTF services as part of the psychiatric\21 
benefit, it would not be required to certify freestanding PRTFs if it 
determines that medically necessary residential treatment services for 
EPSDT patients can be provided in a certified distinct part PRTF 
located in a general hospital or psychiatric hospital setting.
    PRTFs would provide a type of care that is distinctly different 
from the care provided by acute care facilities and therefore a PRTF 
that is affiliated with a participating psychiatric hospital or general 
hospital would need to obtain separate PRTF certification in addition 
to its hospital certification. The setting(s) that a State chooses to 
use for the psychiatric\21 benefit would be indicated in its State 
plan.
    PRTFs would be certified in the same manner as other inpatient 
providers of Medicaid services. States may contract for specialized 
personnel to perform surveys if they wish to.
    Currently operating residential treatment facilities include a wide 
range of providers, from facilities that provide care similar to that 
provided in psychiatric hospitals to facilities that are more similar 
to group homes. In addition, many residential treatment facilities are 
part of multi-service mental health organizations which also provide a 
range of outpatient services. A number of States have developed or are 
in the process of developing licensure requirements for these 
facilities.
    Treatment in residential treatment facilities generally costs less 
per day than treatment in a psychiatric hospital, but because the 
length of stay in residential facilities is generally longer, treatment 
in a residential facility is not always less expensive for the total 
inpatient stay. Rates for residential treatment facility services now 
range from approximately $140 to $420 per day, including professional 
fees.
    Some States have developed managed care systems for mental health 
services and, in some cases, States have combined Medicaid funding for 
these mental health benefits with funding for related services 
administered by other agencies in the State. These arrangements tend to 
ensure that treatment programs are developed in response to the 
individual's service needs rather than being structured according to 
the funding criteria of various programs; we support these coordinated 
efforts. Under these programs, Medicaid is only billed for Medicaid 
covered services provided to Medicaid eligible individuals.
    In the course of developing these proposed regulations, several 
parties suggested that intensive outpatient services be included as a 
subcategory of services under the psychiatric\21 benefit in order to 
emphasize that outpatient services can often be substituted for 
inpatient care, with less traumatic impact on the patient. Although we 
support the goal of substituting outpatient services for inpatient 
services whenever possible, the statutory language of section 1905(h) 
of the Act authorizing this inpatient benefit does not provide latitude 
for including outpatient services; this benefit must be provided in ``a 
psychiatric hospital * * * or in another inpatient setting.'' We 
believe, however, that the system we have proposed for assessing the 
total needs of each child or adolescent will support the goal of 
assuring that outpatient services are used whenever this is a feasible 
alternative.
    It was also suggested that we consider allowing children and 
adolescents who do not require inpatient treatment of their mental 
conditions to enter residential facilities if they require residential 
placement to remove them from a problematic family setting. In this 
situation, it was suggested that Medicaid would fund the treatment 
services, and payment for the cost of room and board would come from 
other sources. While we recognize that this type of arrangement may be 
necessary in some circumstances, and we acknowledge that rehabilitative 
services can be provided in a wide variety of settings, we note that 
care provided under such an arrangement would not be provided in the 
context of the psychiatric\21 benefit, which is restricted by statute 
to individuals who require inpatient care for treatment of their mental 
condition (section 1905(h)(1)(B)). Accordingly, we have not 
incorporated this suggestion into the proposed regulations.

V. Provisions of the Proposed Regulations

A. Inpatient Mental Health Provisions

    We would establish a new Sec. 441.45, Mental health assessment and 
service plan, which implements section 1902(a)(26) of the Act. This 
section requires individual plans of care for psychiatric inpatients 
and periodic medical review in each psychiatric institution. The State 
would be required to ensure that a comprehensive assessment is made 
(Sec. 441.45(a)) and that an individual comprehensive services plan 
(Sec. 441.45(b)) is developed for each individual who has been 
determined to be at risk of requiring inpatient mental health 
treatment. We propose to extend this requirement to include not only 
eligible individuals currently receiving inpatient mental hospital 
services, but also certain eligible individuals who the State 
reasonably believes may imminently need such services, because we 
believe that such a requirement is a necessary safeguard to ensure 
proper utilization of inpatient services. We also believe that such a 
requirement will help to ensure continuity of care and appropriate 
service utilization for patients who have had intermittent inpatient 
mental hospital services. Furthermore, such a requirement is consistent 
with requirements for comprehensive assessments of medical status and 
needs under the early and periodic screening, diagnosis and treatment 
benefit available to individuals under the age of 21.
    A State must consider at risk of requiring inpatient mental health 
services at least those eligible individuals who are in the following 
categories: those who are applicants for inpatient mental health 
facilities, those determined to need inpatient mental health services 
on an EPSDT screen or preadmission screening and annual resident review 
(PASARR), and those discharged from an inpatient mental health 
facility, during the year following discharge. A State may include 
other groups of eligible individuals who it believes are at risk of 
needing inpatient treatment in the near future. For eligible 
individuals who have been identified based on an EPSDT screen or a 
PASARR, a State may adopt as its assessment or comprehensive service 
plan the results of these other reviews if those reviews are sufficient 
to meet the requirements specified in Sec. 441.45.
    Comprehensive mental health planning for a child or adolescent 
would typically involve representatives from the State mental health 
department, the child welfare authority, the educational/vocational 
services agency, the public health department, and in some cases the 
alcohol/drug treatment agency, and/or the juvenile justice system. The 
Medicaid agency would participate with these agencies in determining 
the proportionate share of funding responsibility for the services 
needed under the plan. The child or adolescent and the parents or 
guardians would also be involved in developing the services plan, and 
parents or guardians must also be involved in any treatment provided in 
order to ensure maximum long term benefit from the treatment.
    We would revise Sec. 441.106, Comprehensive mental health program, 
which implements the statutory requirement for a comprehensive mental 
health program, to reflect the statutory provisions more explicitly. 
The revision of this section, consistent with sections 1902 (a)(20) and 
(a)(21) of the Act, would require that each State's comprehensive 
mental health program involve all agencies in the State that serve 
mentally ill individuals.
    Medicaid's statutory authority for requiring a comprehensive mental 
health program applies to all States offering services for individuals 
age 65 and over in institutions for mental diseases (currently 46 
States) and our regulations at Sec. 441.106 have long required that the 
comprehensive program cover all ages. Section 1912 of the Public Health 
Service Act includes a similar mental health planning provision and we 
would specify that any program developed as a result of that 
requirement would meet the Medicaid requirement.
    An annual progress report on the State's comprehensive mental 
health program is required under existing Sec. 441.106(c). We would 
move this requirement to Sec. 441.106(b), and modify it to specify that 
a comprehensive mental health services plan developed under section 
1912 of the Public Health Service Act would satisfy the Medicaid 
reporting requirement. If a separate report is prepared, the 
interagency group involved in mental health planning would participate 
in the report preparation. The revision would also specify that the 
report must be submitted to the HCFA Regional Administrator within 3 
months after the end of the fiscal year.
    In Sec. 441.151, General requirements, a new paragraph (c) would be 
added to require that services provided to an individual under the 
psychiatric\21 benefit must be compatible with the individual's 
comprehensive services plan developed as specified in Sec. 441.45(b) 
(discussed above).
    We also would delete the existing regulatory requirement for Joint 
Commission accreditation in Sec. 441.151(b). As discussed in section II 
of this preamble, this requirement was removed from the law in 1984 and 
the Joint Commission has indicated that it does not wish to have its 
accreditation mandated in HCFA regulations since accreditation is 
voluntary.
    We would require that psychiatric facilities meet either the 
psychiatric hospital requirements specified in existing Sec. 482.60 and 
proposed Sec. 483.202, or operate as an inpatient psychiatric unit in a 
general hospital that meets the requirements of existing subparts B and 
C of part 482 and proposed Sec. 483.202, or meet the psychiatric 
residential treatment facility conditions of participation that we are 
proposing in Secs. 483.210 through 483.224 of the new subpart F of part 
483. To summarize, all providers of the psychiatric\21 benefit would be 
required to meet the condition of participation in Sec. 483.202 
relating to active treatment and the inpatient plan of treatment, in 
addition to meeting the other regulatory requirements applicable to the 
particular setting.
    In addition to meeting the PRTF requirements specified in these 
proposed regulations, as determined by the survey process, a State 
could also require Joint Commission accreditation or accreditation by 
any other accrediting organization determined appropriate by the State 
if it wishes to. The regulations at 42 CFR 431.51(c)(2) allow States to 
establish reasonable standards relating to qualifications of providers. 
We emphasize that accreditation by an organization would not, however, 
be considered a substitute for meeting the regulatory requirements in 
the proposed new subpart F of part 483. Reliance on varied and changing 
accreditation requirements in the past has led to widespread confusion 
about the requirements providers must meet as Medicaid participants.
    We propose to modify the certification requirements in 
Sec. 441.152, Certification of need for services, by adding a 
requirement that the team or organization responsible for certifying 
the need for care must complete a comprehensive assessment as specified 
in Sec. 441.45(a) prior to determining whether inpatient care is 
necessary.
    In addition, we would require that the certification include the 
documented clinical evidence that serves as the basis for the 
certification. We wish to make it clear that certification of the need 
for inpatient care is not to be made unless inpatient care is medically 
necessary for treatment of the child or adolescent, as required by the 
statute. Section 1905(h)(1)(B) of the Act requires that ``physicians 
and other personnel qualified to make determinations with respect to 
mental health conditions and the treatment thereof'' certify the need 
for care which they have determined to be ``necessary on an inpatient 
basis and can reasonably be expected to improve the condition, by 
reason of which such services are necessary, to the extent that 
eventually such inpatient services will no longer be necessary.''
    For this reason, we propose to delete the requirement in existing 
Sec. 441.152(a)(1) that the certification include a statement that the 
ambulatory care resources available in the community do not meet the 
treatment needs of the recipient. This ``availability of ambulatory 
care'' requirement was designed to supplement the certification of the 
medical necessity for inpatient care. However, we are concerned that 
this requirement may have been misinterpreted as forming a basis for 
certifying that inpatient care was needed when, in fact, it was not 
clinically required. Inpatient care may have been incorrectly certified 
to be necessary only because the community services that would have 
been sufficient and preferable for that individual were not available 
in his or her community.
    Given the above circumstances, the current reference to ambulatory 
services may have contributed to the inappropriately high incidence of 
unnecessary inpatient care. HCFA believes that if the need for 
inpatient care is certified on the basis that ambulatory care is 
unavailable, this action would undermine an important impetus to 
developing needed community services.
    The proposed certification statement would have to indicate which 
category of inpatient services are needed, i.e., acute psychiatric 
services or PRTF services.
    The State Medicaid agency needs to ensure that the teams that 
develop the individual comprehensive services plans and assess the need 
for inpatient care are prepared to confer informally on a timely basis 
so that decisions concerning possible inpatient admissions can be made 
in times of crisis. Special procedures would be established for 
emergency admissions under the psychiatric\21 benefit to psychiatric 
hospitals or inpatient units of general hospitals, as specified in 
Sec. 441.152(c). Continued coordination and case management are vital 
in assuring that needed educational/vocational services are available 
in the community since these services are often critical in 
forestalling the need for repeated inpatient mental health treatment.
    If a Medicaid eligible patient requires an emergency admission to a 
psychiatric hospital or psychiatric inpatient unit of a general 
hospital, we would require that hospital staff assess the patient's 
condition and certify the need for inpatient care and then initiate 
appropriate treatment as soon as possible following admission. If an 
individual does not apply for Medicaid until after admission, the 
assessment and certification of the need for inpatient care would be 
made by hospital or facility staff within 7 days following the 
application for Medicaid.
    The formal inpatient plan of treatment developed in accordance with 
proposed Sec. 483.202(b) would have to be implemented within 7 days 
following admission or application for Medicaid if the individual 
remains in the hospital that long. The inpatient plan would need to be 
compatible with the individual's comprehensive services plan developed 
as specified in Sec. 441.45(b).
    No emergency admissions would be allowed for psychiatric 
residential treatment facilities (PRTFs). PRTFs provide less medically 
intensive and less extensive services than psychiatric hospitals or 
psychiatric units of general hospitals and are not generally equipped 
or staffed to deal with acute situations; if an acute situation arises 
during a PRTF stay, the patient would generally need to be transferred 
to an acute care facility.
    We would revise Sec. 441.153, Team certifying need for services, 
concerning the team that makes the certification that inpatient care is 
necessary, by deleting the requirement that different types of teams 
make the certification depending on when the individual becomes 
eligible for Medicaid. We instead propose that, whenever possible, the 
certification would be made by a team composed of representatives of 
the agencies providing services to the individual in order to ensure 
that these services are coordinated and that all possible alternatives 
to inpatient care are considered.
    The stress placed on interdisciplinary planning in this regulation 
is based on the premise that inpatient psychiatric services should be 
used only when medically necessary, and that those who are responsible 
for provision of all services to mentally ill individuals will arrange 
services in the individual's best interest, and arrange for services in 
the community whenever possible. When inpatient psychiatric care is 
provided, the stay should be as brief as possible, and focused on 
improving the individual's condition as quickly as possible to the 
point that he or she can be maintained with community-based services. 
Although it may be difficult to arrange for the necessary interagency 
coordination in States that have not already developed a coordinated 
approach, it is counterproductive to provide services in a fragmented 
manner that does not recognize the total service needs of the child or 
adolescent. Even when a State is not able to utilize interagency teams 
for certification of the need for inpatient care upon the effective 
date of this regulation, we expect that all States will move toward 
improving coordination of interrelated services.
    If inpatient psychiatric care is determined to be necessary, an 
interdisciplinary approach would also ensure that all service providers 
are aware of the need to arrange for or to accommodate service delivery 
in the new setting. The school system, for example, will need to 
arrange for or coordinate the provision of educational services in the 
inpatient setting. We would not require that team members meet in 
person to discuss cases if they find it more convenient to communicate 
via a teleconference or other means.
    We would retain the regulatory requirement for physician 
participation in the certification process (Sec. 441.153(c)(1)), 
consistent with section 1905(h) of the Act, which requires that the 
team certifying the need for care include a physician. The physician 
may be a representative of one of the service agencies.
    The team members must generally be independent, i.e., they may not 
be employees of the inpatient facility being considered for admission 
of the individual. If the inpatient facility is a public facility, an 
individual who is employed by the governmental component responsible 
for administration of the inpatient facility would not be considered 
independent. If inpatient care is required on an emergency basis, 
however, or the individual applied for Medicaid after admission, 
certification may be made by employees of the inpatient facility.
    In some States, it may not currently be feasible to use service 
agency representatives to form the review team. HCFA plans to provide 
guidance on this issue in the State Medicaid Manual. In such 
circumstances, the State would need to arrange for another type of 
review group. The State could establish its own review teams or 
contract with an independent review organization to determine whether 
admissions are necessary. An organization's team would need to meet any 
State registration requirements and would have to have physician 
participation in the determination of the necessity of inpatient 
psychiatric services, as required by statute. These teams or 
organizations would also be required to be aware of and consider the 
total service needs of each individual (Sec. 441.153).
    The rules in Secs. 441.154 and 441.155 concerning ``active 
treatment'' and ``plan of care'' would be revised and incorporated into 
the rules concerning conditions of participation at Sec. 483.202. We 
believe that it is important to incorporate these critical requirements 
into a condition of participation so that they will be subject to 
survey procedures. These requirements are discussed in a later section 
of this preamble.
    Section 441.156, Team developing individual plan of care, would be 
deleted. The process for developing the inpatient plan of treatment 
would be specified in Sec. 483.202(b), Active treatment program.
    A new Sec. 441.158, Care settings, would be added to describe the 
settings to be used for providing this inpatient benefit. One setting 
is a psychiatric hospital, the setting that has been authorized under 
the statute since the psychiatric\21 benefit was first established. We 
would specify psychiatric units in general hospitals as a second 
setting that States can use to provide acute care. Acute psychiatric 
care could be provided in either of these settings when the need for 
such care is certified as specified in Sec. 441.152. These settings 
would be used when an individual has an episode for which acute care is 
required, and when it is determined that this most restrictive type of 
care is necessary to stabilize the patient's acute condition.
    A third possible setting for the psychiatric\21 benefit would be a 
PRTF. The PRTF would be a new category of institutional provider under 
the Medicaid program and would be limited to the provision of the 
psychiatric\21 benefit under section 1905(a)(16) of the Act. PRTFs 
would provide care when an individual does not require acute care, but 
does require supervision and active treatment on a 24-hour inpatient 
basis to attain a level of functioning that allows subsequent treatment 
in a less restrictive setting.
    The PRTF setting is being specified as a new category of Medicaid 
provider in order to establish an alternative inpatient setting which 
provides care more similar to community-based care than the care 
provided in psychiatric hospitals or general hospitals. To ensure that 
PRTFs are community-oriented, we propose to require that these 
facilities coordinate their educational activities with school 
curricula in their communities (Sec. 483.212(a)(3)). In developing this 
proposed rule we considered the possibility of limiting the size of 
facilities to 30 or fewer beds in order to enable the facilities to be 
more appropriate in a community setting, but we are not including a 
proposed limit in the proposed rule. We nevertheless welcome comments 
and suggestions on this subject.
    The certification of need process for PRTF care is described in 
Sec. 441.152 (a) and (b). We are proposing to establish the 
requirements for PRTFs in Secs. 483.210 through 483.224 of the 
regulations in subpart F of part 483.
    The PRTF would be an additional optional setting for States that 
choose to provide this inpatient benefit. States that do not include 
PRTFs as providers under the psychiatric\21 benefit would still have to 
provide this type of care when determined to be necessary by an EPSDT 
screen. If such a State does not have freestanding PRTFs, a section of 
a general hospital or psychiatric hospital that has been certified as a 
PRTF can provide these residential services.
    Any State that elects to provide the psychiatric\21 benefit would 
be required, at a minimum, to provide these services in a psychiatric 
hospital or in a psychiatric unit in a general hospital and to have 
PRTF services available at least when required under EPSDT.
    The maintenance of effort provision in section 1905(h)(2) of the 
Act is implemented in Sec. 441.180 of the regulations. The Medicaid 
statute provides that a State's maintenance of effort computation, 
which would demonstrate that the State continues to provide the same 
level of funding for these services that it did before it began to 
receive FFP, is to be based on data from 1971, the year before this 
provision was enacted. We recognize that the statute is obsolete in 
this regard and we have requested a technical amendment to update this 
provision, but the current regulatory maintenance of effort requirement 
must remain in effect until a statutory amendment is enacted. It is not 
necessary, however, for States that currently offer the psychiatric\21 
benefit to again demonstrate maintenance of effort if they wish to 
modify the State plan option to include PRTFs and/or hospital 
psychiatric units as providers of the psychiatric\21 benefit.
    We would add a new Sec. 441.160, Payment, that would specify the 
condition of payment for the psychiatric\21 benefit. For payment 
purposes, we propose to add PRTF services to the long-term care 
facility services definition in Sec. 447.251(c). In addition, we 
propose to apply the payment principles specified in Sec. 447.250 (a) 
through (c) to all providers of the psychiatric\21 benefit.

B. Requirements for Participation for Facilities

    We propose to establish standards in subpart F of part 483 for all 
facilities and units that wish to participate in Medicaid as providers 
of the psychiatric\21 benefit.
    The proposed requirements relating to active treatment and the 
inpatient plan of treatment would apply to psychiatric hospitals and 
psychiatric units in general hospitals that provide the psychiatric\21 
benefit, as well as to PRTFs. In Sec. 483.202, Active treatment 
program, we propose to require that the facility provide treatment 
designed to enable the individual to achieve sufficient stability to 
progress to outpatient care, and to attain the objectives specified in 
the inpatient plan of treatment that would be required in 
Sec. 483.202(b).
    Section 483.202(b), Inpatient plan of treatment, would require that 
an interdisciplinary team, which includes a facility staff physician 
and at least one other professional staff person, develop the inpatient 
plan of treatment which specifies the interventions to be provided for 
the individual. We would require that the inpatient treatment plan 
include specific measurable treatment objectives and timeframes for 
meeting these objectives. In addition, we would require that inpatient 
mental health services be coordinated with any other services being 
provided under the individual's comprehensive services plan.
    The interval for review of inpatient care by the review team in 
acute care psychiatric\21 providers would be set at 7 days after 
admission and every 7 days thereafter. In a PRTF, reviews would be 
required every 7 days in the initial month of stay; after the first 
month, reviews would be required at monthly intervals. We do not 
believe that longer periods should elapse before the treatment 
modalities being used are assessed for their effectiveness. Any 
necessary changes should be made as soon as possible in order to make 
certain that discharge occurs at the earliest possible time.

C. PRTF Conditions of Participation

    In developing the proposed requirements for PRTFs, we have tried to 
allow flexibility for providers whenever possible, and to avoid 
requiring specific documentation of administrative procedures. We 
recognize that policies and procedures relating to such matters as 
personnel and admissions are generally necessary but we believe that 
facilities that can meet the requirements specified in this proposed 
rule can develop these administrative procedures without additional 
Federal requirements. We have made an effort to minimize the imposition 
of any paperwork burdens.
    Facilities meeting all the requirements in subpart F of part 483 
would be qualified as PRTFs to provide the psychiatric\21 benefit. We 
would require that facilities protect and promote the rights of each 
resident, as specified in Sec. 483.211, Resident rights.
    We would require that these providers meet applicable licensure 
laws in States that have established licensure requirements for this 
type of facility. This requirement would be specified in 
Sec. 483.212(a)(1), Licensure and other laws. Because it is important 
that the children and adolescents in the facility maintain their 
educational development while they are in the facility, we would 
require in Sec. 483.212(a)(2) that the facility coordinate its 
educational activities with school curricula in the community.
    We would specify at Sec. 483.212(a)(3) that providers would be 
expected to meet the regulations issued by the Department of Health and 
Human Services relating to nondiscrimination, protection of human 
subjects, and fraud and abuse, as specified in 45 CFR parts 46, 80, and 
84 and 42 CFR part 455. The disclosure of ownership and control 
requirements in section 1126 of the Act would be applicable to these 
providers. The requirements for provider agreements under section 
1902(a)(27) of the Act would also be applicable.
    We would also require that PRTFs have a governing body which would 
appoint an administrator to be responsible for the general management 
of the facility. These requirements would be specified in 
Sec. 483.212(b), Administrative structure. There would be a general 
requirement relating to competence, academic credentials, and 
administrative experience. We invite comments on whether these 
requirements should be more specific, and if so, what the requirements 
should be.
    We propose to require that the facility designate a clinical 
director who is at least board-eligible in psychiatry and has 
experience in child and adolescent mental health. The clinical director 
would be responsible for the implementation of each resident's 
inpatient treatment plan and for the coordination of all medical/
psychiatric care in the facility.
    We would require that all facilities have written procedures to use 
for all potential emergencies, such as fire, severe weather, and 
missing residents (proposed Sec. 483.218(b)). New employees would be 
trained in these procedures and all staff would participate in review 
drills.
    The facility would be required to have written transfer agreements 
with one or more hospitals which assure that a resident can be 
transferred to an appropriate setting in a timely manner when transfer 
is necessary for more intensive psychiatric care or for medical 
treatment (proposed Sec. 483.220(a)). Necessary information relating to 
the resident's care would be exchanged at the time of transfer.
    The facility would also be required to have an effective program 
for infection control (proposed Sec. 483.218(c)).
    Each resident's dignity would be respected and facilities would be 
precluded in Sec. 483.216, Facility practices and resident behavior, 
from imposing any physical restraints or administering any psychoactive 
drugs for purposes of discipline or convenience. All forms of abuse 
would be forbidden, including verbal, mental, sexual, and physical 
abuse. Any grouping of residents would be planned to protect the safety 
and promote the treatment of all group members. The facility would be 
required to report any alleged abuses to the administrator or to other 
officials in accordance with State law. Facilities would have to retain 
evidence of a thorough investigation.
    Concerning staff qualifications, we would require in 
Sec. 483.214(b) that the facility employ the professional, 
administrative and support staff necessary to implement the inpatient 
plans of treatment and to carry out the applicable regulatory 
requirements. Professional staff could include qualified psychiatrists 
and other physicians, clinical psychologists, psychiatric nurses, 
social workers, substance abuse specialists, other health professionals 
and ancillary staff. We would require that all staff be competent and 
that professional staff be appropriately licensed, certified, or 
registered when this is required under State law. We would further 
require that professional staff not be under sanctions imposed for 
infractions as specified in sections 1156, 1128, or 1892 of the Act. 
Services provided by nonemployees would be subject to a written 
agreement that specifies the facility's and contractor's 
responsibilities. We invite comments as to whether this section should 
contain more specific requirements concerning personnel qualifications.
    We would require that responsible direct care staff be on duty and 
awake on a 24-hour basis to take prompt action in case of injury, 
illness, fire, or other emergency in a facility housing residents who 
are aggressive, assaultive, or security risks (Sec. 483.214(a)).
    The facility would be required to maintain clinical records on each 
resident and retain the records for at least 5 years or any period of 
time required by State law. The material in the records would remain 
confidential except under specified circumstances (Sec. 483.212(d)).
    We would also require that facilities disclose ownership and 
control in accordance with Sec. 455.104 (Sec. 483.212(c)). A facility 
would also have to notify the Medicaid agency within 5 days if there is 
a change in the facility's ownership or administrator or clinical 
director.
    A facility would be required to maintain a quality assurance 
program which monitors care provided in the facility and to cooperate 
with an authorized program of independent medical evaluation, including 
evaluation of each resident's need for facility care (proposed 
Sec. 483.212(e)). PRTFs would be one type of psychiatric facility, and 
would therefore be subject to the ``inspection of care'' provisions 
specified in subpart I of 42 CFR part 456.
    Section 483.218, Safety provisions, contains the provisions we 
propose to ensure general resident safety. We propose to require that 
PRTFs meet the applicable provisions of the Life Safety Code of the 
National Fire Protection Association (Sec. 483.218(a)). If these code 
provisions would result in unreasonable hardship upon facilities 
classified for health care occupancy only, they could be waived by the 
State survey agency, but only if the waiver does not adversely affect 
the health and safety of residents or staff.
    Refuse, including any toxic wastes generated in the facility, would 
have to be disposed of in accordance with applicable Federal, State, 
and local laws (Sec. 483.218(d)).
    PRTFs would be required in Sec. 483.222, Dietary services, to 
provide dietary services that ensure that each resident receives a diet 
that meets the daily nutritional needs of the resident. If a qualified 
dietitian is not employed on a full time basis, the facility would be 
required to designate a person to serve as the director of food 
service. The regulation would require menu planning, and sanitary food 
storage, preparation, and distribution methods.
    We would require that facilities provide sufficient space in the 
dining and program areas to enable staff to provide the services 
specified in each resident's inpatient plan of treatment 
(Sec. 483.224(a)). Residents' bedrooms would be required to accommodate 
no more than four residents, and to measure at least 80 square feet per 
resident in multiple resident bedrooms and at least 100 square feet in 
single resident rooms (Sec. 483.224(b)). Variations in these 
accommodation and size requirements could be allowed in individual 
cases when a physician providing direct care documents that the 
variations are required by special needs of residents and will not 
adversely affect residents' health and safety.
    Bedrooms would have to have direct access to a corridor and to have 
at least one window. Appropriate beds, bedding and furniture, and 
accessible closet space would be required. Each resident room would 
need to be equipped with or located near toilet and bathing facilities.
    Dining and activities rooms would have to be well lighted and 
ventilated, with nonsmoking areas identified if smoking is allowed in 
the facility. It is possible that, in the future, State and Federal 
laws may prohibit smoking in these facilities. The facility would have 
to ensure that there is a sanitary and orderly interior, including 
clean bath and bed linens.
    The facility would be required to establish procedures to ensure 
that water is available to essential areas when there is a loss of 
normal water supply. Comfortable temperature and sound levels would 
have to be maintained, and adequate ventilation would be required. The 
facility would have to maintain an effective pest control program.
    We believe that our proposed facility standards are reasonable and 
adequate for residential treatment facilities. We welcome comments and 
recommendations for modifications of these proposed requirements from 
the general public and especially from those who have had experience in 
providing these services and from residents and families of residents.

D. Technical Revision

    General provisions relating to Medicaid services are included in 42 
CFR part 440. Section 440.160, Inpatient psychiatric services for 
individuals under age 21, currently contains an abbreviated definition 
of the psychiatric\21 benefit. This abbreviated definition has caused 
confusion because it does not make it clear that this benefit must 
always be provided in a psychiatric facility. Therefore, we propose to 
revise the definition in this section to list the three possible 
settings and to cross refer to the detailed requirements in subpart D 
of part 441 and subpart F of part 483.

VI. Collection of Information

    Regulations at Sec. 441.152 contain collection of information 
requirements that are subject to the Paperwork Reduction Act of 1980 
(44 U.S.C. 3501 et seq.). The information collection requirements 
concern resident information. The respondents who will provide the 
information include physicians and medical personnel. Public reporting 
burden for this collection of information is estimated to be 30 minutes 
per respondent. A notice will be published in the Federal Register when 
approval is obtained. Organizations and individuals desiring to submit 
comments on the information collection and recordkeeping requirements 
should direct them to the OMB official whose name appears in the 
ADDRESSES section of this preamble.

VII. Response to Public Comments

    Because of the large number of items of correspondence we normally 
receive on a proposed rule, we are unable to acknowledge or respond to 
them individually. However, we will consider all comments that we 
receive by the date and time specified in the ``DATES'' section of this 
preamble to the final rule.

VIII. Regulatory Impact Statement

    We generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612), unless the Secretary certifies that a proposed regulation 
would not have a significant economic impact on a substantial number of 
small entities. For purposes of the RFA, psychiatric residential 
treatment facilities and psychiatric hospitals are considered to be 
small entities. Individuals and States are not included in the 
definition of small entity.
    In addition, section 1102(b) of the Act requires the Secretary to 
prepare a regulatory impact analysis for any final rule that may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. Such analysis must conform to the provisions of 
section 603 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital with fewer than 50 beds 
located outside a Metropolitan Statistical area.
    There are various aspects of this proposed regulation that might 
have some cost or saving, but the net impact of all of them appears to 
be negligible.
    The establishment of the psychiatric residential treatment facility 
as a new category of Medicaid facility for the purposes of inpatient 
psychiatric care has varying impacts. On one hand, daily charges at 
such facilities are projected to be lower than at psychiatric 
hospitals. On the other hand, lengths of stay seem to be longer, 
probably due to the less acute, more chronic nature of the conditions 
they are designed to treat. However, if we assume that some recipients 
are currently getting inappropriate care in more expensive settings 
merely because of Medicaid regulations, then this regulation may save 
some money. This assumption, though, is impossible to verify.
    Also, there currently are many facilities that are not psychiatric 
hospitals that are currently providing these services under existing 
Medicaid regulations. It is not clear if their costs are higher than 
the proposed residential treatment facilities. It is also unclear how 
many of them will be able to qualify under the new regulations, and 
what this will do to the supply of care and its cost.
    In any event, it does not appear that more eligible individuals 
will come into the program because of this regulation. Currently, there 
are approximately 42,000 recipients of services under this category.
    As for the implementation of requirements for comprehensive 
programs and coordination of State authorities concerned with provision 
of mental health services, as well as the requirements for coordinated 
plans of care, they will probably increase administrative costs 
somewhat, but will reduce program costs by ensuring that the most 
appropriate and efficient form of care is utilized. The magnitude of 
these costs and savings is difficult to determine but probably is 
negligible, given the number of recipients involved.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act since we have determined, and the 
Secretary certifies, that this proposed rule would not result in a 
significant economic impact on a substantial number of small entities 
and would not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
proposed regulation was not reviewed by the Office of Management and 
Budget.

List of Subjects

42 CFR Part 440

    Grant programs--health, Medicaid.

42 CFR Part 441

    Family planning, Grant programs--health, Infants and children, 
Medicaid, Penalties, Reporting and recordkeeping requirements.

42 CFR Part 447

    Standards for payment.

42 CFR Part 483

    Requirements for States and long term care facilities.

    42 CFR chapter IV would be amended as set forth below:

PART 440--SERVICES: GENERAL PROVISIONS

    A. Part 440 is amended as follows:
    1. The authority citation for part 440 continues to read as 
follows:

    Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 
1302).

    2. Section 440.160 is revised to read as follows:


Sec. 440.160  Inpatient psychiatric services for individuals under age 
21.

    ``Inpatient psychiatric services for individuals under age 21'' 
means services that--
    (a) Meet the requirements in subpart D of part 441 of this 
subchapter; and
    (b) Are provided in facilities that meet the applicable 
requirements specified in subpart F of part 483 of this chapter.

PART 441--SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SPECIFIC 
SERVICES

    B. Part 441 is amended as set forth below:
    1. The authority citation for part 441 continues to read as 
follows:

    Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 
1302).

    2. A new Sec. 441.45 is added to read as follows:


Sec. 441.45  Mental health assessment and service plan.

    (a) The State Medicaid agency must ensure that a comprehensive 
assessment is made of each eligible individual who is determined by a 
mental health professional to be at risk of requiring inpatient mental 
health services in the near future.
    (1) At a minimum, this group would include--
    (i) Those who are applicants for inpatient mental health facility 
services;
    (ii) Those determined to need inpatient mental health services on 
the basis of an EPSDT screen or PASARR; and
    (iii) Those recently discharged from an inpatient mental health 
facility (within the past year).
    (2) A State may include other groups of eligible individuals who it 
believes are at risk of needing inpatient treatment in the near future.
    (3) The assessment must accurately identify the individual's 
functional abilities and needs, and must take into account the 
following information about the individual--
    (i) Current diagnoses;
    (ii) Prior medical and psychiatric history, including immunization 
status;
    (iii) Emotional and behavioral functional status;
    (iv) Psychosocial status;
    (v) Sensory and physical impairments;
    (vi) Cognitive status; and
    (vii) Any current drug therapy.
    (4) The assessment must include a determination as to whether the 
individual needs active treatment as defined in Sec. 483.202 of this 
chapter.
    (b) For each eligible individual who is determined to be at risk of 
requiring inpatient mental health treatment, as specified in paragraph 
(a) of this section, the State Medicaid agency must ensure that an 
individual comprehensive services plan is developed, implemented, and 
managed on an ongoing basis by a team composed of representatives from 
all State/local agencies involved in providing care for that individual 
or responsible for ensuring that needed care is provided.
    (1) The individual must be included in the process of developing 
the comprehensive services plan.
    (2) If the individual is under age 18 or has been found by a court 
to be incompetent, his or her parents or legal guardian must also be 
involved.
    (3) The team must be able to confer informally on a timely basis to 
make decisions concerning possible inpatient admission in times of 
crisis.
    (c) The team that develops the comprehensive services plan must 
monitor the plan's implementation to ensure that all services are 
coordinated.
    3. Section 441.106 is revised to read as follows:


Sec. 441.106  Comprehensive mental health program.

    If the plan includes services for individuals age 65 and over in 
institutions for mental diseases, the State must have a comprehensive 
mental health program.
    (a) The program must cover all ages, and include joint monitoring, 
review and evaluation with State mental health, education, vocational 
rehabilitation, criminal justice and social service representatives, of 
the allocation and adequacy of mental health services within the State;
    (b) The State Medicaid agency must prepare an annual progress 
report, with participation by the other State agency representatives 
described in paragraph (a) of this section.
    (1) The State Medicaid agency must submit the annual progress 
report to the HCFA Regional Administrator within 3 months after the end 
of the fiscal year.
    (2) The annual progress report must include a plan for improvements 
to be made in the next year.
    (3) The requirement for an annual progress report may be satisfied 
by the development of a comprehensive mental health services plan which 
meets the requirements of section 1912 of the Public Health Service 
Act. A copy of the plan submitted to PHS must be submitted to the HCFA 
Regional Administrator.
    4. The title of subpart D is revised to read as follows:

Subpart D--Inpatient Psychiatric Services for Individuals Under Age 
21

    5. Section 441.150 is revised to read as follows:


Sec. 441.150  Basis and purpose.

    This subpart specifies the applicable requirements if a State 
elects to provide inpatient psychiatric services to individuals under 
age 21, as authorized under sections 1905(a)(16) and 1905(h) of the 
Act.
    6. Section 441.151 is revised to read as follows:


Sec. 441.151  General requirements.

    Inpatient psychiatric services for individuals under age 21 must 
be--
    (a) Provided under the direction of a physician who is at least 
board eligible in psychiatry and has experience in child/adolescent 
mental health;
    (b) Provided in one or more of the care settings specified in 
Sec. 441.158;
    (c) Provided in accordance with an individual comprehensive 
services plan required by Sec. 441.45(b);
    (d) Provided before the individual reaches age 21 or, if the 
individual was receiving the services immediately before the individual 
reached age 21, before the earlier of the following--
    (1) The date the individual no longer requires the services; or
    (2) The date the individual reaches age 22; and
    (e) Certified in writing to be necessary in the setting in which it 
will be provided (or is being provided in emergency circumstances), in 
accordance with Sec. 441.152.
    7. In Sec. 441.152, paragraphs (a) and (b) are revised, and new 
paragraphs (c) and (d) are added to read as follows:


Sec. 441.152  Certification of need for services.

    (a) The team or organization specified in Sec. 441.153 must--
    (1) Make the comprehensive assessment as required in Sec. 441.45(a) 
before determining whether inpatient services are necessary; and
    (2) If it is determined that inpatient benefits encompassed by this 
benefit are necessary, certify in writing before the individual is 
admitted that inpatient services are necessary for treatment of the 
individual's condition. The certification must specify whether hospital 
or psychiatric residential treatment facility services are required.
    (b) The written certification must include:
    (1) The clinical evidence that justifies the necessity for the 
specified level of inpatient care; and
    (2) The basis for determining that inpatient services will improve 
the condition to the extent that these services will no longer be 
necessary.
    (c) If an admission must be made to a psychiatric hospital or 
psychiatric unit of a hospital on an emergency basis because there is 
imminent danger that the individual will do harm to himself or herself 
or to another person, hospital staff must perform an assessment, a 
hospital physician must certify the need for acute inpatient 
psychiatric services, and the hospital must implement an initial 
treatment plan. Hospital staff must also establish and implement the 
inpatient treatment plan required in Sec. 483.202(b) of this chapter.
    (d) The procedures specified in paragraph (c) of this section will 
also be followed, within 7 days following the date of application, for 
individuals who do not apply for medical assistance before admission.
    8. Section 441.153 is revised to read as follows:


Sec. 441.153  Composition of certifying team or organization.

    (a) The team that certifies the need for inpatient psychiatric care 
as required under Sec. 441.152 (a) and (b) must--
    (1) Include at least one physician who is at least board eligible 
in psychiatry and has experience in the diagnosis and treatment of 
mental illness in children or adolescents;
    (2) Except as indicated in paragraph (b) of this section, include a 
representative from each of the State and local agencies that are 
providing services directly or are responsible for ensuring that needed 
services are provided to the individual, such as educational/
vocational, social welfare, medical, psychiatric and juvenile justice 
services; and
    (3) Be composed of individuals who are not employed by the 
inpatient facility being considered, or by the agency component 
responsible for providing inpatient care, except as specified in 
Sec. 441.152 (c) and (d).
    (b) If an interagency team is not feasible, another team which 
includes a physician, established by the State or an independent review 
organization contracted by the State, may certify the need for 
inpatient services if the organization meets any registration 
requirements that the State may have for such organizations. This 
alternative team must be aware of the complete array of service needs 
of the individual.
    (c) The certifying team or organization must involve the resident 
and his or her parents or legal guardian in the determination process.


Sec. 441.154  [Reserved]


Sec. 441.155  [Reserved]


Sec. 441.156  [Reserved]

    9. Sections 441.154, 441.155 and 441.156 are removed and reserved.
    10. New Secs. 441.158 and 441.160 are added under subpart D to read 
as follows:


Sec. 441.158  Care settings.

    (a) Types of settings. Inpatient psychiatric services for 
individuals under age 21--
    (1) Must be provided in a psychiatric hospital that meets the 
requirements of Secs. 482.60 and 483.202 of this chapter, or in a 
psychiatric unit of a hospital that meets the requirements in subparts 
B and C of part 482, and Sec. 483.202 of this chapter; and
    (2) At the option of the State, may also be provided in a 
psychiatric residential treatment facility that meets the requirements 
in subpart F of part 483 of this chapter. All States must provide 
psychiatric residential treatment facility care when it is required as 
a result of an EPSDT screen.
    (b) Limitations on provision of care. (1) Psychiatric hospital or 
unit. Inpatient services in a psychiatric hospital or a psychiatric 
unit of a hospital are provided for an individual who has a severe 
acute episode of a psychiatric disorder which requires medical 
supervision and treatment on a 24-hour-a-day basis. The services must 
include intensive individualized treatment to stabilize the acute 
condition so that the individual can be discharged as soon as possible 
to a less restrictive type of care.
    (2) Psychiatric residential treatment facility. Inpatient care in a 
psychiatric residential treatment facility may be provided when an 
individual does not require acute care but requires supervision and 
treatment on a 24- hour-a-day basis to attain a level of functioning 
that allows subsequent treatment on an outpatient basis.


Sec. 441.160  Payment.

    Payment for inpatient psychiatric services for individuals under 
age 21 must be made in accordance with the principles specified in 
Sec. 447.250 (a) through (c) of this subchapter.

PART 447--PAYMENT FOR SERVICES

    C. Part 447 is amended as follows:
    1. The authority citation for part 447 continues to read as 
follows:

    Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 
1302).

    2. Section 447.251 is amended by revising the definition of ``long-
term care facility services'' to read as follows:


Sec. 447.251  Definitions.

* * * * *
    Long-term care facility services means intermediate care facility 
services for the mentally retarded (ICF/MR), nursing facility (NF) 
services, and psychiatric residential treatment facility (PRTF) 
services.
* * * * *

PART 483--REQUIREMENTS FOR STATES AND LONG TERM CARE FACILITIES

    E. Part 483 is amended as follows:
    1. The authority citation for part 483 is revised to read as 
follows:

    Authority: Secs. 1102, 1819(a)-(f), 1905(c) and (d), and 
1919(a)-(f) of the Social Security Act (42 U.S.C. 1302, 1395i-3(a)-
(f), 1396d(c) and (d), and 1396r(a)-(f)).

Subpart E--[Reserved]

    2. Subpart E is removed and reserved.
    3. A new subpart F containing Secs. 483.200 through 483.224 is 
added to read as follows:
Subpart F--Conditions of Participation for Providers of Inpatient 
Psychiatric Services for Individuals Under Age 21
Sec.
483.200  Basis and scope of subpart F.
483.202  Condition of participation: Active treatment program.
483.204  Requirements for psychiatric hospitals.
483.205  Requirements for psychiatric units of hospitals.

Conditions of Participation for Psychiatric Residential Treatment 
Facilities

483.210  General requirements for psychiatric residential treatment 
facilities.
483.212  Condition of participation: Administration.
483.214  Condition of participation: Facility staffing.
483.215  Condition of participation: Resident rights.
483.216  Condition of participation: Facility practices and resident 
behavior.
483.218  Condition of participation: Safety provisions.
483.220  Condition of participation: Health services.
483.222  Condition of participation: Dietary services.
483.224  Condition of participation: Space and equipment.

Subpart F-- Conditions of Participation for Providers of Inpatient 
Psychiatric Services for Individuals Under Age 21


Sec. 483.200  Basis and scope of subpart F.

    (a) Basis. Section 1905(h) of the Act provides that the inpatient 
psychiatric services benefit for individuals under age 21 includes 
inpatient services which are provided in an institution (or distinct 
part thereof) which is a psychiatric hospital as defined in section 
1861(f) or in another inpatient setting that the Secretary has 
specified in regulations. Section 1905(h) also specifies that a team of 
physicians and other personnel qualified to make determinations about 
mental health treatment must determine that inpatient care is necessary 
for the individual; and that these services must--
    (1) Involve active treatment that meets standards which may be 
specified in regulations; and
    (2) Reasonably be expected to improve the individual's condition to 
the extent that inpatient psychiatric services will no longer be 
necessary.
    (b) Scope. This subpart contains the requirements that a facility 
must meet in order to qualify as a Medicaid provider of psychiatric 
inpatient services for individuals under age 21. These requirements 
serve as the basis for survey activities for the purpose of determining 
whether a facility meets the requirements for participation in 
Medicaid. All providers of this benefit must also meet the requirements 
in subpart D of part 441 of this chapter.


Sec. 483.202  Condition of participation: Active treatment program.

    (a) Standard: Active treatment requirement. The inpatient provider 
must ensure that each individual receives a continuous program of 
individualized psychiatric treatment that is designed to enable the 
individual to achieve sufficient stability to progress to outpatient 
care, and to attain the treatment objectives specified in the inpatient 
plan of treatment specified in paragraph (b) of this section. These 
services must be consistent with implementation of the individual 
comprehensive services plan required in Sec. 441.45(b) of this chapter.
    (b) Standard: Inpatient plan of treatment. The inpatient provider 
must--
    (1) Ensure that an interdisciplinary team, including a facility 
staff physician and at least one other professional staff person, 
reviews the assessment data collected as specified in Sec. 441.45(a) of 
this chapter, and updates the data as necessary. The team then 
immediately initiates appropriate treatment.
    (2) Ensure that within 7 days after admission, the team develops 
the inpatient plan of treatment for each institutionalized individual 
which specifies the interventions needed to improve the individual's 
psychiatric condition to the extent that inpatient care is no longer 
necessary. This general active treatment goal must be expressed in 
terms of specific measurable treatment objectives for the individual, 
and include the treatment modalities to be used and the target date by 
which the individual will achieve each objective.
    (3) Ensure that the plan includes an estimated discharge date and 
post-discharge plans which specify the coordination required with the 
family or guardian, and the school/vocational and community services 
needed to ensure continuity of care.
    (4) Ensure that the interdisciplinary team reviews inpatient 
progress at least every 7 days, starting from the date of admission, 
except that in PRTFs, after the first month, reviews must be done at 
least once a month. During a review, the team must determine whether--
    (i) Inpatient services continue to be required;
    (ii) The stated objectives for attaining stabilization are being 
achieved; and
    (iii) Any changes are needed in the plan.
    (5) Ensure that the individual's assessment is updated and that the 
inpatient plan of treatment is revised as needed based on the results 
of the progress reviews specified in paragraph (b)(4) of this section.
    (6) Report results of the progress reviews to the team responsible 
for the individual's comprehensive services plan (as specified in 
Sec. 441.45(c) of this chapter) no later than the day following the 
review.
    (7) Provide that the development and review of the inpatient plan 
of treatment specified in this section satisfies the utilization 
control requirements for--
    (i) Recertification under Secs. 456.60(b), 456.160(b), 456.260(b) 
and 456.360(b) of this chapter; and
    (ii) Establishment and periodic review of the plan of care under 
Secs. 456.80, 456.100, 456.200 and 456.300 of this chapter.


Sec. 483.204  Requirements for psychiatric hospitals.

    A psychiatric hospital providing the psychiatric inpatient benefit 
for individuals under age 21 must meet the requirements specified in 
Secs. 482.60 of this chapter and 483.202.


Sec. 483.205  Requirements for psychiatric units of hospitals.

    A psychiatric unit of a hospital providing the psychiatric 
inpatient benefit for individuals under age 21 must meet the 
requirements specified in Sec. 483.202. The hospital must meet the 
requirements specified in subparts B and C of part 482 of this chapter.

Conditions of Participation for Psychiatric Residential Treatment 
Facilities


Sec. 483.210  General requirements for psychiatric residential 
treatment facilities.

    A psychiatric residential treatment facility providing the 
psychiatric inpatient benefit for individuals under age 21 must meet 
the requirements specified in Sec. 483.202, and 483.212 through 
483.224.


Sec. 483.212  Condition of participation: Administration.

    (a) Standard: Licensure and other laws. (1) When State or local law 
requires licensure of this type of medical facility, the facility must 
be licensed.
    (2) The facility must coordinate its educational activities with 
school curricula in the community.
    (3) The facility must support and protect the fundamental human, 
civil, constitutional, and statutory rights of each patient, and must 
meet the applicable provisions of other HHS regulations, including but 
not limited to those pertaining to nondiscrimination on the basis of 
race, color, or national origin (as specified in 45 CFR part 80), 
nondiscrimination on the basis of handicap (as specified in 45 CFR part 
84), protection of human subjects of research (as specified in 45 CFR 
part 46), and fraud and abuse (as specified in 42 CFR part 455). 
Although these regulations are not considered requirements under this 
part, violation may result in the termination or suspension of, or the 
refusal to grant or continue payment of Federal funds.
    (b) Standard: Administrative structure. (1) The facility must have 
a governing body, or designated person(s) functioning as a governing 
body, that is legally responsible for establishing and implementing 
policies regarding the management and operation of the facility.
    (2) The governing body must appoint an administrator who is 
responsible for the general management of the facility. The 
administrator must have appropriate academic credentials and 
administrative experience in psychiatric treatment settings for 
children and adolescents, and must be responsible for the fiscal and 
administrative aspects of facility management as necessary to support 
the facility's clinical program.
    (3) The facility must designate as clinical director a physician 
who is at least board-eligible in psychiatry and has experience in 
providing child and adolescent mental health services. The clinical 
director is responsible for the implementation of each resident's 
clinical plan of care and for the coordination of all medical/
psychiatric care in the facility.
    (c) Standard: Disclosure of ownership. The facility must comply 
with the disclosure requirements of Sec. 455.105 of this chapter. The 
facility must provide written notice to the State survey agency within 
5 working days if a change occurs in--
    (1) Persons with an ownership or control interest, as defined in 
Sec. 455.101 of this chapter; or
    (2) The facility's administrator or clinical director.
    (d) Standard: Clinical records. The facility must develop and 
maintain a separate clinical record on each resident in accordance with 
professional standards. Records must be complete, accurate, accessible 
and organized.
    (1) Clinical records must be retained for the period of time 
required by State law or 5 years from the date of discharge when there 
is no requirement in State law.
    (2) The facility must assure that the clinical record information 
is not lost, destroyed, or put to unauthorized use.
    (3) The facility must assure the confidentiality of all information 
contained in the resident's record, except when release is required 
by--
    (i) Transfer to another health care institution;
    (ii) State and/or Federal law;
    (iii) Third party contract; or
    (iv) The resident.
    (4) The clinical record must contain information which identifies 
the resident, documents the comprehensive assessment, the inpatient 
plan of treatment, the services received, notes on progress toward the 
objectives in the inpatient plan of treatment and any revision of the 
plan of treatment made following review.
    (e) Standard: Quality assurance. The facility must develop and 
implement an ongoing quality assurance program to monitor and evaluate 
the quality of patient care, pursue opportunities to improve care, and 
correct identified problems.
    (f) Standard: Independent medical evaluation. A facility must 
cooperate with a medical evaluation and an inspection of care of 
residents in the facility, including evaluation of each resident's need 
for facility care when the evaluation has been authorized by State or 
Federal government.


Sec. 483.214  Condition of participation: Facility staffing.

    The facility must have enough competent and appropriately qualified 
health care professional, administrative and support staff to provide 
active treatment through implementation of the inpatient plan of 
treatment for each resident and to carry out other facility 
requirements. The facility is responsible for assuring that all 
services are effective, timely, and meet the needs of residents.
    (a) Standard: Staffing status. (1) In a facility that houses 
residents who are aggressive, assaultive or security risks, responsible 
direct care staff must be on duty and awake on a 24-hour basis to take 
prompt action in case of injury, illness, fire or other emergency.
    (2) In a facility that does not house residents who are aggressive, 
assaultive or security risks, a responsible direct care staff person 
must be on duty on a 24-hour basis, but need not remain awake when 
residents are sleeping.
    (3) If any resident is present in the facility, a direct care staff 
person must be present. If all residents are away from the facility 
during the day, a staff member must be available by telephone.
    (b) Standard: Professional staff. Staff may include qualified 
psychiatrists and other physicians, clinical psychologists, psychiatric 
nurses, social workers, substance abuse specialists, and other health 
care professionals and ancillary staff. When licensure, certification, 
or registration is required under State law, professional staff must 
meet these requirements. Professional staff must not be under a 
sanction imposed in accordance with sections 1156, 1128, or 1892 of the 
Act.
    (c) Standard: Contracts. Any professional or other services that 
are furnished to facility residents by persons who are not employed by 
the facility must be furnished under a written contract that specifies 
the contractor's responsibilities.


Sec. 483.215  Condition of participation: Resident rights.

    A facility must protect and promote the rights of each resident, 
with special consideration for residents who are emancipated and have 
no parent or legal guardian, including each of the following rights:
    (a) Access and visits. A resident has a right to see family members 
and legal guardians and to have visitors from outside the facility.
    (b) Consultation. The resident has the right to be consulted as 
much as possible about his or her treatment.
    (c) Complaints. The resident has the right to file complaints with 
the facility administrator or with State officials concerning facility 
conditions or treatment.
    (d) Independent examination. The resident has a right to have 
independent medical or psychological examination.
    (e) Discharge planning. A resident has a right to participate in 
his or her discharge planning.


Sec. 483.216  Condition of participation: Facility practices and 
resident behavior.

    Each resident's care must be provided in a manner that promotes and 
maintains his or her dignity.
    (a) Standard: Restraints. The facility may not impose any physical 
restraints or administer any psychoactive drugs for purposes of 
discipline or convenience. No restraints may be used which are not 
required to treat the resident's psychiatric symptoms and specified in 
the inpatient plan of treatment.
    (b) Standard: Freedom from abuse. The resident has the right to be 
free from verbal, sexual, physical and mental abuse, corporal 
punishment and involuntary seclusion. The facility must develop written 
policies that prohibit mistreatment, neglect, or abuse of residents and 
ensure that the policies are implemented.
    (1) The facility must--
    (i) Not use verbal, mental, sexual or physical abuse, corporal 
punishment, or involuntary seclusion; and
    (ii) Not employ or contract with individuals who have a prior 
employment or personal history of abusing, neglecting or mistreating 
individuals, or have been found guilty of any of these acts in a court 
of law.
    (2) The facility must not house residents who have aggressive 
tendencies, or may otherwise be dangerous, in close physical proximity 
with vulnerable residents who are prone to be victimized. Any resident 
grouping must be planned to protect the safety and promote the 
treatment of all members of the group.
    (3) The facility must ensure that all alleged violations involving 
mistreatment, neglect or abuse, including injuries of unknown source, 
are reported immediately to the administrator of the facility and to 
any other officials specified in State law.
    (4) The facility must have evidence that all alleged violations are 
thoroughly investigated, and must take appropriate action to prevent 
further abuse during the period of the investigation.
    (5) The results of all investigations must be reported to the 
administrator or to his or her designated representative and to other 
officials in accordance with State law within 5 working days of the 
report of the incident. If the alleged violation is verified, the 
administrator must take appropriate corrective action.
    (c) Standard: Drug therapy. The facility must not use drugs in 
doses that interfere with the resident's daily living activities.
    (1) When drugs are used for control of inappropriate behavior, they 
must be used only as an integral part of the resident's plan of care 
that is directed specifically toward the reduction of and eventual 
elimination of the behaviors for which the drugs are employed.
    (2) Drugs used for control of inappropriate behavior must not be 
used unless it is evident that the harmful effects of the behavior 
clearly outweigh the potentially harmful effects of the drugs.
    (d) Standard: Resident work. The facility must ensure that 
residents are not compelled to perform services for the facility. If a 
resident chooses to perform work for the facility, compensation for the 
services must be made at prevailing wage levels.


Sec. 483.218  Condition of participation: Safety provisions.

    The facility must be designed, constructed, equipped, and 
maintained to protect the health and safety of the residents. If a 
circumstance develops that poses a significant threat to the health or 
safety of facility residents, the facility must address the problem 
immediately and promptly advise the State survey agency of the problem 
and the action taken to remove the threat.
    (a) Standard: Fire protection--(1) General. Except as provided in 
paragraph (a)(2) of this section, the facility must meet the applicable 
provisions of either the Health Care Occupancies Chapter or the 
Residential Board and Care Occupancies Chapter of the Life Safety Code 
(LSC) of the National Fire Protection Association, 1991 edition, which 
is incorporated herein by reference.
    (2) Exceptions. For facilities that meet the LSC definition of a 
health care occupancy, the State survey agency may waive, for a period 
considered appropriate, specific provisions of the LSC if--
    (i) The waiver would not adversely affect the health and safety of 
the residents; and
    (ii) Rigid application of specific provisions would result in an 
unreasonable hardship for the facility.
    (b) Standard: Emergency procedures. The facility must develop and 
implement written procedures to meet all potential emergencies, such as 
fire, severe weather, and missing residents. The facility must train 
all new employees in emergency procedures and periodically review the 
procedures. All staff members must demonstrate ability to follow the 
procedures. Staff emergency procedure drills must be held at least 
quarterly on each shift.
    (c) Standard: Infection control. The facility must implement an 
infection control program which prevents, controls, and investigates 
the development and transmission of communicable disease and infection. 
This program must ensure that appropriate immunizations are done, 
according to State law.
    (1) When a resident needs isolation to prevent the spread of 
infection, the facility must isolate the resident and, if necessary, 
transfer the resident to a hospital for diagnostic testing.
    (2) The facility must prohibit employees with symptoms or signs of 
a communicable disease or infected skin lesions from direct contact 
with residents or their food if direct contact will transmit the 
disease.
    (3) Personnel must handle, store, process, and transport linens so 
as to prevent the spread of infection.
    (d) Standard: Waste disposal. The facility must dispose of garbage 
and refuse, including any toxic waste generated at the facility, in 
accordance with Federal, State and local laws.
    (e) Standard: Pest control. The facility must maintain an effective 
pest control program so that the facility is free of pests and rodents.
    (f) Standard: Systems. The facility must maintain all essential 
mechanical, electrical, and other equipment in safe operating 
condition.


Sec. 483.220  Condition of Participation: Health services.

    (a) Standard: Hospital services. The facility must have a written 
transfer agreement in effect with one or more hospitals approved for 
participation under the Medicaid program that reasonably assures that--
    (1) A resident will be transferred from the facility to the 
hospital and admitted in a timely manner when transfer is medically 
necessary for medical care or acute psychiatric care; and
    (2) Medical and other information needed for care of the resident 
will be exchanged between the institutions, including any information 
needed to determine whether appropriate care can be provided in a less 
restrictive setting.
    (b) Standard: Medical services. Medical and emergency dental 
services must be available to each resident 24 hours a day.


Sec. 483.222  Condition of participation: Dietary services.

    Each resident must receive a nourishing, well-balanced diet that 
meets the daily nutritional needs of the resident. Each resident must 
receive a minimum of 3 meals daily.
    (a) Standard: Dietitian. The facility must employ a qualified 
dietitian on at least a part-time or consultant basis. If a qualified 
dietitian is not employed on a full-time basis, the facility must 
designate a person to serve as the director of food service.
    (b) Standard: Menus. Menus must be prepared in advance and must be 
followed.
    (c) Standard: Nutrition. Each resident receives food that conserves 
nutritive value, flavor and appearance; is palatable, attractive and at 
the proper temperature, and is of sufficient quantity. Substitute food 
of similar nutritive value must be offered to residents who refuse 
standard food service.
    (d) Standard: Food procedures. The facility must--
    (1) Procure food from sources approved by Federal, State or local 
authorities; and
    (2) Store, prepare, distribute and serve food under sanitary 
conditions.


Sec. 483.224  Condition of participation: Space and equipment.

    (a) Standard: Dining and program areas. The facility must provide 
sufficient space and equipment in dining and program areas to enable 
staff to provide residents with needed services as identified in each 
resident's plan of care. The facility must provide one or more rooms 
designated for resident dining and activities. These rooms must--
    (1) Be well lighted;
    (2) Be well ventilated, with nonsmoking areas identified if smoking 
is allowed in the facility;
    (3) Be adequately furnished; and
    (4) Have adequate space to accommodate all activities.
    (b) Standard: Resident rooms. Resident rooms must be designed and 
equipped for the comfort, dignity and privacy of residents.
    (1) Bedrooms must--
    (i) Accommodate no more than four residents;
    (ii) Measure at least 80 square feet per resident in multiple 
resident bedrooms and at least 100 square feet in single resident 
rooms;
    (iii) Have direct access to an exit corridor; and
    (iv) Have at least one window to the outside. If the bedroom is 
below grade level, the window must be usable as a second means of 
escape by the resident occupying the room.
    (2) The survey agency may grant a variance to the bedroom sizes 
specified in paragraph (b)(1) of this section in individual cases when 
a physician involved in direct patient care documents that the 
variations are required by special needs of residents and will not 
adversely affect the health and safety of residents.
    (3) The facility must provide each resident with--
    (i) A separate bed of proper size and height in the resident's 
room;
    (ii) A clean and comfortable mattress and clean bedding appropriate 
to the weather and climate; and
    (iii) Functional furniture appropriate to the resident's needs, 
suitable storage space and individual closet space in the resident's 
bedroom with clothes racks and shelves accessible to the resident.
    (c) Standard: Toilet facilities. Each resident's room must be 
equipped with or located near toilet and bathing facilities. The 
facility must--
    (1) Provide toilet and bathing facilities appropriate in number, 
size and design to meet the needs of the residents; and
    (2) Provide for individual privacy in toilets, bathtubs and 
showers.
    (d) Standard: Other environmental conditions. The facility must--
    (1) Ensure a safe, clean, functional, comfortable and homelike 
environment for residents and staff, including clean bath and bed 
linens;
    (2) Establish procedures to ensure that water is available to 
essential areas when there is a loss of normal water supply;
    (3) Maintain comfortable temperature levels;
    (4) Maintain comfortable sound levels; and
    (5) Have adequate outside ventilation by means of windows or 
mechanical ventilation or a combination of the two.

Subpart G--[Reserved]

    4. Subpart G is reserved.

Subpart H--[Reserved]

    5. Subpart H is reserved.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: July 5, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Dated: October 24, 1994.
Donna E. Shalala,
Secretary.
[FR Doc. 94-28318 Filed 11-16-94; 8:45 am]
BILLING CODE 4120-01-P