[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Proposed Rules]
[Pages 9990-10028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03081]



[[Page 9989]]

Vol. 85

Thursday,

No. 34

February 20, 2020

Part III





 Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Parts 431, 433, 435, et al.





 Medicaid Program; Preadmission Screening and Resident Review; Proposed 
Rule

  Federal Register / Vol. 85, No. 34 / Thursday, February 20, 2020 / 
Proposed Rules  

[[Page 9990]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 431, 433, 435, 441, and 483

[CMS-2418-P]
RIN 0938-AT95


Medicaid Program; Preadmission Screening and Resident Review

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would modernize the requirements for 
Preadmission Screening and Resident Review (PASRR), currently referred 
to in regulation as Preadmission Screening and Annual Resident Review, 
by incorporating statutory changes, reflecting updates to diagnostic 
criteria for mental illness and intellectual disability, reducing 
duplicative requirements and other administrative burdens on State 
PASRR programs, and making the process more streamlined and person-
centered.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on April 20, 2020.

ADDRESSES: In commenting, please refer to file code CMS-2418-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-2418-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-2418-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Anne Blackfield, (410) 786-8518.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post all comments received before the close of the comment period on 
the following website as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that website to view public comments.

I. Background

    Preadmission Screening and Annual Resident Review (now referred to 
as Preadmission Screening and Resident Review, or PASRR) was created as 
part of the Omnibus Budget Reconciliation Act of 1987 (OBRA '87). The 
PASRR requirements, added to the statute as sections 1919(b)(3)(F) and 
1919(e)(7) of the Social Security Act (the Act), required states to 
create a system to assess the needs of individuals with mental illness 
(MI) or intellectual disability (ID) applying to, or already residing 
in, Medicaid-certified nursing facilities (NFs), to ensure that 
individuals were not being placed in NFs unnecessarily or without 
adequate supports. These sections of the statute direct the state 
mental health authority (SMHA) or state intellectual disability 
authority (SIDA), as appropriate, to determine whether individuals with 
MI or ID who are applying to, or are living in, Medicaid-certified NFs 
require the level of services offered by a NF and whether they need 
additional (``specialized'') services for MI and ID beyond the services 
typically provided in a NF. (Note that section 1919(e)(7)(G)(i) of the 
Act explicitly excludes individuals with dementia or Alzheimer's 
disease or a related disorder from the definition of MI. The current 
and proposed definitions of MI and ID are discussed in the discussion 
of Sec.  483.102 in this rule.)
    When first enacted, sections 1919(b)(3)(F) and 1919(e)(7) of the 
Act set forth basic requirements for PASRR, including:
     Requirements for preadmission screening of NF applicants, 
which states were required to implement by January 1, 1989;
     Requirements for annual review of NF residents with MI or 
ID, which states were required to begin by April 1, 1990;
     Discharge procedures for short-term residents found to not 
need NF level of services;
     Options for long-term residents (who had lived in a 
nursing facility for 30 or more months) found to not need NF level of 
services, but to need specialized services;
     Basic rules for Federal Financial Participation (FFP), 
including when FFP could be withheld for failure to comply with PASRR 
requirements;
     A requirement for an appeals procedure, to allow 
individuals to appeal adverse outcomes resulting from PASRR 
determinations; and
     Basic definitions for MI, ID (referred to in statute as 
``mental retardation''), and specialized services (originally called 
``active treatment'').
    We published initial criteria for the PASRR programs in the State 
Medicaid Manual (HCFA Pub. 45-4) in May 1989 (Transmittal No. 42). 
These criteria functioned as interim guidelines for states' PASRR 
programs, and formed the basis for the proposed rule, published in the 
Federal Register on March 23, 1990 (55 FR 10951). In the meantime, on 
November 5, 1990, the Omnibus Budget Reconciliation Act of 1990 (OBRA 
'90) (Pub. L. 101-508) was enacted. Section 4801(b) of OBRA '90 
contained several revisions to the PASRR requirements in sections 
1919(b)(3)(F) and 1919(e)(7) of the Act. Notable revisions included the 
addition of exemptions from Preadmission Screening for readmissions and 
certain hospital discharges to NFs, and adding the term ``specialized 
services'' in place of ``active treatment.'' We published the final 
PASRR rule on November 30, 1992 (57 FR 56540), which reflected the 
statutory changes to PASRR made by OBRA `90.
    On October 19, 1996, Public Law 104-315 removed the requirement 
that Resident Review be performed annually, and provided instead at 
section 1919(e)(7)(B)(iii) of the Act that Resident Review should be 
performed upon a significant change in the resident's physical or 
mental condition. We have not issued additional regulations since the 
final rule in November 1992, so current regulations do not reflect this 
statutory change.
    We have received feedback from stakeholders including states' 
Medicaid agencies, states' PASRR programs, clinicians, NFs, and NF 
resident advocates that portions of the current PASRR regulations are 
unclear, illogical, duplicative, or out of touch with current long-term 
care practices. While we have attempted to address some of the 
challenges presented by outdated regulations through technical 
assistance,

[[Page 9991]]

we believe updating and streamlining the regulations will provide the 
most effective method of improving implementation of PASRR nationwide. 
With this proposed rule, we seek to modernize PASRR requirements so 
that they may become an even more effective tool and resource for 
states, NFs, and individuals with MI or ID.

II. Provisions of the Proposed Regulations

A. Parts 431, 433, 435, and 441

1. Basis and Scope (Sec.  431.200)
    Section 431.200 sets out the basis for the regulations in part 431, 
subpart E, stating that the fair hearings process afforded to Medicaid 
beneficiaries and applicants is authorized by sections 1902(a)(3), 
1919(f)(3), and 1919(e)(7)(F) of the Act. Section 431.200(c) provides 
that regulations in part 431, subpart E implement section 1919(e)(7)(F) 
of the Act, which provides an appeal for any person who has been 
adversely affected by the PASRR process. We propose technical changes 
to Sec.  431.200(c)(1). We propose to replace the word ``pre-
admission'' with ``preadmission,'' so that the word ``preadmission'' 
conforms to how it appears in other regulations. We propose to remove 
the word ``annual'' before ``resident review.'' We also propose to add 
``and further described in part 483, subpart C of this chapter'' after 
``section 1919(e)(7) of the Act.'' We believe a cross-reference to the 
regulations that implement PASRR statutory requirements would be 
helpful to readers.
2. Definitions (Sec.  431.201)
    Section 431.201 contains definitions of terms used in part 431, 
subpart E. We propose a technical change to the definition of ``date of 
action,'' which includes a mention of PASRR, to remove the word 
``annual'' from before ``resident review.'' We also propose to replace 
``of section 1919(e)(7) of the Act'' with ``under part 483, subpart C 
of this chapter.'' We believe a cross-reference to the regulations that 
implement PASRR statutory requirements would be helpful to readers.
3. Informing Applicants and Beneficiaries (Sec.  431.206)
    Section 431.206 contains requirements for when the state must 
notify Medicaid applicants and beneficiaries of their appeal rights. We 
propose a technical change to Sec.  431.206(c)(4) to remove ``annual'' 
before ``resident review.'' We also propose to replace ``of section 
1919(e)(7) of the Act'' with ``under part 483, subpart C of this 
chapter.'' We believe a cross-reference to the regulations that 
implement PASRR statutory requirements would be helpful to readers.
4. Exceptions From Advance Notice (Sec.  431.213)
    Section 431.213 contains exceptions to the advance notice 
requirements contained in Sec.  431.211. Section 431.211 requires that 
the state Medicaid agency provide Medicaid applicants and beneficiaries 
with notice of appeal rights 10 days before the effective date of the 
action they wish to appeal. However, actions associated with PASRR are 
exempted from this requirement. Rather, per Sec.  431.213(g), the state 
Medicaid agency may provide notice on the date of action--namely, the 
date the PASRR program issues the determinations required in sections 
1919(e)(7)(A) and 1919(e)(7)(B) of the Act. We propose a technical 
correction to Sec.  431.213(g), which states that the exception applies 
to notices involving adverse determinations made ``with regard to the 
preadmission screening requirements of section 1919(e)(7) of the Act.'' 
We propose to add ``and resident review'' after ``preadmission 
screening.'' Section 1919(e)(7) of the Act pertains to both 
preadmission screening and resident review requirements, and we propose 
to fix the omission of ``resident review'' in this provision. We also 
propose to replace ``of section 1919(e)(7) of the Act' with ``under 
part 483, subpart C of this chapter.'' We believe a cross-reference to 
the regulations that implement PASRR statutory requirements would be 
helpful to readers.
5. When a Hearing Is Required (Sec.  431.220)
    Section 431.220 lays out the circumstances when an individual may 
request a hearing, which includes when an individual believes the PASRR 
program has made an error in making the determinations required by 
section 1919(e)(7) of the Act. We propose a technical change to Sec.  
431.220(a)(3) to add ``screening'' after the word ``preadmission.'' We 
propose this change so that this mention of Preadmission Screening 
conforms to how it appears elsewhere in regulation--as ``preadmission 
screening,'' not just ``preadmission.'' We propose to remove ``annual'' 
from before ``resident review.'' We also propose to replace ``of 
section 1919(e)(7) of the Act'' with ``under part 483, subpart C of 
this chapter.'' We believe a cross-reference to the regulations that 
implement PASRR statutory requirements would be helpful to readers.
6. Matters To Be Considered at the Hearing (Sec.  431.241)
    Section 431.241(c) addresses the matters that must be reviewed 
during the PASRR hearing. We propose a technical change to remove 
``annual'' from before ``resident review.'' We also propose to replace 
``of section 1919(e)(7) of the Act'' with ``under part 483, subpart C 
of this chapter.'' We believe a cross-reference to the regulations that 
implement PASRR statutory requirements would be helpful to readers.
7. Hearing Decisions (Sec.  431.244)
    Section 431.244 sets out the requirements for the hearing decision, 
including how the decision may be reached and the appellant's access to 
the decision. We propose a technical change to Sec.  431.244(f)(3)(i). 
We propose to add ``screening'' after the word ``preadmission.'' We 
propose this change so that this mention of Preadmission Screening 
conforms to how it appears (as ``preadmission screening,'' not just 
``preadmission'') elsewhere in regulations. We propose to remove 
``annual'' from before ``resident review.''
8. Federal Financial Participation (Sec.  431.250)
    Section 431.250 discusses the availability of FFP for activities 
relating to hearings and hearing decisions. We propose a technical 
change to Sec.  431.250(f)(4) to remove ``annual'' from before 
``resident reviews.''
9. State Requirements for Nursing Facilities (Sec.  431.621)
    Section 431.621 provides guidelines for the interagency agreement 
that the states' Medicaid agencies must execute with the SMHA and SIDA 
regarding the authorities' respective roles in implementing PASRR. We 
propose to make technical corrections in this section, including: 
removing ``PASARR'' and replacing it with ``PASRR''; removing the word 
``annual'' before ``resident review''; correcting typos; and updating 
cross-references.
    Additionally, we propose a modification to Sec.  431.621(c)(6). The 
current provision specifies that determinations regarding NF level of 
services and specialized services must be consistent with criteria 
adopted by the State Medicaid Agency (SMA) under its approved State 
plan. We propose to remove the words ``under its approved State plan'' 
because State plan approval is not required for states to develop

[[Page 9992]]

state-specific PASRR criteria or NF admissions criteria.
10. Rates of FFP for Administration (Sec.  433.15)
    Section 433.15(b)(9) provides the FFP rate for PASRR administrative 
activities. We propose technical changes in this provision to replace 
``PASARR'' with ``PASRR'' and to remove ``annual'' before ``resident 
review.''
11. Definitions Related to Institutional Status (Sec.  435.1010)
    Section 435.1010 provides the definition for ``persons with related 
conditions.'' Related conditions, also commonly referred to as 
``developmental disabilities,'' are considered a subset of ID for PASRR 
purposes (see discussion regarding Sec.  483.102 in this proposed 
rule). The definition for PASRR ID at Sec.  483.102(b)(3) contains a 
cross-reference to Sec.  435.1010. Section 435.1010 contains one use of 
the outdated term ``mentally retarded persons,'' which we propose to 
replace with ``people with intellectual disabilities.''
12. Supporting Documentation Required (Sec.  441.303)
    Section 441.303, which provides guidance on HCBS programs, make 
incidental reference to the PASRR process. We propose to make technical 
changes to paragraphs (f)(4) and (f)(9), including: replacing 
``PASARR'' with ``PASRR''; removing ``annual'' before ``resident 
review''; correcting typos; and replacing the phrase ``developmentally 
disabled'' with ``individuals with developmental disabilities'' at 
441.303(f)(4). We also propose to replace the word ``inpatients'' with 
``residents'' to reflect language more commonly used to describe 
individuals who live in NFs or ICF/IIDs.
    We also propose in Sec.  441.303(f)(4) to clarify that in making 
estimates for annual per capita expenditures for a separate waiver 
program, the state may estimate costs for individuals with 
developmental disabilities who have been identified by PASRR, who are 
residents of NFs, or require the level of care provided by an 
Intermediate Care Facility for Individuals with Intellectual 
Disabilities (ICF/IID).

B. Part 483, Subpart B

1. Resident Assessment (Sec.  483.20)
    Section 483.20 provides instructions to NFs on resident 
assessments, as required by section 1919(b)(3) of the Act, which 
requires that NFs perform a comprehensive, standardized, reproducible 
assessment of each resident's functional capability. NFs must use an 
assessment tool known as the Resident Assessment Instrument to identify 
residents' strengths, needs, and preferences in key areas of functional 
abilities and activities of daily living. The minimum data set (MDS) is 
a component of the resident assessment, which contains a standardized 
set of essential clinical and functional status measures. Information 
gathered from the MDS is used to identify conditions that require 
additional evaluation, and the information gathered from these 
assessments is used to develop the individualized care plan required 
for each NF resident.
    Despite certain superficial similarities between the resident 
assessments and PASRR evaluations, the two processes are distinct 
statutory requirements. Resident assessments are specifically intended 
to be the responsibility of the NF (per section 1919(b)(3)(A) of the 
Act), whereas PASRR evaluations are specifically the responsibility of 
the SMHA and SIDA, and cannot be delegated to the NF (in accordance 
with section 1919(b)(3)(F) of the Act). Unlike PASRR evaluations, 
resident assessments are performed for all NF residents, not just those 
with MI or ID. The timing for resident assessments and PASRR 
evaluations is also different. A comprehensive resident assessment must 
be performed initially within 14 days after NF admission and then every 
year until the resident's discharge from the NF (per section 
1919(b)(3)(C) of the Act) with modified quarterly assessments performed 
in the intervals between the annual comprehensive resident assessments 
to ensure the information stays up-to-date (per Sec.  483.20(c)). 
Additionally, when an individual experiences a ``significant change'' 
in physical or mental conditions, as defined in Sec.  483.20(b)(2)(ii), 
the NF must perform a new comprehensive resident assessment within 14 
days of the significant change (even if this significant change happens 
before the resident's scheduled annual comprehensive resident 
assessment). By comparison, Preadmission Screening evaluations for 
PASRR must be performed prior to NF admission (per section 
1919(b)(3)(F) of the Act), and Resident Review evaluations must be done 
``promptly'' after a NF has observed a significant change of physical 
or mental condition (per sections 1919(b)(3)(E) and 1919 (e)(7)(B)(iii) 
of the Act). Both resident assessments and PASRR evaluations involve 
reviewing the individual's medical history, cognitive and behavior 
patterns, psychosocial well-being, and long-term care goals (in 
accordance with Sec.  483.20(b) for resident assessment and Sec.  
483.128 of this proposed rule for PASRR evaluations). However, the 
resident assessment is focused on the individual's needs while in the 
NF, while the PASRR evaluation considers whether the individual may be 
better served in a different setting other than a NF. As described in 
Sec.  483.20(b), resident assessments focus on a broad range of 
functional needs--such as vision, dental, continence, and skin 
conditions--that may be out of scope for a PASRR evaluation, which 
focuses on only those needs directly related to the individual's MI or 
ID. PASRR evaluations will include recommendations for NF services and 
specialized services (which are discussed in greater detail in the 
discussions of Sec. Sec.  483.120 and 483.128 later in this proposed 
rule). However, these differences notwithstanding, both resident 
assessments and PASRR evaluations are designed to assess needs of NF 
residents and provide information needed to identify residents' care 
needs while they are in the NF.
    Section 483.20(e) implements the requirement at section 
1919(b)(3)(E) of the Act that NFs must coordinate Preadmission 
Screening with resident assessments to the greatest extent practicable. 
We propose a technical correction to Sec.  483.20(e) to replace 
``PASARR'' with ``PASRR.'' We also propose to change the term ``mental 
disorder'' to ``mental illness'' in this section to align with the 
language in part 483, subpart C, which uses ``mental illness'' rather 
than ``mental disorder.'' The term ``mental illness'' is more aligned 
with terminology used in the authorizing statute for PASRR at sections 
1919(b)(3)(F) and 1919(e)(7) of the Act, which uses ``mentally ill'' 
and ``serious mental illness.'' Additionally, we note that the term 
``mental disorder'' commonly denotes neurodevelopmental disorders (such 
as intellectual disability and developmental disability) and 
neurocognitive disorders (such as dementia and Alzheimer's or related 
conditions).\1\ People with intellectual and developmental disabilities 
are identified in sections 1919(b)(3)(F)(ii) and 1919(e)(7)(B)(ii) of 
the Act as distinct from people with mental illness, who are addressed 
in sections 1919(b)(3)(F)(i) and 1919(e)(7)(B)(i). Section 
1919(e)(7)(G)(i) indicates that primary diagnoses of dementia and

[[Page 9993]]

Alzheimer's or related disorders cannot be included in the PASRR-
specific definition of mental illness. Thus we propose to replace the 
broad term ``mental disorder'' with the narrower term ``mental 
illness'' in order to indicate mental disorders that do not include 
neurodevelopmental or neurocognitive disorders. Because there is much 
discussion in the behavioral health community about appropriate 
terminology, we solicit feedback on this proposal to use ``mental 
illness'' rather than ``mental disorder.''
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    \1\ See, for example, World Health Organization, ``Mental Health 
Disorders.'' April 9, 2018. Available at https://www.who.int/news-room/fact-sheets/detail/mental-disorders. Last accessed: August 19, 
2019.
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    We propose a change to the language Sec.  483.20(e)(1), which 
requires that PASRR recommendations be incorporated into a resident's 
assessment, care planning, and transitions of care. We propose to 
remove the mention in Sec.  483.20(e)(1) of care planning and 
transition planning because they are both out of scope for this 
section. Care planning requirements are addressed in Sec.  483.21, 
whereas Sec.  483.20 contains requirements for resident assessments. 
Additionally, paragraphs (a)(1)(ii)(F) and (b)(1)(iii) at Sec.  483.21 
both address the inclusion of PASRR recommendations in care planning, 
so including the same requirement in Sec.  483.20(e)(1) is duplicative. 
We also propose in Sec.  483.20(e)(1) to replace PASRR 
``recommendations'' with PASRR ``findings.'' The word 
``recommendations'' is not defined in this provision, but seems to 
refer to recommendations for NF services or specialized services--
information that would be incorporated into a care plan, but would not 
be incorporated into the resident assessment. Rather, we propose using 
the word ``findings'' in its place because this more clearly refers to 
the data collected by the PASRR evaluator regarding the individual's 
medical history, psychosocial history, diagnosis of MI or ID, and 
functional needs--information that could be used to help complete the 
resident assessment.
    We propose to make changes to Sec.  483.20(e)(2), which requires 
that NFs refer all NF residents with known MI or ID (as determined by 
the PASRR program) and all residents with possible MI or ID to the 
PASRR program for Resident Review upon the completion of a significant 
change in status assessment. This requirement somewhat duplicates the 
requirement at Sec.  483.20(k)(4) that NFs promptly refer all NF 
residents with known MI or ID (as determined by the PASRR program) for 
a Resident Review upon a significant change in physical or mental 
condition. One key difference between these provisions is the timing of 
when the referral must be made. Section 483.20(e)(2) specifies that the 
referral must happen upon a significant change in status assessment. 
Significant change in status assessments, per Sec.  483.20(b)(2) must 
be completed within 14 days of the significant change, so it appears 
that Sec.  483.20(e)(2) currently allows NFs to wait at least 14 days 
before making a referral for Resident Review. This conflicts with the 
requirement in Sec.  483.20(k)(4) (which more closely mirrors the 
language in section 1919(b)(3)(E) of the Act), requiring referrals for 
Resident Review to be made ``promptly after a significant change.'' 
Another key difference between the two provisions is that Sec.  
483.20(e)(2) addresses the needs of residents with ``newly evident or 
possible'' MI or ID--meaning residents who had not been previously 
identified by the PASRR program as having MI or ID. Section 
483.20(k)(4) only refers to residents with MI or ID--presumably 
residents who have already been identified by the PASRR program as 
having MI or ID.
    We propose to resolve the duplications and misalignment between 
Sec.  483.20(e)(2) and (k)(4) by striking the current language in Sec.  
483.20(e)(2) and replacing it with proposed language that would clarify 
that NFs would be required to refer residents with newly evident or 
possible MI or ID to the PASRR program for a Resident Review within 72 
hours of when the NF identifies conditions indicating the person has 
possible MI or ID. (See discussion of Sec.  483.126 in this proposed 
rule for proposed criteria for ``possible'' MI and ID.) We believe it 
is critical for NFs to refer such individuals to the PASRR program, 
since any resident of a Medicaid-certified NF with possible MI or ID 
falls within PASRR's purview--including individuals who had been 
misidentified at admission, or developed MI post-admission. While the 
NF would be expected to complete a Level I identification screen 
(discussed in detail in the discussion of Sec.  483.126 of this 
proposed rule), we do not propose to require that a NF first complete a 
significant change in status assessment to make the referral. In some 
instances the NF's discovery of an overlooked MI or ID identification 
may occur during the initial comprehensive resident assessment 
performed at admission (in which case, the NF's discovery of the 
possible MI or ID would not be the result of a resident experiencing a 
significant change in physical or mental condition). We also do not 
propose that a NF first complete a significant change in status 
assessment before making the referral for Resident Review. This would 
apply even if the newly evident or possible MI or ID is discovered by 
the NF as a result of a significant change in the resident's condition; 
rather, we propose that the referral for Resident Review be made first, 
so that the evaluations performed as part of the Resident Review could 
be used to help the NF complete the significant change in status 
assessment, if one ultimately needs to be performed. We propose in the 
amended Sec.  483.20(e)(2) that the referral for Resident Review be 
made within 72 hours after the facility identifies evidence indicating 
the individual has possible mental illness, intellectual disability, or 
related conditions, to align with the timeframe for Resident Review 
referral we propose to add to Sec.  483.20(k)(4), discussed below.
    Section 483.20(k) is currently titled ``Preadmission screening for 
individuals with a mental disorder and individuals with an intellectual 
disability.'' We propose to retitle this provision ``Preadmission 
screening and resident review for individuals with mental illness and 
individuals with an intellectual disability.'' We propose this change 
because Sec.  483.20(k) addresses both Preadmission Screening and 
Resident Review requirements. Additionally, we propose to change 
``mental disorder'' to ``mental illness'' to align Sec.  483.20(k) with 
PASRR requirements in part 483, subpart C that use ``mental illness'' 
rather than ``mental disorder.'' Similarly, we propose at Sec.  
483.20(k)(1)(i) to change ``mental disorder'' to ``mental illness.'' 
(See discussion of rationale for this change in the discussion of Sec.  
483.20(e) above.)
    Section 483.20(k)(2) describes exceptions to Preadmission Screening 
requirements. We propose to add language to Sec.  483.20(k)(2)(i) to 
clarify that neither new Level I identification screens, nor new 
preadmission Level II evaluation and determinations, are required for 
readmissions. We propose this clarification because, as will be 
discussed at greater length in the discussion of Preadmission Screening 
in Sec.  483.112, we propose to resolve confusion about what 
constitutes ``Preadmission Screening'' and what PASRR activities are 
required to be completed prior to admission.
    We propose to add language at Sec.  483.20(k)(2)(ii), which 
implements the statutory Preadmission Screening exemption for 
individuals who have been admitted to a NF from a hospital under 
certain circumstances. We propose to add language that would clarify 
that a resident admitted under an exempted hospital discharge (as in, 
meeting the criteria listed in

[[Page 9994]]

Sec.  483.20(k)(2)(ii)) would not be required to receive a Level II 
evaluation and determination prior to admission, but would still be 
expected to have received a Level I identification screen prior to 
admission. This added language would align Sec.  483.20(k)(2)(ii) with 
proposed changes to Sec.  483.112 that would require Level I 
identification screens for all NF applicants, including applicants 
eligible for an exempted hospital discharge. These proposed changes are 
discussed further in the discussion of Sec.  483.112 in this proposed 
rule.
    We propose a new section 483.20(k)(2)(iii) that would add an 
additional exception to the requirement that residents not be admitted 
until they have received a Level II evaluation and determination. This 
proposed provision would specify that individuals who are admitted to 
the NF under a provisional admission (which is described in the 
discussion of proposed Sec.  483.112(b)(3) of this rule) would be 
required to receive Level I identification screens, but would not be 
required to receive a Level II evaluation and determination prior to 
admission. This would align the requirements for NF admissions of 
individuals eligible for provisional admission with proposed 
requirements regarding provisional admissions in Sec.  483.112(b)(3).
    We propose a technical change in Sec. Sec.  483.20(k)(3)(i) and 
(k)(4) to change ``mental disorder'' to ``mental illness'', for the 
reasons already discussed in this section.
    We are also proposing an additional change to Sec.  483.20(k)(4). 
Section 483.20(k)(4), like the current Sec.  483.20(e)(2), addresses 
NFs' obligations to make referrals to Resident Review. As noted in the 
discussion of proposed Sec.  483.20(e)(2), we propose to remove the 
requirement in Sec.  483.20(e)(2) that a Resident Referral must be made 
after a resident with known MI or ID experiences a significant change 
(instead proposing to focus Sec.  483.20(e)(2) on the needs of 
residents who have newly evident or possible MI or ID). We propose to 
retain Sec.  483.20(k)(4) (with some rewording for clarity), as it 
implements a critical component of section 1919(b)(3)(E) of the Act, 
which requires that NFs refer residents with known MI or ID (as in, 
previously identified by the Level II process) to the PASRR program for 
Resident Review ``promptly after a significant change in physical or 
mental condition.'' We propose to add language to Sec.  483.20(k)(4) to 
specify that ``promptly'' means within 72 hours of the significant 
change in condition. We also propose to add a cross-reference to 
paragraph (b)(2)(ii) of this section to provide a definition of 
``significant change in physical or mental condition.''
2. Comprehensive Person-Centered Care Planning (Sec.  483.21)
    Section 483.21 contains requirements for person-centered care 
planning, which includes services recommended through the PASRR 
process. We propose to make technical changes to this section to 
replace ``PASARR'' with ``PASRR.'' We propose to amend language at 
paragraph (b)(1)(iii), which indicates that PASRR recommendations of 
specialized services or specialized rehabilitative services must be 
part of the care plan. This provision currently provides that the care 
plan must include any specialized services or specialized 
rehabilitative services that the nursing facility will provide as a 
result of PASRR recommendations. We propose to amend this language to 
clarify that the state, not the NF, is responsible for providing 
specialized services (as is discussed in the discussion of Sec.  
483.120 in this proposed rule). We also propose changes to the second 
sentence of this provision, which currently states that if a facility 
disagrees with the PASRR findings, it must indicate its rationale in 
the resident's medical record. We propose to replace the word 
``findings'' with ``recommendation'' in order to promote consistency in 
the use of those terms. As noted in the discussion of proposed changes 
to Sec.  483.20(e)(1), we believe that ``findings'' connotes 
conclusions about the individual's diagnosis and functional abilities, 
whereas ``recommendations'' refers to the NF services and specialized 
services recommended by the PASRR program. We also seek to amend this 
provision to specify that NFs cannot unilaterally disregard PASRR 
recommendations without communication with the PASRR program. We would 
specify that changes to the PASRR recommendations in a plan of care 
would need to be made as part of the PASRR Level II determination 
process (as described in the discussion of Sec.  483.130 below).

C. Part 483, Subpart C

1. Preadmission Screening and Resident Review for Individuals With 
Mental Illness or Intellectual Disability (Part 483, Subpart C)
    The current title of part 483, subpart C is ``Preadmission 
Screening and Annual Resident Review of Mentally Ill and Mentally 
Retarded Individuals.'' We propose to change this title to 
``Preadmission Screening and Resident Review for Individuals with 
Mental Illness or Intellectual Disability.''
2. Basis (Sec.  483.100)
    Section 483.100 provides the authority for PASRR, which lies 
primarily in section 1919(e)(7) of the Act. We propose to revise this 
section by removing ``annual'' before ``resident review,'' and 
replacing the acronym ``PASARR'' with ``PASRR,'' to reflect the 
statutory change made in 1996 (by Pub. L. 104-315) that removed the 
``annual'' requirement for Resident Review.
3. Applicability and Definitions (Sec.  483.102)
    Section 483.102(a) explains that part 483, subpart C applies to all 
individuals with MI or ID who apply to or reside in a Medicaid-
certified NF, regardless of the individuals' source of payment to the 
NF or known prior diagnoses. We note that this provision means that 
PASRR applies to all individuals who enter a facility that is Medicaid-
certified, including individuals whose stays are covered by Medicare, 
the Department of Veterans Affairs, private insurance, or the 
individual out of his or her own funds. PASRR also applies to 
individuals who are entering a facility that is dually-certified for 
Medicare and Medicaid beneficiaries, unless the facility has distinct 
parts for Medicaid and Medicare beneficiaries as defined in Sec.  483.5 
(in which case, PASRR would only apply to those entering the Medicaid 
distinct part). We do not propose to make changes to Sec.  483.102(a).
    Section 483.102(b) provides PASRR-specific definitions of MI, 
dementia, and ID, all of which we propose to revise.
a. Mental Illness
    Section 1919(e)(7)(G)(i) of the Act indicates that an individual is 
considered to have MI for PASRR purposes if the individual has a 
``serious mental illness'' as defined by the Secretary in consultation 
with the National Institute of Mental Health (NIMH); the statutory 
definition states that the MI must be serious and that the individual 
may not have a primary diagnosis of dementia. The current definition of 
MI at Sec.  483.102(b)(1) requires that for a PASRR program to 
determine an individual has MI, the program must consider three sets of 
criteria related to diagnosis, functional impairment, and duration of 
illness as measured by how recently the individual received intensive 
treatment.
    The current diagnosis criteria for MI at Sec.  483.102(b)(1)(i) 
requires that an individual have a ``major mental disorder'' 
diagnosable under the ``Diagnostic and Statistical Manual of Mental 
Disorders, 3rd edition'' (also

[[Page 9995]]

referred to as the DSM-III-R), which was released in 1987. The mental 
disorders listed currently in Sec.  483.102(b)(1) include 
``schizophrenic, mood, paranoid, panic or other severe anxiety 
disorder; somatoform disorder; personality disorder; other psychotic 
disorder'' and any other mental disorder that may lead to a chronic 
disability. Since Sec.  483.102(b)(1) was issued, the DSM has been 
revised several times and is now in a 5th edition (DSM-5), published in 
2013. The DSM-5 and DSM-III-R are not identical, and the DSM-5 does not 
categorize disorders the same way as the DSM-III-R. As a result, 
clinicians must currently crosswalk diagnoses made using the DSM-5 with 
the categories of mental disorders listed in the DSM-III-R.
    In addition to diagnosis, the current definition of MI at Sec.  
483.102(b)(1)(ii) also includes criteria that an individual must have 
experienced a functional impairment within the previous 3-6 months and, 
at Sec.  483.102(b)(1)(iii), that an individual must have required 
intensive psychiatric treatment or social supports within the previous 
2 years. We believe that limiting the definition of MI only to those 
individuals who have recently had acute symptoms may be unintentionally 
problematic. For instance, under a strict reading of this current 
definition, an individual with MI who has successfully managed symptoms 
with treatment or therapy, or is in remission, may be considered to not 
have MI for PASRR purposes. If an individual requires such specific 
treatment or therapy while in a NF, including these therapies might 
constitute specialized services if they go beyond typical NF services 
(see discussion of specialized services in discussion of Sec.  483.120 
of this rule)--in which case the PASRR program may help ensure that 
these ongoing treatments or therapies are maintained in the NF.
    We have also received feedback from stakeholders that the ``recent 
treatment'' requirement at Sec.  483.102(b)(1)(iii), which requires 
individuals to have received inpatient hospitalization, is out of step 
with current practices, which are increasingly trending towards 
intensive outpatient and other community-based treatments. Individuals 
who may have received inpatient hospitalization in 1992, when Sec.  
483.102(b)(1)(iii) was originally promulgated, might today be more 
likely to receive some form of outpatient treatment, making this 
criterion unreasonably difficult to meet by today's standards of 
practice.
    For readability, we propose to title Sec.  483.102(b)(1) ``Mental 
illness.'' We propose to revise Sec.  483.102(b)(1) in its entirety; a 
new definition of MI at Sec.  483.102(b)(1) would provide that a person 
would be considered to have MI if:
     The individual has, within the past year, had a serious 
and persistent mental disorder meeting the criteria specified within 
the (DSM-5), with the exception of conditions that would fall under 
DSM-5 ``V'' codes, substance use or substance/medication-induced 
disorders, neurodevelopmental disorders, and neurocognitive disorders;
     The disorder has been determined by a qualified clinician 
to be acute or in partial remission, have recurrent or persistent 
features and, if the DSM includes a severity scale for the disorder, 
the severity level of the disorder is moderate to severe;
     The disorder has resulted in functional impairment which 
has substantially interfered with, or limited, one or more major life 
activity (including activities of daily living; instrumental activities 
of daily living; or functioning in social, family, and academic or 
vocational contexts), or would have caused functional impairment 
without the benefit of treatment or other support services; and
     A qualified clinician has found that the mental disorder 
is not a secondary characteristic of a primary diagnosis of dementia 
(or neurocognitive disorder due to Alzheimer's disease or related 
conditions), as defined in paragraph (b)(2).
    The proposed definition is a PASRR-specific modification of the 
definition of serious MI issued by the Substance Abuse and Mental 
Health Services Administration (SAMHSA) as part of the Public Health 
Service Act (PHSA). The Alcohol, Drug Abuse, and Mental Health 
Administration Reorganization Act (Pub. L. 102-321, enacted July 10, 
1992) that created SAMHSA in 1992 also directed SAMHSA to issue a 
definition of ``serious mental illness,'' which it did in 1993 (58 FR 
29425, May 20, 1993). We arrived at this proposed definition for PASRR-
eligible MI after consultation with NIMH staff, as directed by section 
1919(e)(7)(G)(i) of the Act. In an attempt to streamline the 
regulations, we are proposing a single definition of MI to apply to 
both children and adults, whereas the PHSA definition offers separate 
definitions for ``serious mental illness'' and ``serious emotional 
disturbance'' for children. In addition, in an effort to bring the 
proposed definition of MI up-to-date, we have chosen to refer to the 
most current available version of the DSM (which is more current than 
the edition reflected in the PHSA). Unlike the PHSA definition, the 
proposed PASRR definition for MI would exclude Alzheimer's disease and 
related disorders in accordance with section 1919(e)(7)(G)(i) of the 
Act.
    Another proposed update to the definition of MI is to indicate that 
a person must have been diagnosed with a ``mental disorder'' rather 
than a ``major mental disorder.'' The DSM-5 does not classify many 
mental disorders as ``major'' as it may have done in previous editions, 
and we believe removing ``major' aligns better with the current 
descriptions of most of the relevant mental disorders in the DSM-5. We 
also believe this would avoid over-inclusion of individuals with 
clinically mild presentations of disorders that have the word ``major'' 
in the diagnosis, such as major depressive disorder. We propose instead 
to specify that a qualified clinician would have to identify that the 
disorder has recurrent or persistent features. The term ``serious and 
persistent mental illness'' is often used interchangeably with 
``serious mental illness,'' and we propose to highlight the persistent 
or recurrent nature of the disorder to avoid over-inclusion of 
individuals who have experienced a single episode of mental illness 
that will not require the ongoing specialized supports offered through 
PASRR interventions. We also propose to specify that, if the DSM-5 
includes a severity scale for the disorder, that the disorder be 
considered by the clinician to be moderate to severe.
    We note that in the proposed definition, a diagnosis of substance 
use disorder (including opioid use disorder) or a substance-induced 
disorder would not be considered a qualifying diagnosis of MI. This is 
in keeping with the SAMHSA definition of serious MI. However, an 
individual with a diagnosis of substance use disorder and a distinct 
diagnosis of a qualifying MI (such as bipolar disorder) would be 
considered eligible for PASRR evaluation.
    We believe this proposed definition would rectify the problems 
posed by the current definition described above by updating the 
diagnostic criteria and removing specific treatment criteria. It would 
also adopt language from the preamble to SAMHSA's 1993 definition of 
serious MI (at 58 FR 29425) that specifies that the mental disorder 
would be considered serious if it caused a functional impairment in the 
past year, or would have caused an impairment in the past year absent 
treatment or support services. This would mean that people with serious 
but managed conditions could still be eligible for PASRR evaluation and 
determination to ensure continuation of these supports while they are 
in the NF.

[[Page 9996]]

    The final criterion of the proposed definition for MI reflects the 
statutory requirement at section 1919(e)(7)(G)(i) of the Act that a 
person is not considered to have MI (for PASRR purposes) if the MI 
diagnosis is secondary to a primary diagnosis of dementia. We propose 
to specify as part of this provision that a qualified clinician would 
make the decision that the dementia is primary, as it may difficult for 
non-clinicians (such as those who may be performing the Level I 
identification screen, discussed in Sec.  483.126 of this proposed 
rule) to identify accurately whether the individual's behavioral 
disturbances are caused by MI or dementia. We solicit feedback on this 
proposed updated definition.
b. Dementia
    Section 483.102(b)(2) provides a definition of dementia, and for 
readability, we propose to title Sec.  483.102(b)(2) ``Dementia.'' We 
propose to amend the current definition of dementia at Sec.  
483.102(b)(2). In the DSM-5, dementia is now described as ``major 
neurocognitive disorder'' and Alzheimer's disease and related disorders 
are described as different forms of either mild or major neurocognitive 
disorders. We propose to specify that an individual would be considered 
to have dementia if a qualified clinician has diagnosed such individual 
with a ``major neurocognitive disorder'' as defined in the DSM-5, with 
the exception of delirium. (See the discussion of proposed Sec.  
483.112(b)(3) for a discussion of how individuals with delirium 
diagnoses would be addressed by PASRR.) Mild neurocognitive disorders, 
including mild cognitive impairment, would not be included in the 
definition of dementia for PASRR purposes.
    We also propose to specify that an individual with a co-occurring 
diagnosis of MI and a neurocognitive disorder would not automatically 
be considered to have ``primary dementia'' unless a qualified clinician 
has confirmed the identification of dementia as primary. We frequently 
receive requests for additional guidance on what is meant by ``primary 
dementia'' in PASRR. We solicit feedback on our proposed approach.
c. Intellectual Disability
    Section 483.102(b)(3) provides a definition of intellectual 
disability, and for readability we propose to add a title to this 
provision, ``Intellectual disability.'' The statute does not provide a 
specific definition of ``intellectual disability''. Section 
1919(e)(7)(G)(ii) of the Act states that a person is ``mentally 
retarded'' if the person is mentally retarded or has a related 
condition as described in section 1905(d) of the Act.'' Section 1905(d) 
defines intermediate care facilities for people with intellectual 
disability (ICF/IID), but does not define ``intellectual disability''. 
Section 483.102(b)(3)(i) currently provides a definition of 
``intellectual disability,'' but it relies on an outdated diagnostic 
manual (the American Association on Mental Deficiency's ``Manual on 
Classification in Mental Retardation'' (1983)). We propose to update 
this definition, using an adaptation of the most current definition 
provided by the American Association on Intellectual and Developmental 
Disabilities (AAIDD), formerly known as the American Association on 
Mental Deficiency. We propose to specify that an individual may be 
considered to have an intellectual disability if the individual has a 
disability, with onset before age 18, which is characterized by 
significant limitations in both intellectual functioning and adaptive 
behavior, as described in the American Association on Intellectual and 
Developmental Disabilities' ``Intellectual Disability: Definition, 
Classification, and Systems of Support, 11th edition'' (2010). We also 
propose to retain the provision at Sec.  483.102(b)(3)(ii) that an 
individual may also be considered to have ID for PASRR purposes if the 
individual has a related condition as defined by Sec.  435.1010. We 
welcome public comment on this definition.
d. Incorporation by Reference: Material Availability and Description
    We also propose to add a new Sec.  483.102(c) to incorporate the 
American Psychiatric Association's ``Diagnostic and Statistical Manual 
of Mental Disorders, 5th Edition'' (DSM-5) and the 11th edition of 
AAIDD's Intellectual Disability: Definition, Classification, and 
Systems of Support'' by reference; PASRR programs would use these 
materials to identify MI, dementia and ID, in accordance with 5 U.S.C. 
552(a) and 1 CFR 51.5(a). Incorporation by reference allows federal 
agencies to comply with the requirement to publish rules in the Federal 
Register and the Code of Federal Regulations (CFR) by referring to 
material already published elsewhere. The legal effect of incorporation 
by reference is that the material is treated as if it had also been 
published in the Federal Register and the CFR. This material, like any 
other properly issued rule, has the force and effect of law. New Sec.  
483.102(c)(1) would incorporate by reference the DSM-5, which we 
propose would be used to identify qualifying MI diagnoses and to 
identify primary dementia diagnoses. Section 483.102(c)(2) would 
incorporate by reference the current edition of the AAIDD's 
``Intellectual Disability: Definition, Classification, and Systems of 
Support'', which we propose would be used to identify instances of 
intellectual disability.
    The ``Diagnostic and Statistical Manual of Mental Disorders, Fifth 
Edition'' (DSM-5) is the diagnostic tool published by the American 
Psychiatric Association (APA). The DSM serves as one of the principal 
authorities for identifying and classifying the psychiatric diagnoses 
required for treatment recommendations and health care payments. The 
DSM-5 contains criteria that help clinicians identify subtypes of: 
Neurodevelopmental disorders; schizophrenia spectrum and other 
psychotic disorders; bipolar and related disorders; depressive 
disorders; anxiety disorders; obsessive-compulsive disorders; trauma- 
and stressor-related disorders; dissociative disorders; somatic symptom 
and related disorders; feeding and eating disorders; elimination 
disorders; sleep-wake disorders; sexual dysfunctions; gender dysphoria; 
disruptive, impulse-control, and conduct disorders; substance-related 
and addictive disorders; neurocognitive disorders; personality 
disorders; and paraphilic disorders.
    The AAIDD's manual, ``Intellectual Disability: Definition, 
Classification, and Systems of Supports'', contains current guidelines 
on diagnosing and classifying intellectual disability, as well as 
information on developing a system of supports for people with an 
intellectual disability. The manual was created to provide an 
authoritative definition and diagnostic system of intellectual 
disability and to give guidance on the role of assessment in the 
diagnostic process, the role of the intelligence quotient (IQ) in 
making a diagnosis, and methods of assessing adaptive behavior.
    We would make both the DSM-5 and the AAIDD's ``Intellectual 
Disability: Definition, Classification, and Systems of Support'' 
available for inspection at the Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Baltimore, Maryland, or at the 
National Archives and Records Administration (NARA). For information on 
the availability of these materials at NARA, call 202-741-6030, or go 
to http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. Information on how to 
purchase a copy of the DSM-5 may be

[[Page 9997]]

obtained from the American Psychiatric Association, 800 Maine Avenue 
SW, Suite 900, Washington, DC 20024, 202-559-3500, or from American 
Psychiatric Association Publishing at www.appi.org. Information on how 
to purchase a copy of the AAIDD manual may be obtained from the AAIDD, 
8403 Colesville Road, Suite 900, Silver Spring, MD 20910, 202-387-1968 
or www.aaidd.org.
4. State Plan Requirement (Sec.  483.104)
    Sec.  483.104 provides that, as a condition of approval of the 
State plan, states must operate a PASRR program that meets the 
requirements of Sec. Sec.  483.100 through 483.138. We propose in this 
provision to remove the word ``annual'' to indicate that Resident 
Review is no longer required annually.
5. Basic Rules and Responsibilities (Sec.  483.106)
    Currently, Sec.  483.106 is titled ``Basic rule.'' The focus of 
this section is on providing a high-level overview of PASRR 
requirements and outlining the roles of the State Medicaid Agency 
(SMA), the SMHA, and the SIDA in implementing PASRR. PASRR is a 
somewhat unusual Medicaid mandate in that the statute (sections 
1919(b)(3)(F) and (e)(7)(A) and (B) of the Act) assigns 
responsibilities to the SMHA and the SIDA, as well as the SMA. We 
propose to retitle this section ``Basic rules and responsibilities'' to 
draw readers' attention to these distinct responsibilities. We also 
propose to make revisions to this section to clarify and highlight the 
respective roles of each authority.
    The current Sec.  483.106(a) reiterates the requirement in section 
1919(e)(7)(A)(i) of the Act that states were to have a system for 
Preadmission Screening in place by January 1, 1989. It also reflects 
the requirement in section 1919(e)(7)(B) of the Act that states must 
perform an initial Resident Review of all individuals with MI or ID in 
NFs by April 1, 1990, and have a system of annual Resident Review in 
place by April 1, 1990. This requirement for annual Resident Review was 
repealed in 1996 (by Pub. L. 104-315) and replaced with the requirement 
that a Resident Review was required upon a resident's ``significant 
change of physical and mental condition.'' We propose to remove Sec.  
483.106(a) because the deadlines for implementation of Preadmission 
Screening implementation and Resident Review programs have long passed, 
and the reference to annual Resident Review is now obsolete.
    We propose to redesignate the current Sec.  483.106(c) as Sec.  
483.106(a) and remove the existing reference to ``annual'' Resident 
Reviews. This provision provides the basic purpose of PASRR programs, 
which are to have Preadmission Screening and Resident Review processes 
that result in determinations for NF applicants and residents with MI 
and ID, based on a physical and mental evaluation of the individual.
    The current Sec.  483.106(b) indicates that ``new admissions'' must 
receive Preadmission Screening, and clarifies who is considered a ``new 
admission.'' It also defines and distinguishes among new admissions, 
exempted hospital discharges, readmissions, and inter-facility 
transfers. Because this provision has more relevance to Preadmission 
Screening than to Resident Review, we propose to move this provision to 
Sec.  483.112 (which discusses Preadmission Screening for NF 
applicants) and to redesignate it as Sec.  483.112(b). Additional 
proposed changes to that provision are contained in the discussion of 
Sec.  483.112 in this proposed rule.
    We propose new language at Sec.  483.106(b) to provide a proposed 
restatement of the basic requirements of the PASRR programs, including:
     Identification of all applicants for admission to, and 
residents of, Medicaid-certified NFs who have possible MI or ID;
     Preadmission Screening of all eligible new admissions with 
MI or ID who apply to Medicaid NFs and tracking of individuals with 
possible MI or ID admitted under Preadmission Screening exceptions; and
     Resident Review of eligible residents with MI or ID.
    This proposed regulation would provide a clear overview of PASRR 
requirements that reflects current statutory requirements. The proposed 
Sec.  483.106(b)(2) would provide a cross-reference to Sec.  483.112, 
where we propose that exempted hospital discharge and other exceptions 
to Preadmission Screening be defined.
    We propose a new requirement at Sec.  483.106(c) that would 
describe the SMA's PASRR responsibilities, including:
     General responsibility for ensuring and enforcing the 
PASRR program's compliance with federal regulations;
     Executing and enforcing written interagency agreement 
among the State Medicaid agency, SMHA and SIDA as required at Sec.  
431.621;
     Designating an entity to perform the evaluations for 
individuals with MI;
     Ensuring timely and accurate reporting of data as required 
in proposed Sec.  483.130(j); and
     All PASRR functions not explicitly assigned to another 
entity by statute or regulation.
    We believe this new regulation is necessary because the current 
regulations do not offer explicit discussion of the SMA's role in 
PASRR. Our proposed regulation would largely affirm current 
responsibilities of the SMA. We have observed that while the SMA does 
bear ultimate responsibility for PASRR implementation, in some 
instances SMAs have been unaware of some of their specific obligations, 
and we attempt to highlight these obligations in proposed Sec.  
483.106(c). For instance, the existing Sec.  431.621 requires the SMA 
to execute a PASRR-related interagency agreement among the SMA, SMHA 
and SIDA--a requirement that is easy to overlook because it is not part 
of the PASRR requirements in part 483, subpart C. Additionally, we 
propose to clarify that since the SMHA cannot perform or delegate 
responsibility for evaluations for people with MI (per the restrictions 
at sections 1919(b)(3)(F)(i) and 1919(e)(7)(B)(i) of the Act, discussed 
further in the discussion of Sec.  483.106(d) in this proposed rule), 
that responsibility would fall to the SMA.
    To the list of the SMA's responsibilities, we propose to add one 
new responsibility in proposed Sec.  483.106(c)(4), to ensure timely 
and accurate reporting of data as required in proposed Sec.  
483.130(j). The proposed reporting requirements are discussed at 
greater length in the discussion of Sec.  483.130(j) in this proposed 
rule. We propose at Sec.  483.106(c)(4) that, when a PASRR program 
gathers and submits data on PASRR program activities, the SMA would 
bear ultimate responsibility for ensuring that this data is reported to 
the Secretary, as required in section 1919(e)(7)(C)(iv) of the Act.
    Section 483.106(d) describes the specific obligations of the SMHA 
and SIDA to perform determinations for people with MI and ID 
(respectively), as described in the statute. Sections 1919(b)(3)(F)(i) 
and 1919(e)(7)(B)(i) of the Act specify that the determinations made by 
the SMHA must be based on an ``independent physical and mental 
evaluation performed by a person or entity other than the [SMHA.]'' 
Sections 1919(b)(3)(F)(ii) and 1919(e)(7)(B)(ii) of the Act require the 
SIDA to base determinations ``on the physical and mental condition'' of 
the individual (implying that determinations must also be based on 
evaluations). Unlike the SMHA, the SIDA is not statutorily prohibited 
from performing the evaluation on which the determination is made. The 
language in current

[[Page 9998]]

Sec.  483.106(d) generally reflects this set of statutory requirements. 
We propose in Sec.  483.106(d) to change a mention of ``the level of 
services provided by a NF'' to ``NF level of services'' to maintain 
consistent language around NF level of services. We propose to add 
clarifying language to Sec.  483.106(d)(1) that indicates that the 
SMHA's determination for people with MI must be based on a physical and 
mental evaluation performed by a person or entity that is ``independent 
from'' the SMHA. The current language indicates only that the person or 
entity must be ``other than'' the SMHA. That arguably ambiguous 
language has created the misimpression for some PASRR programs that the 
evaluation of people with MI can be performed by an entity that is 
distinct from, but still under contract with, the SMHA. We believe a 
plain reading of the statute indicates that the entity performing the 
evaluation for people with MI cannot have a contractual relationship 
with the SMHA, and propose to make that clear. The SIDA's role is 
summarized at Sec.  483.106(d)(2). To highlight the differences between 
the SIDA statutorily-authorized roles in evaluations, we propose to add 
language at Sec.  483.106(d)(2) that specifies that the determination 
made by the SIDA must be ``based on a physical and mental evaluation 
performed by the state intellectual disability authority or its 
designee.''
    We propose changes at Sec.  483.106(e), which currently describes 
the obligations placed on the SMHA and the SIDA when delegating 
statutory responsibilities. We propose to redesignate Sec.  
483.106(e)(1)(i) through (iii) as Sec.  483.106(e)(1) through (3). We 
propose to expand Sec.  483.106(e) and (e)(1) to include the SMA, as 
well as the SMHA and SIDA. We also propose to remove current Sec.  
483.106(e)(1)(ii), which contains an instruction to the SMHA and SIDA 
that the two determinations as to the need for NF services and 
specialized services must be made based on a consistent analysis of the 
data. We believe this instruction is unnecessary, as this principle is 
also addressed in rules regarding determinations (contained in Sec.  
483.130). We propose to replace this provision with a clarification at 
newly redesignated Sec.  483.106(e)(2) that the SMA cannot delegate the 
evaluation responsibility to the SMHA (in accordance with sections 
1919(b)(3)(F)(i) and (e)(7)(B)(i) of the Act). Section 
483.106(e)(1)(iii), which we propose to redesignate Sec.  
483.106(e)(3), instructs that the responsibility of evaluations and 
determinations cannot be delegated to a NF or an entity with a direct 
or indirect relationship with a NF. As this is required by sections 
1919(b)(3)(F) and (e)(7)(B)(iv)) of the Act, we propose to retain this 
provision without amendment.
    We propose to remove the current Sec.  483.106(e)(2), which 
contains redundant language describing the SIDA and SMHA's 
responsibilities and ability to delegate these responsibilities. We 
also propose to remove the current Sec.  483.106(e)(3), which 
reiterates the restriction against the SMHA providing (or delegating) 
evaluations for people with MI, and restricting the state from 
delegating this responsibility to NFs. We believe this language 
duplicates existing and proposed language in Sec.  483.106(d)(1) and of 
newly redesignated Sec.  483.106(e)(2) and (3).
    We propose to move the current Sec.  483.128(b) to Sec.  483.106 
and redesignate it as Sec.  483.106(f). This provision requires that 
PASRR evaluations and determination notices be adapted to the cultural 
background, ethnic origin, language, and means of communication used by 
the individual. We propose this redesignation because the provision is 
currently in Sec.  483.128, which provides criteria only for 
evaluations, yet the provision addresses both evaluation and 
determination practices. Culturally-sensitive and accessible 
communications are fundamental to all PASRR-related activities, so we 
consider this provision most appropriate for the section on basic 
rules. In relocating language currently found at Sec.  483.128, we 
propose to revise the reference to ``PASARR notices'' to ``PASRR-
related communications'' to clarify that cultural adaptation and 
accessibility would be expected of all communication, and not limited 
to formal determination notices issued by the PASRR program. We would 
also add in this provision that, at no cost to the individual, 
evaluations should include qualified interpreters as needed, as 
required by Section 1557 of the Affordable Care Act and Title VI of the 
Civil Rights Act of 1964, and qualified sign language interpreters and 
auxiliary aids as required by Section 1557 of the Affordable Care Act 
and Section 504 of the Rehabilitation Act of 1973, to ensure there is 
effective communication.
6. Relationship of PASRR to Other Medicaid Processes (Sec.  483.108)
    Section 483.108 describes the protections for, and limitations on, 
the independence of the SMHA and SIDA in making determinations, and the 
statutory responsibility to coordinate PASRR with the resident 
assessment in Sec.  483.20(b).
    We propose to make only minor technical changes to Sec.  
483.108(a), to remove the acronym ``PASARR'' and replace it with 
``PASRR.'' We propose minor changes in Sec.  483.108(b). We propose 
replacing ``NF care'' with ``NF level of services'' to keep language 
regarding the NF level of services determination consistent. The 
current provision specifies that determinations regarding NF level of 
services and specialized services must be consistent with ``any 
supplemental criteria adopted by the State Medicaid agency under its 
approved State plan.'' We propose to remove the words ``under its 
approved State plan'' because state plan approval is not required for 
states to develop state-specific rules about PASRR criteria or NF 
admissions criteria.
    We propose to add clarifying language in Sec.  483.108(c), which 
reflects the statutory requirement in sections 1919(b)(3)(E) and 
1919(e)(7)(B)(iii) of the Act that the resident assessment process 
implemented in Sec.  483.20 must be coordinated with the state's PASRR 
program. (See discussion of Sec.  483.20 for discussion of the resident 
assessment process.) As we discuss in the discussion of Sec.  483.20(e) 
in this proposed rule, Preadmission Screening and Resident Review may 
be coordinated with the resident assessment by gathering the 
preliminary documentation that will aid in the completion of the 
resident assessment. To this end, we propose to replace language in 
Sec.  483.108(e) requiring that PASRR must be coordinated with the 
routine resident assessments with a more specific statement to the 
effect that information gathered by the PASRR process must be 
incorporated into the routine resident assessments required by Sec.  
483.20(b) whenever possible. We recognize that the need for 
coordination between PASRR and resident assessments is both critical 
and complex, and intend to expand on this requirement through future 
sub-regulatory guidance.
7. Out-of-State Arrangements (Sec.  483.110)
    Section 483.110 describes how responsibility for PASRR is assigned 
when an individual seeks admission or transfer to an out-of-state NF. 
The general goal of Sec.  483.110(a) is to ensure that one state (the 
``sending state'') cannot obligate another (the ``receiving state'') to 
provide, or pay for, NF services or specialized services that do not 
align with the NF level of services

[[Page 9999]]

or specialized services in the receiving state.
    We have received stakeholder feedback that, for some states, 
deciding how PASRR should be performed when a NF resident is 
transferred between states, or otherwise moves over state lines, can be 
a source of confusion. We understand that some receiving states: (1) 
Elect to accept the PASRR documentation from the sending state, even if 
the receiving state will ultimately be responsible for paying for the 
individual's care (including paying for specialized services); (2) redo 
all PASRRs for relocated residents; or (3) attempt to perform 
Preadmission Screening on prospective new residents themselves, which 
may involve sending staff from the receiving state's PASRR program 
across state lines to the sending state to perform the Preadmission 
Screening.
    Some of the challenges related to admitting NF applicants or 
residents from another state are beyond PASRR's scope, such as 
differences in Medicaid eligibility or states' level of care criteria 
for NF admission. However, while we do not currently propose 
substantive changes to Sec.  483.110(a), we solicit suggestions from 
stakeholders on ways that the language in Sec.  483.110 may, within the 
scope of the authority of this subpart, be amended to address any 
barriers to executing PASRR responsibilities associated with out-of-
state transfers.
    We propose to remove the current requirement at Sec.  483.110(b), 
which indicates that states may choose to include PASRR in interstate 
agreements. States do not need regulatory authority to do so, and may 
continue to do so if this removal is finalized. We have observed that 
some states have interpreted Sec.  483.110(b) as a mandate, which it is 
not. We note that the delegation authority granted at Sec.  483.106(e) 
would include, for example, allowing a receiving state to delegate its 
authority to perform PASRR activities to a sending state's PASRR 
program to complete needed Preadmission Screening. Because we propose 
to remove Sec.  483.110(b), we propose that Sec.  483.110(a) would be 
redesignated as Sec.  483.110.
8. Preadmission Screening of Admission to NFs (Sec.  483.112)
    Section 483.112 describes the requirements for Preadmission 
Screening. Per section 1919(b)(3)(F) of the Act, Preadmission Screening 
instructs that ``new resident[s]'' with MI or ID cannot be admitted to 
a NF unless the SMHA or SIDA has determined ``prior to admission'' that 
the individual needs NF level of services and, if the individual does 
need NF level of services, whether the individual needs specialized 
services. (The need for NF level of services and specialized services 
are discussed in greater detail in the discussions of Sec. Sec.  
483.120, 483.132, and 483.134 of this proposed rule.)
    In this section, we propose to reorganize and expand on the 
requirements for Preadmission Screening. As part of this 
reorganization, we propose to remove current Sec.  483.112(a) and (b). 
These sections reiterate the statutory requirement set out in the 
previous paragraph. We propose removing these sections and 
consolidating this information into a single requirement at Sec.  
483.112(d), discussed later in this proposed rule.
    We propose a new Sec.  483.112(a) that would clarify who would be 
required to receive Level I identification screening prior to NF 
admission. We would specify that all individuals who are applying to 
Medicaid-certified NFs as a new admission (as defined in proposed Sec.  
483.112(b)) must receive a Level I identification screen. We note that 
Level I identification screens performed prior to admission do not 
constitute Preadmission Screening, but rather are used to indicate who 
must receive Preadmission Screening. This means that all applicants, 
including those who are eligible for exemptions from Preadmission 
Screening, would be required to receive a Level I identification 
screen. The rationale for this proposed policy is discussed further in 
the discussion of proposed Sec.  483.112(b) in this proposed rule.
    We propose a new Sec.  483.112(b), which is largely a redesignation 
of the current Sec.  483.106(b). As noted in our discussion in Sec.  
483.106, this provision currently describes who is required to receive 
Preadmission Screening. We would add new language in this revised Sec.  
483.112(b) that clarifies that new admissions with positive Level I 
identification screens applying to become a new resident of a Medicaid-
certified NF would be required to receive Preadmission Screening prior 
to admission. (Proposals regarding the Level I identification process, 
including what may constitute a positive Level I screen, are discussed 
in the discussion of Sec.  483.126 of this proposed rule.) We also 
propose to add language at proposed Sec.  483.112(b) clarifying that 
Preadmission Screening (also referred to in this proposed rule as 
``Level II Preadmission Screening'') consists of a Level II evaluation 
and determination as described in Sec. Sec.  483.128 and 483.130. We 
believe this definition of Preadmission Screening accurately reflects 
the description of Preadmission Screening required by sections 
1919(b)(3)(F) and 1919(e)(7)(A) of the Act, which only specifically 
includes the evaluation and determination process.
    Proposed Sec.  483.112(b)(1) contains much of the current language 
from existing Sec.  483.106(b)(1) that defines ``new admission.'' We 
propose to retain the language that explains that ``new admissions'' 
are individuals applying for admission to a Medicaid-certified NF for 
the first time and who do not qualify as ``readmissions'' or an 
``inter-facility transfer.'' (Readmissions and inter-facility transfers 
are discussed further in the discussions for Sec.  483.112(b)(4) and 
(b)(5), respectively in this proposed rule.) We also propose to add 
language at proposed Sec.  483.112(b)(1) that clarifies that, with the 
exception of certain hospital discharges or provisional admissions 
(explained in the next paragraph), new admissions would be subject to 
Preadmission Screening (meaning they must receive, if they have 
possible MI or ID, a Level II evaluation and determination prior to 
admission).
    At proposed Sec.  483.112(b)(2), we would preserve much of the 
language from current Sec.  483.106(b)(2) that defines exempted 
hospital discharge. Current Sec.  483.106(b)(2)(i) mirrors the language 
in section 1919(e)(7)(A)(iii) of the Act, which provides that 
Preadmission Screening ``shall not apply'' to an individual: (1) Who is 
admitted to the NF directly from a hospital after receiving acute 
inpatient care at the hospital; (2) who requires nursing facility 
services for the condition for which the individual received care in 
the hospital; and (3) whose attending physician has certified, before 
admission to the NF, that the individual is likely to require less than 
30 days of nursing facility services. Current Sec.  483.106(b)(2)(ii) 
adds that if an individual who was admitted to a NF under an exempted 
hospital discharge ends up staying in the NF for more than 30 days, the 
SMHA or SIDA must conduct a Resident Review by the 40th day of the 
individual's admission.
    We believe the current regulations do not provide adequate 
oversight for the exempted hospital discharge because they have left 
unclear whether the PASRR program may have any contact with individuals 
who qualify for the exempted hospital discharge prior to the NF 
admission (such as by performing a Level I identification screen on the 
individual or verifying that the person meets the criteria for exempted 
hospital discharge). We have received anecdotal

[[Page 10000]]

feedback from stakeholders that many states' PASRR programs do not feel 
they have the authority, under current regulations, to conduct proper 
oversight of the application of hospital discharge exemptions. The lack 
of oversight of hospital discharge exemptions may result in improper 
use of the exemption, such as identifying individuals as qualifying for 
the exemption even though they do not have written documentation from a 
physician as required by law. Another issue that may arise with 
hospital discharge exemptions is that individuals with possible MI or 
ID may initially meet the criteria for an exempted hospital discharge 
but then stay in the NF longer than 30 days, and not receive a timely 
referral for Resident Review; it is difficult for PASRR programs to 
ensure that such Resident Review referrals are being made when the 
PASRR program has no prior knowledge of the individuals admitted under 
this exemption.
    To address these potential issues, we propose to add language at 
Sec.  483.112(b)(2) to clarify that exempted hospital discharges are 
considered new admissions, which means that while they are exempted 
from Preadmission Screening (Level II evaluation and determination), 
they are not exempted from Level I identification screening. Performing 
Level I identification screens on people who qualify for the hospital 
discharge exemption would serve two purposes. One is to serve as notice 
to PASRR programs that individuals with MI or ID (as identified via a 
positive Level I screen) are being admitted to a NF under a hospital 
discharge exemption and may need a Resident Review if their stays 
exceed 30 days. The second is to have the Level I identification screen 
function as a means of verifying that the conditions of the hospital 
discharge exemption are met, including that a physician has certified 
the expected length of the stay. This proposed clarification would 
assist us in providing greater oversight of the use of hospital 
discharge exemptions to avoid misapplication or misuse of this 
exemption, and would provide PASRR programs with an improved ability to 
track individuals with MI or ID who have been admitted to NFs.
    We propose to redesignate Sec.  483.106(b)(2)(i) as Sec.  
483.112(b)(2)(i). The language in this provision describes the 
conditions for exempted hospital discharge per section 
1919(e)(7)(A)(iii) of the Act. Additionally, we propose in Sec.  
483.112(b)(2)(ii) to retain the provision in current Sec.  
483.106(b)(2)(ii) which states that, if an individual ends up staying 
in a NF longer than 30 days, the state's PASRR program would be 
required to conduct a Resident Review (consisting of a Level II 
evaluation and determination) within 40 calendar days of admission. 
However, we propose to add language in proposed Sec.  483.112(b)(2)(ii) 
specifying that only individuals who have possible MI or ID (as 
identified by the Level I identification screen) would have to receive 
a Resident Review by the 40th day of admission. We also propose to 
change the word ``conduct'' to ``complete,'' to make it clear that the 
Level II evaluation and determination would have to be completed by the 
40th day (rather than merely initiated) after the person's admission 
date. We believe this proposed Resident Review requirement would 
provide a critical protection to ensure that individuals with MI or ID 
who intended to stay in a NF for only a short time do not become long-
term residents without being reviewed by the PASRR program to confirm 
that the individual needs NF level of services and to determine whether 
the individual needs specialized services.
    We propose to add a new provision at Sec.  483.112(b)(3) that 
describes a second exemption to Preadmission Screening, called a 
``provisional admission.'' Section 1919(b)(3)(F) of the Act specifies 
that those applying as ``new residents'' are subject to Preadmission 
Screening. We would define a provisional admission as a new admission 
in which the individual is only admitted to a NF for short, time-
limited stays, and thus is not considered a ``new resident'' for PASRR 
purposes. These individuals would be subject to a Level I 
identification screen but, even if the individuals receive positive 
screens, would not be required to receive Level II evaluation and 
determination prior to admission. Provisional admissions, like hospital 
discharge exemptions, would be time-limited NF stays that are 
admissions for:
     Emergency stays due to emergency evacuations or protective 
services placements, with placement in the NF not to exceed 14 days;
     Individuals with delirium where the delirium prevents an 
accurate diagnosis at the time of entry into the NF, but is expected to 
clear within 14 days;
     Respite stays of up to 30 consecutive days to provide 
respite to in-home caregivers; or
     Convalescent stays of up to 30 days in which an applicant 
requires a stay in the NF to recover from an acute physical illness 
that required hospitalization; and does not meet all the criteria for 
an exempted hospital discharge (described previously in this proposed 
rule in the discussion of Sec.  483.112(b)(2)). Convalescent stays, for 
example, may be required for individuals who do not qualify for 
hospital discharge exemptions because they are being discharged to a NF 
from a rehabilitative hospital, rather than an acute care hospital as 
specified by section 1919(e)(7)(A)(iii) of the Act.
    While this would be a new requirement, it is one designed to reduce 
burden. We propose such provisional admissions in lieu of the 
categorical determinations, examples of which are set out at current 
Sec.  483.130(d). Categorical determinations are part of the current 
regulations and are designed to expedite admissions for individuals 
with positive Level I screens whose conditions are such that the SMHA 
or SIDA can determine, without a comprehensive evaluation, that the 
individual either needs NF level of services or does not need 
specialized services, or both. As authorized by the current 
regulations, categorical determinations frequently result in ``desk 
reviews,'' which are quick reviews of the individual's medical 
paperwork (often without the individual's direct involvement).
    We believe the proposed regulations at Sec.  483.112(b)(3) would 
reduce PASRR programs' burden by eliminating the need to collect and 
review paperwork for individuals with positive Level I identification 
screens who are going to be in the NF for such a short period of time 
that the individual is not likely to become a long-term resident and 
would not have time to benefit from specialized services. The 
application of this exception would be voluntary for state PASRR 
programs; this provision would not preclude states, if they so choose, 
from performing Preadmission Screening or providing specialized 
services, as appropriate, to individuals with positive Level I 
identification screens who fall under these categories if the state 
identifies that the individual would benefit from such interventions.
    We also propose to provide a schedule at proposed Sec.  
483.112(b)(3)(ii) for when a Resident Review would need to be completed 
by the SMHA or SIDA for an individual with possible MI or ID (as 
indicated by the Level I identification screen) who was admitted under 
provisional admission. We propose a similar timeframe to the Resident 
Review policy on expired hospital discharge exemptions described in 
proposed Sec.  483.112(b)(2)(ii), which contemplates 9 calendar days 
for the Resident Review. We propose that a Resident Review would have 
to be completed by the 24th

[[Page 10001]]

calendar day after admission for emergency admissions and delirium, and 
the 40th calendar day after admission for respite stays and 
convalescent care stays. This ensures that individuals who are admitted 
under provisional admissions do not become long-term residents without 
an appropriate review for NF level of services and specialized 
services.
    In summary, we are proposing parallel processes for hospital 
discharge exemptions and provisional admissions. We propose that 
individuals in both categories would receive Level I identification 
screening prior to admission to identify individuals who have possible 
MI or ID (as described in the discussion for Sec.  483.126) and to 
confirm that the individual qualifies for a Preadmission Screening 
exemption, the individual's MI or ID notwithstanding. These exemptions 
come with an expiration date--30 days for exempted hospital discharge 
and provisional admission for respite or convalescent stays, 14 days 
for provisional admissions for emergencies and delirium. We propose 
that when individuals who have been admitted under an hospital 
discharge exemption or as a provisional admission remain in the NF past 
the allotted exemption period, the NF must notify the PASRR program 
promptly so that the SMHA or SIDA can perform a Resident Review and 
make a Level II determination within an average of 9 calendar days of 
when the individual's exemption period expired.
    We propose at Sec.  483.112(b)(4) to relocate and revise the 
language from current Sec.  483.106(b)(3) that defines 
``readmissions''. Readmissions, as set forth in section 
1919(e)(7)(A)(ii) of the Act do not need to receive Preadmission 
Screening. We propose to remove the sentence that explains that 
readmissions are exempt from Preadmission Screening, but are subject to 
``annual'' Resident Review, because annual Resident Review is no longer 
a requirement. In its place, we propose to add a specification that 
readmissions of individuals who received a Level I identification 
screen and Level II evaluation and determination (if needed) upon 
initial admission do not need to have these processes repeated upon 
readmission. We propose to retain the language from current Sec.  
483.106(b)(3) that readmissions are still subject to Resident Review, 
although we propose to remove the language that says that this Resident 
Review must be performed annually and would clarify that the Resident 
Review would need to be performed in accordance with Sec.  483.114.
    At proposed Sec.  483.112(b)(5), we propose to retain the 
definition of ``inter-facility transfer'' from current Sec.  
483.106(b)(4), which is that an individual is being transferred from 
one NF to another, with or without an intervening hospital stay. We 
propose to add language specifying that inter-facility transfers are 
treated similarly to readmissions, in that Level I identification 
screening and, for individuals with MI or ID, Level II evaluations and 
determinations (conducted as Preadmission Screening and any subsequent 
Resident Reviews), Level I identification and Level II Preadmission 
Screening typically do not need to be repeated during the transfer. We 
propose to add language at Sec.  483.112(b)(5)(ii) that would specify 
that a receiving NF would have to ensure that the individual has 
paperwork demonstrating that the individual has previously received a 
Level I identification screen and, if necessary, Level II determination 
(or multiple Level II determinations). Absent this documentation or if 
this documentation does not reflect the individual's current physical 
or mental condition, we would specify that the individual must be 
treated as a new admission (meaning the individual would need to 
receive a new Level I identification screen and, if necessary, Level II 
evaluation and determination prior to admission.) We also propose a new 
requirement at Sec.  483.112(c)(5)(iii) indicating that a new Level II 
Preadmission Screening would be required for an individual whose inter-
facility transfer involved an intervening stay in an inpatient facility 
in which the individual received inpatient psychiatric treatment or 
active treatment (as defined in Sec.  483.440(a)).
    We propose changes to the provisions at Sec.  483.112(c)(1) 
describing the timeliness of the Level II Preadmission Screening. The 
current regulation indicates that Level II determinations must be made 
in writing within an annual average of 7-9 working days from the day 
the Level I referral was made. We believe setting a standard that is 
both an average and a range presents an unnecessarily confusing 
benchmark for PASRR programs. While 9 working days is clearly the upper 
limit of how long most determinations should take, states are not 
required to complete determinations in a minimum of 7 days. We propose 
to revise the existing completion rate of an annual average of 7 to 9 
working days to within an annual average of 9 calendar days from date 
of receipt of the Level I referral. We propose to change ``working 
days'' to ``calendar days'' because calendar days, unlike ``working 
days'' are unambiguous. We also note that in the requirement for 
completing Level II determinations for expired hospital discharge 
exemptions (discussed in this section above in relation to proposed 
Sec.  483.112(b)(2)), the need for the Level II determination would 
begin on the 31st day after admission, and the Level II would need to 
be completed by the 40th day of admission--in other words, within 9 
calendar days. Thus, we propose that all Level II determinations be 
made within, on average, 9 calendar days of the Level I referral in 
order to streamline timeframes.
    We also propose to add at Sec.  483.112(c) that Level II 
Preadmission Screening (consisting of a Level II evaluation and 
determination) would have to be completed prior to admission, and 
propose to clarify that the Level II determinations may be made 
electronically or in writing. We believe many PASRR programs already 
deliver determinations electronically, and propose to formally 
memorialize this practice in regulation. Relatedly, we propose to 
remove Sec.  483.112(c)(2) allowing the PASRR program to make Level II 
determinations verbally and confirming in writing. The presumed purpose 
of this requirement was to help expedite admissions to NFs at a time 
when email and other forms of electronic communication were not widely 
available. Electronic communication at this point can be almost as 
instantaneous as phone calls (if not more so) and, unlike verbal 
communications, create an instant verifiable record of the 
determination.
    We propose to relocate Sec.  483.112(c)(3) and (c)(4), which 
pertain to requirements for gathering data on the annual average 
timeliness and the ability to request waiver of this requirement to a 
new provision at proposed Sec.  483.130(j). We discuss these 
requirements at greater length in the discussion of Sec.  483.130 of 
this proposed rule.
    We propose a new provision at Sec.  483.112(d) that contains the 
expectations for Preadmission Screening determinations set forth in 
section 1919(b)(3)(F) of the Act. The Act indicates that NF applicants 
referred to the PASRR program for Level II determinations must first 
receive a determination for NF level of services and, if found to 
require NF level of services, a determination for specialized services.
9. Review of NF Residents (Sec.  483.114)
    The title of Sec.  483.114 is currently ``Annual Review of NF 
Residents.'' As

[[Page 10002]]

has been discussed elsewhere, Resident Review is no longer required 
annually so we propose to retitle this section ``Review of NF 
Residents.'' All regulations in this section currently presume the 
Annual Resident Review requirement. As such, we propose to remove them 
and replace them (at Sec.  483.114(e)) with language on how states' 
PASRR programs may implement section 1919(e)(7)(B)(iii) of the Act, 
which requires that Resident Review be performed when there has been a 
``significant change in the resident's physical or mental condition.''
    We propose a new requirement at Sec.  483.114(a) specifying the 
circumstances under which a referral for a Resident Review would be 
required. We propose at Sec.  483.114(a) to specify that a referral for 
Resident Review would be required when a resident with known MI or ID 
(as confirmed by a previous Level II evaluation and determination) 
experiences a possible significant change in physical or mental 
condition, as defined in Sec.  483.20(b)(2)(ii). The definition of 
``significant change'' in Sec.  483.20(b)(2)(ii) is a ``major decline 
or improvement in the resident's status'' that (1) will not normally 
resolve itself without further intervention by staff or by implementing 
standard disease-related clinical interventions, (2) has an impact on 
more than one area of the resident's health status, and (3) requires 
interdisciplinary review or revision of the individual's care plan (or 
both). In the absence of a specific definition of ``significant 
change'' in part 483, subpart C, NFs have already been using the 
definition of ``significant change'' provided in Sec.  483.20(b)(2)(ii) 
when identifying the need for referral for Resident Review, and we 
propose to formally adopt this definition in subpart C.
    We propose at Sec.  483.114(a)(2) that an individual with possible 
MI or ID who was exempted from receiving Preadmission Screening 
(because the individual qualified as an exempted hospital discharge or 
a provisional admission) would be required to be referred for a 
Resident Review upon the expiration of the exemption's time limit as 
described in proposed Sec.  483.112(b).
    We propose at Sec.  483.114(a)(3) that a Resident Review referral 
would be required when the NF identifies, through any means not 
otherwise described in this section, that a resident has a possible MI 
or ID that was not previously identified by a Level I identification 
screen. We propose at Sec.  483.114(a)(4) to specify that states would 
be able to establish criteria, in addition to the criteria listed 
above, for when a Resident Review is required.
    We propose at Sec.  483.114(b) to provide a definition of Resident 
Review, which we propose would consist of a Level II evaluation and 
determination (and is sometimes referred to in the proposed regulations 
as the Level II Resident Review). This proposed regulation would 
reflect the description of Resident Review in section 1919(e)(7)(B) of 
the Act, which describes Resident Review as a determination based on an 
evaluation. Criteria for Level II evaluation and determination are 
discussed in greater detail in the discussions of sections Sec. Sec.  
483.128 and 483.130, respectively. We propose new language at Sec.  
483.114(b)(1) to specify that the purpose of a Resident Review would be 
to provide first-time Level II evaluation and determination for 
residents with possible MI or ID who had not previously received Level 
II evaluation and determination. We propose new language at Sec.  
483.114(b)(2) to provide that a Resident Review would provide a new 
Level II evaluation and determination for residents who have previously 
been confirmed by Level II determination to have MI and ID, but are 
experiencing a significant change in physical or mental condition such 
that the PASRR program will need to revise the findings of the previous 
Level II determination.
    We propose at Sec.  483.114(c) requirements for when the NF would 
refer residents to the PASRR program for Resident Review. We propose at 
Sec.  483.114(c)(1) that referrals would have to be made within 72 
hours of when the resident experiences one of the circumstances 
described in proposed Sec.  483.114(a)(1) and (a)(3), including an 
apparent significant change in an individual's mental or physical 
condition, or evidence of a previously-unidentified MI or ID. We 
propose a 72-hour timeframe for Resident Review referral because 
section 1919(e)(7)(B)(iii) of the Act requires NFs to make Resident 
Review referrals ``promptly'' when a ``significant change' occurs. 
Additionally, we propose at Sec.  483.114(c)(2) that NFs must make a 
referral for Resident Review within 24 hours of when the NF identified, 
or should have identified, the expiration of an exemption period for 
exempted hospital discharges or provisional admissions. These 
conditions are described in greater detail in the discussion of 
proposed Sec.  483.112(b).
    In an effort to create consistency in PASRR processes where 
possible, we are proposing at Sec.  483.114(d) to align the timeframe 
for completing a Level II determination made as part of Resident Review 
with the timeframe proposed at Sec.  483.112(c) for Level II 
determinations made as part of Preadmission Screening--that is, within 
an annual average of 9 calendar days from date of receipt of referral. 
The rationale for that timeframe is discussed in the discussion of 
proposed Sec.  483.112(c).
    We are proposing a new requirement at Sec.  483.114(e) that 
reflects the language from sections 1919(e)(7)(B)(i) and (ii) of the 
Act that describes, generally, the expectations for Resident Review 
determinations. These sections of the statute specify that NF residents 
referred to the PASRR program for determination must receive a 
determination for NF level of services (or the need for the level of 
services provided by an inpatient psychiatric hospital for individuals 
under age 21, an institution providing medical assistance for 
individuals over age 65, or an ICF/IID), and a determination for 
specialized services.
10. Residents and Applicants Determined To Require NF Level of Services 
(Sec.  483.116)
    Section 483.116 describes the admission and retention requirements 
for individuals found to need NF level of services and specialized 
services. We are proposing only one technical change to this section. 
We propose to remove the phrase ``for the mental illness or 
intellectual disability'' from Sec.  483.116(b). The definition of 
``specialized services'' at Sec.  483.120 makes it clear that 
specialized services are inherently services that support an 
individual's MI or ID. To avoid the impression that there are different 
types of ``specialized services'' and for consistency throughout the 
revised regulation, we propose to replace the phrase ``specialized 
services for mental illness and intellectual disability'' with 
``specialized services'' in this regulation.
11. Residents and Applicants Determined Not To Require NF Level of 
Services (Sec.  483.118)
    Section 483.118 describes the discharge and retention options for 
NF applicants and residents who have been determined by the PASRR 
program to not need NF level of services. These outcomes are carefully 
described in sections 1919(e)(7)(C) of the Act, and we do not propose 
to make significant changes to the regulations in Sec.  483.118 that 
reiterate these requirements.
    We propose to make minor changes in Sec. Sec.  483.118(b) and (c) 
to promote consistency in how the regulations refer to ``specialized 
services.'' For the reasons explained in the discussion of Sec.  
483.116, we propose to remove the phrase ``specialized services for MI 
or IID'' where it appears in Sec. Sec.  483.118(b)

[[Page 10003]]

and (c), as well as the phrase ``specialized services for the mental 
illness or intellectual disability'' in Sec. Sec.  483.118(c)(1)(iv) 
and (c)(2)(iii), and replace them with ``specialized services.''
    We propose to remove language in Sec.  483.118(c)(1) and (2) that 
references alternative disposition plans. Alternative disposition plans 
were allowances under section 1919(e)(7)(E) of the Act for states to 
delay discharging residents from NFs pending development of resources 
in alternative settings. As noted in section 1919(e)(7)(E) of the Act, 
this allowance expired April 1, 1994, therefore it is no longer 
necessary to include in the regulations.
12. Specialized Services and NF Services (Sec.  483.120)
    The current Sec.  483.120 contains provisions describing 
specialized services, which are a central component of PASRR. We 
propose to revise the definition of ``specialized services'' and to add 
clarity as to how the provision of specialized services relates to, and 
is different from, the provision of NF services. We propose retitling 
Sec.  483.120 to ``Specialized Services and NF Services'' to reflect 
this expanded focus on both specialized services and NF services.
    Section 1919(e)(7)(G)(iii) of the Act gives the Secretary broad 
authority to define ``specialized services'' in regulations, so long as 
the definition specifies that they do not include services within the 
scope of services which the NF must provide or arrange for its 
residents under section 1919(b)(4) of the Act. (Section 1919(b)(4) of 
the Act contains a list of services that NFs must provide and are 
typically included in their per diem reimbursement rate.)
    The current Sec.  483.120(a) provides a definition of ``specialized 
services'', which distinguishes between specialized services for people 
with MI and for people with ID. In the current definition of 
``specialized services'' for people with MI (at current Sec.  
483.120(a)(1)), the focus of the services is split between improving 
the resident's ``level of independent functioning'' and addressing the 
needs of residents ``experiencing an acute episode of serious mental 
illness.'' ``Specialized services'' for people with ID are defined at 
current Sec.  483.120(a)(2) as equivalent to active treatment offered 
in ICF/IIDs, which is defined at Sec.  483.440(a)(1). We have found 
that these requirements inadvertently perpetuate an image of 
specialized services as being restricted to institutional-type 
services. We propose a broader understanding of specialized services, 
beyond those furnished in institutional settings such as inpatient 
psychiatric facilities or ICF/IIDs.
    We propose a new definition at Sec.  483.120(a) that would define 
specialized services as state-defined services for NF residents with MI 
or ID, which, we propose, would have to be:
     Developed by an interdisciplinary team, that would 
include, at minimum, a physician and a mental health professional (for 
people with MI) or intellectual disability or developmental disability 
professional (for people with ID or related conditions);
     Designed to address needs related to MI or ID;
     Of greater intensity, frequency or customization than the 
NF services for MI or ID required in part 483, subpart B;
     Designed in a person-centered manner that promotes self-
determination and independence,
     Designed to prevent or delay loss of, or support increase 
in, functional abilities; and
     If the individual is admitted to or remains in an 
institutional setting, designed to support any goals the individual may 
have of transition to the most integrated setting appropriate.
    This proposed definition would depart from the current definition 
of ``specialized services'' in Sec.  483.120(a) in several key ways. 
The proposed definition would not provide a distinct definition for 
``specialized services'' for people with MI and a separate distinct 
definition for people with ID. This is, in part, because we want to 
provide a more flexible definition, and we believe a combined 
definition would pose fewer logistical challenges when designing 
service plans for people with co-occurring diagnoses of MI and ID. This 
also means, should our proposal be finalized as proposed, that for 
people with MI, specialized services would emphasize developing long-
term skills needed for independence as opposed to focusing narrowly on 
managing discrete periods of crisis. Likewise, for people with ID, 
specialized services would have an even greater emphasis on developing 
skills needed to transition to the community than what may currently be 
captured in the active treatment requirement at Sec.  483.440(a)(1).
    Many states have done a commendable job of looking beyond the 
institutional bias of the current definition of ``specialized 
services'' and developing robust and creative systems of specialized 
services, and we propose to update this definition in ways that would 
solidify the commitment to using specialized services as a tool for 
assisting individuals' transition to the community. We emphasize, 
however, that we do not believe specialized services are only to be 
delivered to people with a specific goal of transitioning from the NF 
into the community. Rather, specialized services should be designed to 
maintain individuals in the most integrated setting appropriate--
whether that is to help maintain them in a NF (versus a more 
restrictive institutional setting such as a locked psychiatric unit) or 
whether that is to assist the individual's move into a home- or 
community-based setting. The purpose of PASRR ultimately is to allow 
people to live in the optimal setting for that individual, as reflected 
by the individual's needs and preferences. Because they are critical to 
the operation and success of PASRR, we solicit comments on the proposed 
definition of specialized services.
    We propose to remove the current Sec.  483.120(b), which describes 
who must receive specialized services. Currently, Sec.  483.120(b) 
requires that the state provide or arrange for the provision of 
specialized services, to all NF residents with MI or ID who require 
``continuous supervision, treatment and training'' by qualified mental 
health or intellectual disability personnel. We propose to replace the 
language ``continuous supervision, treatment and training'' with new 
language that indicates that states would provide specialized services 
to individuals needing specialized services, as identified through the 
Level evaluation and determination process (discussed in sections 
Sec. Sec.  483.128 and 483.130.) This proposal would remove language 
that ambiguously suggests that these services would be restricted only 
to those individuals requiring ``continuous supervision, treatment or 
training''--language reminiscent of the definition of ``active 
treatment'' in Sec.  483.440(a)--and would clarify the connection the 
Level II evaluation and determination process and the provision of 
specialized services.
    We also propose to remove language in Sec.  483.120(b) suggesting 
that only ``mental health and intellectual disability professionals'' 
may provide specialized services. We propose to replace this with new 
language in Sec.  483.120(b) that the state must ensure that the 
services are provided by qualified personnel. We propose to give states 
more flexibility in deciding the qualifications of who may deliver the 
specialized services and potentially to allow services to be delivered 
by qualified professionals who would not necessarily be considered 
``mental

[[Page 10004]]

health or intellectual disability personnel.''
    We also propose in revised Sec.  483.120(b) to require that 
specialized services be periodically reviewed to ensure they remain 
effective for the individual. We include this proposal out of concern 
that once specialized services are recommended, it is not always clear 
if they are monitored for quality, safety, and efficacy. We want to 
ensure that states take measures to ensure that specialized services 
are not only being delivered to individuals as required, but that they 
are delivered efficiently and effectively. We do not propose a specific 
frequency with which specialized services must be reviewed, but welcome 
stakeholder comments on this proposal.
    We propose to change the current title of Sec.  483.120(c) from 
``Services of a lesser intensity than specialized services'' to 
``Provision of NF services'' as this provision describes services 
offered by NFs as part of their per diem and ``specialized services'' 
does not need to be included in the title.
    We propose to add a new requirement at Sec.  483.120(d) that would 
specify that specialized services may not duplicate the services NFs 
must provide under part 483, subpart B, which describes the activities 
NFs must perform to meet the requirements (also known as ``conditions 
of participation'') as a Medicaid provider, and for which they are 
already reimbursed by states participating in the Medicaid program. 
These are services that are largely medical or rehabilitative in nature 
and, while intended to improve or maintain an individual's health and 
well-being, may not explicitly prioritize helping individuals 
transition to the most integrated setting. This proposed requirement 
would reaffirm the statutory prohibition of specialized services 
duplicating NF services set forth in section 1919(e)(7)(G)(iii) of the 
Act.
    We propose a new requirement at Sec.  483.120(e) that would specify 
that, for individuals who are admitted to or retained by a NF, NF 
services and specialized services recommended by the PASRR program 
would have to be coordinated with the individual's care plan, as 
required at Sec.  483.21(b)(1)(iii).
    We propose a new Sec.  483.120(f) to explain that, if an individual 
requiring specialized services is discharged to another institutional 
setting or to a community program for the purposes of receiving long-
term services and supports, services offered in those settings would be 
presumed to satisfy the specialized services requirement. This proposed 
requirement would seek to clarify the requirement in sections 
1919(e)(7)(C)(i) and (ii) of the Act that the state must continue to 
provide specialized services for residents who need specialized 
services but who have been discharged from a NF because they do not 
need the NF level of services.
13. FFP for NF Services (Sec.  483.122)
    FFP for NF services, including when FFP may be provided to NF 
residents or withheld for non-compliance with PASRR requirements, is 
described in Sec.  483.122. We propose at Sec.  483.122(a) to remove 
the reference to alternative disposition plans provided for by section 
1919(e)(7)(E) of the Act, since, as we explained in the discussion of 
Sec. Sec.  483.118(c)(1) and (2) in this proposed rule, the 
availability of alternative disposition was a statutory construct that 
expired in 1994; consequently the language in this section, as in the 
other sections, is obsolete and can be removed.
    We also propose to change ``NF care'' to ``NF level of services'' 
in Sec.  483.122(a)(1), and we propose to change ``NF services'' to 
``NF level of services'' in Sec.  483.122(a)(2) to promote consistency 
in references to the determination for NF level of services.
    In Sec.  483.122(b), we propose to remove the obsolete mention of 
an ``annual review'' (referring to the annual Resident Review) and 
replace it with ``resident review.''
14. FFP for Specialized Services (Sec.  483.124)
    Section 483.124 currently indicates that FFP is not available for 
specialized services delivered as NF services. This language has long 
caused confusion; until recently it has been misinterpreted as a 
prohibition against FFP for any specialized services. However, section 
1919(e)(7)(G)(iii) of the Act does not prescribe such a restriction on 
specialized services; it only specifies that specialized services 
cannot be NF services. We propose to remove the current language in 
Sec.  483.124 and replace it with new language that would more clearly 
describe the conditions under which FFP is available for specialized 
services. We propose language that states that FFP would be available 
for specialized services furnished to NF residents so long as the state 
has added a description of the services in its State plan (which is 
approved by CMS) and these services do not duplicate NF services 
included in payments to the NF. This language would not create a new 
policy regarding FFP for specialized services, but rather affirms 
existing policy.
15. Level I Identification Criteria (Sec.  483.126)
    The current Sec.  483.126, titled ``Appropriate placement,'' 
contains a single provision defining what ``appropriate placement'' in 
a NF means. This phrase relates to NF level of services determinations 
and is addressed in Sec. Sec.  483.130(c) and 483.132. We propose to 
remove both the title and the requirement in Sec.  483.126.
    In its place, we propose to include requirements that describe the 
Level I identification process. Level I identification is the function 
of identifying people with possible MI or ID who are eligible for 
Preadmission Screening or Resident Review. Despite being a critical 
precursor to the PASRR process, the Level I identification process is 
not described in current regulation, aside from a brief mention in 
current Sec.  483.128(a). We propose to retitle Sec.  483.126 ``Level I 
identification criteria,'' and to provide in this revised section a 
description for the Level I process.
    We propose a new provision at Sec.  483.126(a) that would explain 
that the state's PASRR program must have a Level I screening process to 
identify all individuals with possible MI or ID who require 
Preadmission Screening (if they are NF applicants) or Resident Review 
(if they are residents). Note that, as will be explained in the 
discussion of Sec.  483.126(b), people with known diagnoses of MI or ID 
are still considered to have ``possible MI or ID'' until the Level II 
evaluator has confirmed the individual meets the definition of MI or ID 
proposed in Sec.  483.102(b).
    We propose a new Sec.  483.126(b) that would provide guidelines on 
the criteria for identifying ``possible MI'' that would be used during 
the Level I process. We propose that an individual may be considered to 
have possible MI if one or more of the following criteria are met:
     The individual has received a diagnosis of MI that appears 
to meet the definition at Sec.  483.102(b)(1);
     Within the last 12 months the individual has experienced 
significant challenges to interpersonal or cognitive functioning, 
including but not limited to hallucinations or delusions, attempts to 
harm self or others, or suicidal ideation;
     Within the last 12 months the individual has required 
psychiatric treatment, including residential treatment, partial 
hospitalization, or inpatient hospitalization; or
     The Level I identification screener cannot rule out 
possible MI based on the available data.
    We propose a new requirement at Sec.  483.126(c) that would specify 
that an

[[Page 10005]]

applicant may be considered to have ``possible ID'' if:
     The individual has received a diagnosis of ID or a related 
condition that appears to meet the definition of ID in Sec.  
483.102(b)(3),
     Within the past 12 months the individual has received 
active treatment (as defined in Sec.  483.440(a)) in an ICF/IID; or
     The Level I identification screener cannot rule out 
possible ID or related condition based on the available data.
    We note that for both proposed definitions, an individual would not 
need to meet all of the listed criteria, but rather would have to meet 
at least one. We also propose to give Level I screeners flexibility to 
exercise judgment, particularly in instances in which the individual 
has gaps in medical history or is exhibiting behaviors not listed in 
this proposed regulations that the Level I screener regards as needing 
further examination. For instance, a Level I screener might have reason 
to believe that someone with a diagnosed substance use disorder, but no 
formal diagnosis of MI might nevertheless require evaluation for MI, 
given the high incidence of overlap between substance use disorders and 
MI. We welcome comments on our proposed criteria.
    We propose at Sec.  483.126(d) to specify that the state would be 
able to designate the qualifications for who may complete the Level I 
screen. While NFs are prohibited from performing the Level II 
evaluations and determinations by sections 1919(b)(3)(F) and 
(e)(7)(B)(iv) of the Act, NFs are not excluded from performing Level I 
screens because they are distinct from the evaluation and determination 
process.
    We propose at Sec.  483.126(e) to clarify that individuals 
performing the Level I identification screen would be able to rely on 
existing records, including hospital records, physician's evaluations, 
election of hospice status, school records, records of community mental 
health centers or community intellectual disability or developmental 
disability providers, and other information provided by the individual 
or the individual's legally authorized representative. We also propose 
in this provision that the Level I screener would have to certify that 
the records relied upon support the screener's conclusions regarding 
whether the individual has possible MI or ID and if the individual 
qualifies for a hospital discharge exemption or as a provisional 
admission.
    We propose a new Sec.  483.126(f) which would require that 
individuals with possible MI or ID be referred to the PASRR program for 
Level II evaluation and determination, unless the individuals are 
applicants who qualify for an exemption to Preadmission Screening due 
to a hospital discharge exemption or provisional admission, as 
discussed in the proposed changes to Sec.  483.112(b) in this proposed 
rule. These individuals would have to be identified to the PASRR 
program but would not need to receive a Level II evaluation and 
determination prior to admission. Notifying the PASRR program when 
someone with a positive Level I identification screen has been admitted 
to the NF under a hospital discharge exemption or provisional admission 
would allow the PASRR program to track how often these exceptions were 
applied (to discourage misuse or overuse) and would alert the PASRR 
program to individuals who might need a Resident Review in the near 
future should the exception period expire (to offer better oversight of 
when NFs' Resident Review referrals).
    We propose to move the fourth sentence of current Sec.  483.128(a) 
to this section and redesignate it as Sec.  483.126(g). This sentence 
currently states that as part of the Level I identification function, 
an individual must be provided (at least in the case of first time 
identifications), with written notice that the individual is 
``suspected of having'' MI or ID and is being referred to the SMHA or 
SIDA for Level II evaluation and determination. We propose to retain 
some of this language in this section as well, but to modify it so that 
it would provide that the state's performance of the Level I 
identification function would have to provide a copy of the completed 
Level I identification screen (rather than a ``written notice'') to the 
individual, the individual's legal representative and the admitting or 
retaining NF (if applicable.) We also propose that the Level I 
identification screen would clearly indicate whether the individual is 
being referred to the PASRR program for Level II evaluation and 
determination. We believe it is important for individuals to have 
documentation demonstrating that they have had a Level I identification 
screen completed in compliance with this subpart. We also believe it is 
important that individuals be notified whether they are being referred 
for additional evaluation as part of the Level II evaluation and 
determination process. When an applicant has a positive Level I screen, 
providing a copy of the Level I screen would alert the NF that the 
individual could not be admitted until Preadmission Screening 
(consisting of a Level II evaluation and determination) is completed. 
In cases in which the individual has a negative Level I screen, the NF 
would be provided documentation that proves admission was appropriate 
and Level II Preadmission Screening was not required.
16. Level II Evaluation Criteria (Sec.  483.128)
    Section 483.128 describes the criteria that must be used to perform 
the physical and mental evaluations on which the Level II 
determinations must be made. We propose to retitle Sec.  483.128 
``Level II Evaluation Criteria,'' which would acknowledge that 
evaluations are typically referred to as ``Level II evaluations'' and 
further distinguish evaluations from the Level I identification process 
described in the previous section.
    We propose to remove the first three sentences of Sec.  483.128(a), 
which contain definitions of the terms ``Level I'' and ``Level II'' 
that are contained elsewhere (including proposed Sec. Sec.  483.126, 
483.128 and 483.130). We propose to redesignate the fourth sentence of 
Sec.  483.128(a) as Sec.  483.126(g), which is discussed in the 
discussion of Sec.  483.126(g). We propose that the requirements of 
Sec.  483.128(b) be redesignated as Sec.  483.106(g), which is 
discussed in the discussion of Sec.  483.106 in this proposed rule.
    We propose new language for Sec.  483.128(a) that would more 
clearly articulate the purpose of the evaluation, which is to provide 
the SMHA or SIDA with enough information to confirm that the individual 
has MI or ID, as defined in proposed Sec.  483.102, or to confirm that 
the individual has experienced a qualifying significant change in 
physical or mental condition, as defined in Sec.  483.114(b)(2); and to 
make the determinations regarding need for a NF level of services and 
specialized services.
    We propose a new requirement at Sec.  483.128(b) that would 
authorize the state to specify the mental health, intellectual 
disability or developmental disability professionals who may perform 
the evaluations. We specify in the proposed requirement that the state 
would have to ensure that the evaluators are qualified to make or 
confirm clinical diagnoses, and that the evaluations are performed in 
accordance with statutory restrictions. Specifically, evaluations for 
people with MI cannot be performed by the SMHA, and NFs cannot perform 
evaluations. The language of this proposed requirement is adapted from 
the current requirements for who may conduct evaluations at Sec. Sec.  
483.134(c)(2) and 483.136(c).

[[Page 10006]]

    We propose to remove current Sec.  483.128(c) as its substance 
would be incorporated into a new proposed requirement at Sec.  
483.128(e)(10), described later in this proposed rule.
    We propose to redesignate current Sec.  483.128(d), addressing 
interdisciplinary coordination of evaluations where more than one 
evaluator is needed, as Sec.  483.128(c). We propose to add language to 
specify that this coordination would, in particular, apply to 
individuals who have (or may have) diagnoses of both MI and ID. We 
propose to include this specification because some PASRR programs have 
different processes for evaluations of people with MI and people with 
ID, and we do not want people with dual diagnoses to experience 
unnecessary burden or delays due to the different processes.
    We propose a new title for Sec.  483.128(d), ``Data to confirm 
Level II identification and significant change,'' and a new provision 
designated as Sec.  483.128(d)(1), that would provide a list of data to 
be used to confirm that the individual does have MI or ID, as defined 
in Sec.  483.102. This proposed list would include, at a minimum:
     A review of current medical and psychiatric condition and 
current medications;
     A medical history and physical exam that has been 
performed by a qualified clinician, as identified by the state;
     A history of medication and prescription and illegal drug 
use;
     For MI evaluations, an evaluation of psychiatric history 
performed by a qualified mental health professional;
     For ID evaluations, an evaluation of intellectual 
functioning performed by a licensed psychologist or psychiatrist; and
     Any other documentation or information provided to, or 
gathered by, the evaluator to confirm a diagnosis.
    We adapted this proposed revised regulation from the current list 
of data required in Sec. Sec.  483.134(b) and 483.136(b). We propose to 
specify that this data would have to be used to confirm MI or ID for 
people with positive Level I identification screens who are eligible 
for Preadmission Screening or Resident Review. We note one specific 
proposed change in proposed Sec.  483.128(d)(1)(ii). Currently, Sec.  
483.134(c)(1) requires that the history and physical examination of 
individuals with MI, when used during a Level II evaluation of the need 
for specialized services, be performed or reviewed by a physician. This 
same requirement currently does not exist for people with ID. We have 
received feedback from stakeholders that the requirement that a history 
and physical examination be performed or reviewed by a physician is 
burdensome, particularly in rural areas where there may be few 
physicians and such examinations are typically performed by a nurse 
practitioner or other qualified clinician. We propose to reduce this 
burden by allowing states to identify which clinicians are qualified to 
perform the history and physical examinations included as part of PASRR 
documentation for people with MI and with ID.
    We propose a new provision at Sec.  483.128(d)(2) to describe the 
data that we believe should be used in confirming a qualifying 
significant change in physical or mental status of a resident who was 
already confirmed by the PASRR program to have MI or ID. This data 
would include, at minimum, recent medical, psychiatric and medication 
records and resident assessments relevant to the significant change in 
physical or mental status; and other information deemed necessary by 
the evaluator. This proposed language would expand on the new 
regulations that we propose in Sec.  483.114 to implement the statutory 
requirement that Resident Review be performed for individuals 
experiencing a significant change in physical or mental status.
    We propose to remove Sec.  483.128(e), which currently requires 
that evaluators use the data listed in Sec. Sec.  483.132, 483.134, and 
483.136 when performing evaluations for NF level of services and 
specialized services. With the changes that we propose in this rule, 
those cross-references would no longer be accurate. Section 483.128(e) 
also mentions evaluations for categorical determinations, which--as is 
discussed further in the discussion of Sec.  483.128(m)--we propose to 
remove.
    We also propose to remove the current language in Sec.  483.128(f) 
describing data to be used in evaluations and propose to replace it 
with language that would more specifically describe the data that 
evaluators should use when performing evaluations for NF level of 
services and specialized services. Currently, Sec. Sec.  483.132, 
483.134, and 483.136 contain separate lists of the data that should be 
used to evaluate individuals' need for NF level of services and 
specialized services. We envision a more integrated evaluation process 
and propose to not require use of different sets of data for an 
individual's evaluation.
    To that end, we propose a new provision at Sec.  483.128(e) that 
would require that the data relied upon for evaluations to assess the 
need for NF level of services and specialized services include:
     Review of the relevant history of the physical status;
     Focused relevant physical examination (either as recorded 
in chart or conducted by the evaluator);
     Review of relevant psychiatric history including 
diagnoses, date of onset, treatment history;
     Focused relevant mental status examination, including 
observations and professional opinion regarding intellectual and memory 
functioning, impulse control, irritability and ability to be 
redirected, likelihood that individual may post threat to self or 
others, agreeableness to participate in activities of daily living 
(that is, how likely the patient is to resist activities such as 
bathing, eating, grooming, etc.);
     Functional assessment (activities of daily living and 
instrumental activities of daily living);
     Psychosocial evaluation (for example, living arrangements, 
natural and formal supports);
     Social, academic and vocational history;
     Service plans from community-based providers, if 
applicable; and
     Relevant sections of the individual's plan of care (as 
defined in Sec.  483.21(b)) if the individual is a NF resident.
    This proposed requirement is drawn from the data listed in the 
current requirements at Sec. Sec.  483.132, 483.134, and 483.136 for 
evaluating need for NF level of services and specialized services. We 
also propose to require at Sec.  483.128(e)(10) that these evaluations 
include person-centered interviews that involve the individual being 
evaluated and the individual's legal representative, if one has been 
designated under state law; and the individual's family, friends or 
caregivers, at the individual's discretion. With proposed Sec.  
483.128(e)(10), we propose to make it clearer that for the NF level of 
services and specialized services evaluations, the individual must be 
directly involved in the evaluation activities.
    We propose at Sec.  483.128(f) that the person-centered interviews 
that we propose to require in proposed Sec.  483.128(e)(10) be 
conducted face-to-face. We include in this proposed provision that we 
would permit telehealth evaluations via live videoconferencing to be 
performed if conducting a face-to-face interview would, due to resource 
limitations, geographical distances, or other circumstances, prevent 
timely completion of the determination. We have observed that most 
PASRR

[[Page 10007]]

programs already conduct face-to-face interviews with NF applicants and 
residents, and some states have begun piloting the use of telehealth 
technologies to perform evaluations. We would specify that the 
telehealth technology applied would be live videoconferencing (as 
opposed to other asynchronous telehealth options). The purpose of the 
use of telehealth technology would be to recreate the experience of a 
live, face-to-face interaction as much as possible. Note that we do not 
propose to apply this face-to-face requirement for the confirmation of 
MI or ID, or the confirmation of a significant change in physical or 
mental status, which, if the state PASRR program chooses, may be 
performed as a desk review in advance of the NF level of services and 
specialized services evaluations. We propose that the face-to-face 
interview requirement only apply to the NF level of services and 
specialized services evaluations.
    We propose to retain Sec.  483.128(g), which discusses the use of 
pre-existing data that evaluators may use when gathering information to 
perform the evaluation. We propose to delete two minor elements in this 
regulation; we would remove reference to ``annual resident reviews'' 
and ``individualized evaluations.'' We would expect all evaluations to 
be individualized. (See discussion for Sec. Sec.  483.112, 483.128(m) 
and 483.130 regarding removal of categorical determinations in this 
proposed rule.)
    We propose to retain Sec.  483.128(h) requiring that findings made 
in evaluations reflect the individual's current condition. However, we 
propose to remove references to ``categorical and individualized 
determinations'' as we would expect that all determinations would be 
individualized. As noted previously with respect to Sec. Sec.  483.112, 
483.128(m), and 483.130 in this proposed rule, we propose to remove 
categorical determinations, making references to categorical 
determinations unnecessary in this proposed rule.
    We propose to retain Sec.  483.128(i), which describes the 
evaluation report that the evaluator submits to the SMHA or SIDA after 
completing the evaluation. Section 483.128(i) currently requires that 
after completing the evaluation for NF level of services and 
specialized services, the evaluator must submit to the SMHA or SIDA a 
written evaluative report summarizing the findings. We propose to add 
that the report must summarize recommendations in addition to findings. 
(See discussion of proposed changes to Sec. Sec.  483.20(e), and 
483.20(k) in this rule for discussion of ``findings'' versus 
``recommendations.'') We also propose to remove language that indicates 
this report is for ``individualized determinations'' as we would expect 
that all evaluations would be individualized (see discussion of the 
proposed removal of categorical determinations in Sec. Sec.  483.112, 
483.128(m) and 483.130 in this proposed rule). We propose to combine 
two of the provisions in Sec.  483.128(i)--currently designated 
Sec. Sec.  483.128(i)(3) and 483.138(i)(4)--both of which presently 
require the evaluator to describe the types of NF services the 
evaluator is recommending for the individual. We propose to merge these 
duplicative provisions into a single provision designated Sec.  
483.128(i)(3). Sections 483.128(i)(5) and (6) would be redesignated as 
Sec. Sec.  483.128(i)(4) and (5), respectively.
    We propose to retain the provision at Sec.  483.128(j), with 
revisions. This provision describes the format of an abbreviated 
evaluation report generated for evaluations made for categorical 
determinations--a report that is shorter than the evaluation report 
that is to be issued for individualized evaluations. As noted in the 
discussions of Sec. Sec.  483.112, 483.128(m), and 483.130 of this 
proposed rule, we are proposing to eliminate categorical 
determinations, so there would no longer be a need to generate an 
evaluation report for categorical determinations. We do, however, 
propose to retain the concept of an abbreviated evaluation report under 
certain circumstances. In particular, we propose that this abbreviated 
report would be issued when an evaluation is terminated before the 
evaluation for NF level of services or specialized services, as 
discussed in Sec.  483.128(m) of this proposed rule. We propose to 
include a specific regulation describing evaluation reports issued 
after termination of an evaluation to clarify the presently existing, 
but ambiguously stated, expectation that evaluation reports must be 
generated to document the rationale for terminating an evaluation. The 
current regulations do not waive the evaluation report requirement for 
terminated evaluations, but also do not specify what information should 
be shared with the SMHA or SIDA. We propose at Sec.  483.128(j) to 
retitle the provision ``Evaluation report: Terminated evaluations'' and 
replace the mention of ``categorical determinations'' in the 
introductory text with language specifying the regulation refers to 
terminated evaluations. We propose to remove Sec.  483.128(j)(2), which 
is specific to categorical determinations, and replace it with a 
requirement that the evaluator include in the report the specific 
reason why the evaluator terminated the report.
    We propose to retain Sec.  483.128(k) that requires that findings 
of the report must be explained to the individual. We propose to remove 
the phrase ``For both categorical and individualized determinations'' 
because we expect that there would only be individualized 
determinations, referred to simply as determinations. (See discussion 
of categorical determinations in sections for Sec. Sec.  483.112, 
483.128(m), and 483.130 in this proposed rule.)
    In Sec.  483.128(l), we propose to retain only the requirement at 
Sec.  483.128(l)(2) that the evaluation report be forwarded to the SMHA 
or SIDA as appropriate. In an effort to consolidate the paperwork sent 
to individuals during the PASRR process, we propose to remove the 
requirements at Sec. Sec.  483.128(l)(1), (3), (4) and (5) that the 
evaluation report be provided to the individual and others separately 
from the determination notice. We discuss the proposed requirement to 
include the evaluation report with the determination notice in proposed 
Sec.  483.130(g).
    We propose to remove the language at Sec.  483.128(m), which allows 
evaluators to terminate evaluations under certain circumstances. We 
propose to replace this regulation with language that would lay out a 
different set of criteria for terminating an evaluation. The current 
Sec.  483.128(m) allows evaluators to terminate the evaluation if: (1) 
The evaluator finds that the individual being evaluated does not have 
MI or ID within the definition of proposed Sec.  483.102 or (2) the 
individual has MI but also has primary dementia. We propose to replace 
this language with a revised Sec.  483.128(m) that would indicate the 
evaluations may be terminated without further evaluation of the need 
for NF level of services or specialized services (as discussed in 
Sec. Sec.  483.132 and 483.134 of this proposed rule), and an 
abbreviated evaluation report issued (per proposed Sec.  483.128(j) 
discussed above) should the evaluator find that the individual being 
evaluated--
     Does not have MI or ID within the definition of Sec.  
483.102;
     Did not experience a qualifying significant change in 
physical or mental condition as defined in Sec.  483.114(b)(2); or
     Has a severe physical illness (such as ventilator 
dependency; advanced Parkinson's disease, Huntington's disease, 
amyotrophic lateral sclerosis; or is comatose or functioning at a brain 
stem level), terminal illness (as defined in Sec.  418.3 of this 
chapter) or dementia (as defined in Sec.  483.102(b)(2)) which

[[Page 10008]]

results in a level of impairment so severe that the individual could 
not be effectively evaluated for the need for NF level of services and 
specialized services.
    We intend that the list of physical conditions that we propose here 
would replace the current categorical determinations criteria in 
current Sec.  483.130(d) and (h). Under the current regulations, 
categorical determinations function as expedited determinations for 
people with certain conditions. According to current regulations at 
Sec.  483.130(f), people with severe physical illness and terminal 
illness do not need an evaluation for NF level of services, but are 
still required to receive an evaluation for specialized services. The 
current regulation at Sec.  483.130(h) allows individuals with co-
occurring ID and dementia to be admitted to a NF without an evaluation 
for specialized services, but still requires that they receive an 
evaluation for NF level of services. We consider this current framework 
of categorical determinations to be somewhat confusing, and propose to 
retain the principle that evaluations should not be performed 
needlessly on individuals who clearly need NF level of services but who 
are not likely, as the result of a severe physical or cognitive 
impairment, to benefit from specialized services. Proposed Sec.  
483.128(m) would simply require an evaluator to confirm that 
individuals have a condition or conditions such that the individual 
could not be effectively evaluated by the Level II evaluator for NF 
services specific to ID or MI or for specialized services.
    We note that this would also allow individuals with the listed 
conditions to receive PASRR interventions if they are able to 
participate in evaluations for NF level of services and specialized 
services. For instance, if an individual with terminal illness is able 
to participate in the evaluations, the individual could still receive 
NF level of services and specialized service recommendations (whereas 
under the old categorical determinations framework, an individual with 
terminal illness might automatically be considered to require NF level 
of services without an evaluation). Our intent is that the PASRR 
process should be driven by the person's individual circumstances 
rather than a diagnosis. This focus on person-centeredness motivates 
the proposal to eliminate categorical determinations, which focus too 
heavily on making assumptions about individuals based solely on 
diagnosis.
17. Level II Determination Criteria (Sec.  483.130)
    Section 483.130 sets out the criteria that must be used to make 
determinations of the need for NF level of services and for specialized 
services. We propose to retitle Sec.  483.130 ``Level II PASRR 
Determination Criteria,'' to acknowledge that determinations are 
typically referred to as ``Level II determinations'' and to underscore 
that Level II evaluations and determinations should be an integrated 
process.
    We propose to retain Sec.  483.130(a), which explains that the 
determinations must be based on evaluations, and add a cross-reference 
to Sec.  483.128(e). As discussed in the discussion of Sec.  
483.128(e), we propose to add language to Sec.  483.128(e) to describe 
the data to be used in evaluations.
    We propose to remove Sec. Sec.  483.130(b) through (i), which set 
out requirements pertaining to categorical determinations. As we 
explained in discussing Sec. Sec.  483.112 and 483.128(m) of this 
proposed rule, we propose to eliminate categorical determinations. We 
have found that the framework of categorical determinations has proven 
cumbersome and counterproductive. In too many instances, they have 
created the opportunity for individuals with MI or ID to be admitted to 
an NF with only a cursory review of the individual's records, and 
without a follow-up comprehensive Resident Review to ensure individuals 
do not end up unnecessarily becoming long-term NF residents (or, if the 
long-term institutionalization is necessary, to ensure that they 
receive needed specialized services). We believe new proposals of 
provisional admissions (as proposed at Sec.  483.112(b)(3)) and the 
expansion of evaluation terminations (as proposed at Sec.  483.128(m)) 
would adequately preserve the spirit of categorical determinations--
avoiding unnecessary evaluations--but would create a simpler system 
with greater accountability.
    We propose a new requirement at Sec.  483.130(b) to clarify who 
would be able to perform the determinations. We propose that the state 
would be able to designate the medical, mental health, intellectual 
disability, or developmental disability professionals who perform the 
determinations, as appropriate. The proposed rule would also reiterate 
requirements stemming from sections 1919(b)(3)(F) and (e)(7)(B)(iv) of 
the Act that the determinations may not be performed by NFs.
    We propose a new requirement at Sec.  483.130(c) that would provide 
the criteria for making a determination regarding the need for NF level 
of services. (The criteria for evaluation of individuals for NF level 
of services on which this determination would be based will be 
discussed in greater detail in the discussion of Sec.  483.132 in this 
proposed rule.) In proposed Sec.  483.130(c), we propose that an 
individual with MI or ID could be determined to need NF level of 
services only when:
     The individual meets the state's criteria for NF 
admission;
     The individual's total needs do not exceed the services 
which can be delivered in the NF to which the individual is admitted, 
either through NF services alone or, where necessary, through NF 
services supplemented by specialized services; and
     Placement in HCBS program cannot be achieved either 
because the individual's total needs exceed or cannot currently be 
accommodated by the state's HCBS programs, or the individual does not 
want the community placement.
    We propose a new requirement at Sec.  483.130(d) that would provide 
criteria for determining the need for specialized services. (The 
criteria for evaluating individuals for specialized services is 
discussed in greater detail in proposed Sec.  483.134 of this proposed 
rule.) We propose at Sec.  483.130(d) that an individual may be 
determined to need specialized services if the individual's total needs 
are such that services described in Sec.  483.120(a) would be necessary 
to maintain the individual in, or transition the individual to, the 
most integrated setting appropriate, and the individual would benefit 
from such services. We believe this proposed criteria for determination 
adequately summarizes the underlying purpose of specialized services, 
as discussed in proposed Sec.  483.120.
    We propose redesignating Sec.  483.130(j), requiring that 
determinations be recorded in the individual's records, as Sec.  
483.130(e). This requirement currently specifies that all 
determinations made by the SMHA and SIDA, ``regardless of how they are 
arrived at,'' must be recorded in the individual's record. We propose 
removing the clause ``regardless of how they are arrived at,'' as its 
meaning and purpose is unclear.
    We propose to redesignate and revise the current Sec.  483.130(k) 
as Sec.  483.130(f). This section requires that the SMHA or SIDA send 
determination notices (either in writing or, as we propose to add here, 
electronically) to the individual and the individual's legal 
representative, the admitting or retaining NF, the individual's 
attending physician, and

[[Page 10009]]

the discharging hospital (unless the individual is exempt from 
Preadmission Screening). We propose that the determination notice be 
sent to the ``physician most involved in the individual's medical care, 
as identified by the individual,'' as opposed to the presently 
specified ``attending'' physician. We have received feedback from 
stakeholders that the provision to simply send the determination to the 
``attending'' physician meant that determinations notices were 
sometimes sent to physicians with little involvement in the 
individual's ongoing care, such as the attending physician during an 
individual's brief hospital stay.
    We propose to retain Sec.  483.130(l), but redesignate it as Sec.  
483.130(g). This requirement describes the contents of the 
determination notice. We propose to retain the introductory text of 
this newly redesignated section. We propose to replace the language in 
Sec. Sec.  483.130(g)(1), (2) and (3). We propose a new Sec.  
483.130(g)(1) that specifies that the determination notice should 
indicate if the person was found by the PASRR program to have MI or ID 
(as defined in Sec.  483.102) or a significant change in physical or 
mental status (as described in Sec.  483.114(b)(2)). We propose a new 
Sec.  483.130(g)(2) that specifies that if an individual has been 
confirmed to have MI or ID (as defined in Sec.  483.102) or a 
significant change in physical or mental condition (as described in 
Sec.  483.114(b)(2)), the determination notice should specify whether 
the individual needs NF level of services and specialized services, and 
what placement options are available to the individual as described in 
Sec. Sec.  483.116 and 483.118. These changes largely reflect the 
current language in Sec.  483.130(l), but are intended to clarify that 
the PASRR program only needs to make determinations regarding NF level 
of services, specialized services, and placement options when the 
individual has MI or ID, or has had a significant change in physical or 
mental condition, and is within the PASRR program's jurisdiction. We 
propose to redesignate Sec.  483.130(l)(4), which provides for 
individuals' appeal rights, as Sec.  483.130(g)(3). We also propose to 
add a new Sec.  483.130(g)(4) that would require the evaluation report 
described in proposed Sec. Sec.  483.128(i) and (j) to be attached to 
the determination notice. As noted in the discussion in Sec.  
483.128(l) in this proposed rule, we are proposing to remove the 
requirement that the evaluation report be sent to the individual 
separately from the determination notice; here we propose that the two 
documents be delivered to the individual (as well as the individual's 
legal representative, physician, and admitting or retaining NF) in a 
single package.
    We propose to remove Sec.  483.130(m) and (n), which describe the 
placement options and the provision of specialized services based on 
the determinations. We believe these regulations are duplicative of 
requirements in Sec. Sec.  483.116, 483.118 and 483.120.
    We propose to redesignate Sec.  483.130(o), which describes 
requirements regarding record retention, as Sec.  483.130(h). We 
propose to remove the reference to categorical and individualized 
determinations. Per the discussion of Sec. Sec.  483.112 and 483.128, 
and in this section of the proposed rule, we propose to eliminate 
categorical determinations and such distinctions would not be 
necessary. The current language states that record retention is 
necessary to help protect the appeal rights of individuals subjected to 
PASRR. We also propose to revise the provision so that rather than 
describing individuals as being ``subjected to'' PASRR, the requirement 
would state that records must be kept in order to protect individuals' 
appeal rights related to PASRR determinations.
    We propose to retain the language of Sec.  483.130(p), but 
redesignate it as Sec.  483.130(i) with no substantive changes. We 
propose to replace mention of ``PASARR'' with ``PASRR.'' We propose to 
replace ``individuals with MI or IID'' with ``individuals with MI or 
ID'' for grammatical reasons.
    We propose to add a new Sec.  483.130(j) that would contain new 
reporting requirements on two key activities related to the 
determination process: Timeliness and outcomes. The language we propose 
at Sec.  483.130(j)(1) would require that the state report to the 
Secretary on an annual basis the annual averages for completion of 
determinations, in order to demonstrate compliance with the timeframes 
required in proposed Sec. Sec.  483.112(c) and 483.114(d). Section 
483.106(c)(3) currently requires that states compute annual averages 
for their completion times, and Sec.  483.112(c)(4) allows the 
Secretary to grant a waiver should a state fall behind, but the current 
regulations do not make explicit the requirement to actually report the 
completion times. We seek to remedy this confusion with proposed Sec.  
483.130(j)(1). We believe our oversight of PASRR would be more 
effective if states affirmatively reported on their compliance with the 
timeliness requirement, rather than only reporting to the Secretary 
when the state has fallen behind on the timeliness standard. We propose 
to specify at Sec.  483.130(j) that states would be expected to report 
the annual average of the completion of these determinations, as is 
suggested by current Sec.  483.112(c)(3). While proposed changes to 
Sec. Sec.  483.112(c) and 483.114(d) indicate that determinations would 
be provided within 9 calendar days of Level I referral, it is possible 
that some determinations would be issued sooner than in 9 days. Thus, 
we are proposing to request that states report on the average of the 
number of days required to complete determinations over the course of a 
year, and expect that states would report an average of 9 calendar days 
or less.
    We propose at Sec.  483.130(j)(2) that states would report annually 
on the number of people with MI or ID who, as a result of the PASRR 
program's determinations, are diverted or are discharged from NFs each 
year because the individual:
     Does not meet, or no longer meets, the state's criteria 
for NF level of care,
     Requires the level of services offered in another 
institutional setting; or
     Elects to receive services in a non-institutional setting.
    This proposed provision is designed to implement section 
1919(e)(7)(D)(iv) of the Act that requires that each state report 
annually to the Secretary the number and disposition of individuals who 
are discharged from NFs because they have been determined to no longer 
needed NF level of services (but still need specialized services) and 
individuals who are discharged from NFs because they are determined to 
need neither NF level of services nor specialized services. This 
reporting requirement was not explained in the current regulations, 
and, as a result, reporting to the Secretary has been inconsistent. We 
propose to require reporting on both diversions of NF applicants, as 
well as discharges of NF residents. We believe that the purpose of the 
statutory requirement at section 1919(e)(7)(D)(iv) of the Act is to 
ensure that PASRR has a meaningful impact on the outcome of individuals 
who do not need (or want) NF placement, which would include 
dispositions for applicants as well as residents.
    We propose to add a new requirement at Sec.  483.130(j)(3) that 
would retain language from current Sec.  483.112(c)(3) allowing the 
state to compute separate annual averages for the determination made by 
the SMHA and SIDA. We propose to add language indicating that 
dispositions for individuals with MI or ID, as required in proposed

[[Page 10010]]

Sec.  483.130(j)(2), could also be reported separately.
    We propose to add a new requirement at Sec.  483.130(j)(4) that 
incorporates the language from current Sec.  483.112(c)(4), authorizing 
the Secretary to grant an exception to the timeliness standard (which 
would be reported on per proposed Sec.  483.130(j)(1)) at the 
Secretary's discretion.
    We propose to add a new requirement at Sec.  483.130(j)(5) that 
would require that reports containing data for the previous calendar 
year be submitted to the Secretary by March 1 of each year.
18. Evaluating the Need for NF Level of Services (Sec.  483.132)
    We propose to retitle Sec.  483.132 as ``Evaluating the Need for NF 
Level of Services.'' The current title, ``Evaluating the Need for 
Services and NF Level of Care,'' perpetuates the confusion that PASRR 
processes include NF level of care assessments. This is a problematic 
assumption. NF level of care assessments are the functional needs 
assessments states use to confirm basic eligibility for NF admission on 
the basis of functional needs. The evaluation of NF level of services 
evaluation required by PASRR involves a more comprehensive and holistic 
evaluation than most NF level of care assessments, and we want to avoid 
the impression that performing a NF level of care assessment satisfies 
the requirement to evaluate individuals with MI or ID for NF level of 
services. The relationship between NF level of services and NF level of 
care is further discussed in the discussion of proposed Sec.  
483.132(e).
    Because many of the current requirements in this section were 
incorporated in proposed Sec. Sec.  483.120 and 483.128, we propose to 
remove all of the requirements in this section and replace them with 
new language. We propose at Sec.  483.132(a) to describe the evaluation 
for the most integrated setting appropriate for the individual. At 
proposed Sec.  483.132(a)(1), we propose that for each NF applicant and 
each NF resident who has MI or ID, the evaluator would assess whether 
the individual has the option of placement in an HCBS program (and a 
non-institutional placement is desired by the individual). At Sec.  
483.132(a)(2), we propose that if the individual does not have the 
option of community placement, or does not want community placement, 
the evaluator would assess whether the individual's total needs are 
such that they can be met only by admitting the individual on an 
inpatient basis (as ``inpatient'' is defined in Sec.  440.2 of this 
chapter). In that case, the evaluator would also have to assess whether 
the NF (with or without specialized services) would be an appropriate 
institutional setting for meeting those needs; or, if the NF would not 
be the most appropriate setting for meeting the individual's needs, 
whether another institutional setting would be an appropriate setting 
for meeting those needs. Our proposed language is similar to the 
current basic rule at Sec.  483.132(a), but we propose to restructure 
it such that we would highlight more explicitly the expectation that 
evaluators should review the individual's consideration of HCBS options 
during the evaluation.
    We propose a new requirement at Sec.  483.132(b) that would require 
that the evaluator assess the individual's preferences for where the 
individual may receive long term services and supports, including HCBS 
and institutional care. We propose that this evaluation would include 
confirming whether the individual and the individual's legal 
representative, if applicable, have received information about the 
types of long term care options available to the individual.
    We propose a new requirement at Sec.  483.132(c) that would require 
that for individuals for whom NF placement is identified as an 
appropriate setting by the evaluator (resulting from the evaluations 
performed under proposed Sec.  483.132(a) and (b)), the evaluator would 
be required to assess what services for MI or ID the individual may 
need that are offered as part of standard NF services, including 
behavioral health services and specialized rehabilitative services 
described at Sec. Sec.  483.40 and 483.65, respectively.
    We propose a new requirement at Sec.  483.132(d) that would require 
the data relied on in performing the evaluation to include the data 
listed in proposed Sec.  483.128(e).
    We propose a new requirement at Sec.  483.132(e) that would clarify 
the relationship between NF level of services and NF level of care, 
which is a set of criteria established by each state that an individual 
must meet to be eligible for Medicaid coverage of services provided in 
a NF. We propose to clarify that evaluations to determine whether an 
individual meets the state's NF level of care criteria are not part of 
the PASRR process. However, PASRR evaluators may ``look behind'' a 
level of care determination to confirm that the individual has been 
accurately assessed as meeting the state's NF level of care criteria, 
and may consider that assessment in determining an individual's needs 
for PASRR purposes. We note that Level II evaluators are charged with 
ensuring that individuals with MI or ID are not improperly placed in 
NFs simply because they have MI or ID (when other options preferred by 
the individuals are available), and Level II evaluators may disagree 
with the conclusions of a level of care assessment (so long as their 
findings still abide by state-specific criteria for NF level of care).
19. Evaluating the Need for Specialized Services (Sec.  483.134)
    Currently, Sec.  483.134 lists criteria for evaluating people with 
MI for specialized services and Sec.  483.136 contains criteria for 
evaluating people with ID for specialized services. Because many of the 
requirements presented in this section were incorporated in our 
proposed Sec. Sec.  483.120 and 483.128, we propose to remove 
Sec. Sec.  483.134 and 483.136 in their entirety and replace them with 
a single new Sec.  483.134, titled ``Evaluating the Need for 
Specialized Services.''
    We propose a new requirement at Sec.  483.134(a) that would provide 
a basic rule for performing specialized services evaluations for NF 
applicants with MI or ID who are recommended for NF placement per Sec.  
483.132, and for NF residents with MI or ID. (Note that for NF 
applicants, section 1919(b)(3)(F) of the Act makes the evaluation for 
specialized services conditional on the outcome of the NF level of 
services evaluation, while section 1919(e)(7)(B) of the Act requires NF 
residents to receive both evaluations for NF level of services and 
specialized services.) We propose at new Sec.  483.134(a)(1) that the 
evaluator would be required to assess the individual's ability to 
engage in activities of daily living and instrumental activities of 
daily living. We propose at new Sec.  483.134(a)(2) that the evaluator 
would then assess the level of support that would be needed to assist 
the individual to perform these activities successfully in the NF or 
while living in the community. We propose at new Sec.  483.134(a)(3) 
that the evaluator would then evaluate the level of support needed by 
the individual could be provided by standard NF services or whether 
specialized services (as defined at proposed Sec.  483.120) were 
required. We intend that the definition of specialized services we 
propose in Sec.  483.120(a) would provide evaluators with additional 
guidance as to what types of services should be considered as part of 
this evaluation.
    We propose a new requirement at Sec.  483.134(b) that would 
indicate that if specialized services are already being provided to a 
NF resident, the evaluator would assess whether the specialized 
services included in the resident's care plan need to be modified. We 
seek to encourage regular and meaningful

[[Page 10011]]

review of specialized services to ensure they continue to be effective 
for the individual and meet the individual's needs.
    We propose a new requirement at Sec.  483.134(c) that would 
require, at a minimum, that the data relied on to perform an evaluation 
for specialized services include the data listed in proposed Sec.  
483.128(e).
20. Maintenance of Services and Availability of FFP (Sec.  483.138)
    We are not proposing any changes to this section.

D. Part 483, Subpart E

1. Appeals of Discharges, Transfers and Preadmission Screening and 
Resident Review Actions (Part 483, Subpart E).
    The current title of part 483, subpart E is ``Appeals of 
Discharges, Transfers and Preadmission Screening and Annual Resident 
Review (PASARR) Determinations.'' We propose to change this title to 
``Appeals of Discharges, Transfers, and Preadmission Screening and 
Resident Review (PASRR) Actions'' in order to (1) remove the word 
``annual'' from the title, for reasons we discuss previously, and (2) 
change the word ``Determinations'' to ``Actions'' to broaden the scope 
of appeals to include both Level I identification screening decisions 
as well as Level II determinations.
2. Provision of a Hearing and Appeal System (Sec.  483.204)
    Section 483.204 specifies individuals' ability to appeal PASRR 
determinations. We propose at Sec.  483.204(a)(2) to change ``PASARR 
determination'' to ``PASRR Level I screen or Level II determination.'' 
We propose to further streamline and update the regulation by removing 
``in the context of preadmission screening and annual resident 
review.'' We also propose to change ``appeal that determination'' to 
``appeal that Level I screen or Level II determination.'' Our intent 
with this proposal is to clarify individuals' right to appeal both 
Level I screens (positive and negative identifications) as well as 
Level II determinations.

III. PASRR Requirements Crosswalk

    Table 1 notes the proposed changes to the regulations in part 483, 
subpart C.

                                Table 1--Proposed Changes to Part 483, Subpart C
----------------------------------------------------------------------------------------------------------------
         Existing CFR section                   Title                    Action              New CFR section
----------------------------------------------------------------------------------------------------------------
Sec.   483.100.......................  Basis..................  .......................  Sec.   483.100.
Sec.   483.100.......................  Basis..................  Technical changes......  Sec.   483.100.
Sec.   483.102.......................  Applicability and        Revised................  Sec.   483.102.
                                        definitions.
Sec.   483.102(a)....................  (a) Applicability......  Technical changes......  Sec.   483.102(a).
Sec.   483.102(b)....................  (b) Definitions........  .......................  Sec.   483.102(b).
Sec.   483.102(b)(1).................  (1) untitled...........  Titled and revised.....  Sec.   483.102(b)(1)
                                                                                          Mental illness.
Sec.   483.102(b)(2).................  (2) untitled...........  Titled and revised.....  Sec.   483.102(b)(2)
                                                                                          Dementia.
Sec.   483.102(b)(3).................  (3) untitled...........  Titled and revised.....  Sec.   483.102(b)(3)
                                                                                          Intellectual
                                                                                          disability.
n/a..................................  (c) Incorporation by     Added..................  Sec.   483.102(c)(1)-
                                        reference.                                        (2).
Sec.   483.104.......................  State plan requirement.  .......................  Sec.   483.104.
Sec.   483.104.......................  State plan requirement.  Technical changes......  Sec.   483.104.
Sec.   483.106.......................  Basic rule.............  Retitled...............  Sec.   483.106 Basic
                                                                                          rules and
                                                                                          responsibilities.
Sec.   483.106(a)....................  (a) Requirement........  Removed................  n/a.
Sec.   483.106(b)....................  (b) Admissions,          Redesignated, retitled   Sec.   483.112(b) Who
                                        readmissions and inter-  and revised.             must receive Level II
                                        facility transfers.                               preadmission
                                                                                          screening.
Sec.   483.106(b)(1).................  (1) New admissions.....  Redesignated and         Sec.   483.112(b)(1).
                                                                 revised.
Sec.   483.106(b)(2).................  (2) Exempted hospital    Redesignated and         Sec.   483.112(b)(2).
                                        discharge.               revised.
Sec.   483.106(b)(3).................  (3) Readmissions.......  Redesignated and         Sec.   483.112(b)(4).
                                                                 revised.
Sec.   483.106(b)(4).................  (4) Inter-facility       Redesignated and         Sec.   483.112(b)(5).
                                        transfers.               revised.
Sec.   483.106(c)....................  (c) Purpose............  Redesignated...........  Sec.   483.106(a).
n/a..................................  Requirement............  Added..................  Sec.   483.106(b).
n/a..................................  State Medicaid agency    Added..................  Sec.   483.106(c)(1)-
                                        responsibilities.                                 (5).
Sec.   483.106(d)....................  (d) Responsibility for   Revised................  Sec.   483.106(d).
                                        evaluation and
                                        determinations.
Sec.   483.106(e)....................  (e) Delegation of        Revised................  Sec.   483.106(e).
                                        responsibility.
Sec.   483.106(e)(1).................  (1) untitled...........  Redesignated and         Sec.   483.106(e).
                                                                 revised.
Sec.   483.106(e)(1)(i)..............  (i) untitled...........  Redesignated and         Sec.   483.106(e)(1).
                                                                 revised.
Sec.   483.106(e)(1)(ii).............  (ii) untitled..........  Redesignated and         Sec.   483.106(e)(2).
                                                                 revised.
Sec.   483.106(e)(1)(iii)............  (iii) untitled.........  Redesignated and         Sec.   483.106(e)(3).
                                                                 revised.
Sec.   483.106(e)(2).................  (2) untitled...........  Removed................  n/a.
Sec.   483.106(e)(3).................  (3) untitled...........  Removed................  n/a.
Sec.   483.108.......................  Relationship of PASARR   Retitled...............  Sec.   483.108
                                        to other Medicaid                                 Relationship of PASRR
                                        processes.                                        to other Medicaid
                                                                                          processes.
Sec.   483.108(a)....................  (a) untitled...........  Technical changes......  Sec.   483.108(a).
Sec.   483.108(b)....................  (b) untitled...........  Revised................  Sec.   483.108(b).
Sec.   483.108(c)....................  (c) untitled...........  Revised................  Sec.   483.108(c).
Sec.   483.110.......................  Out-of-State             .......................  Sec.   483.110.
                                        arrangements.

[[Page 10012]]

 
Sec.   483.110(a)....................  (a) Basic rule.........  Redesignated and title   Sec.   483.110.
                                                                 removed.
Sec.   483.110(b)....................  (b) Agreements.........  Removed................  n/a.
Sec.   483.112.......................  Preadmission screening   .......................  Sec.   483.112.
                                        of applicants for
                                        admission to NFs.
Sec.   483.112(a)....................  (a) Determination of     Removed................  n/a.
                                        need for NF services.
Sec.   483.112(b)....................  (b) Determination of     Removed................  n/a.
                                        need for specialized
                                        services.
n/a..................................  Preadmission Level I...  Added..................  Sec.   483.112(a).
n/a..................................  Provisional admissions.  Added..................  Sec.   483.112(b)(3).
Sec.   483.112(c)....................  (c) Timeliness.........  Retitled and revised...  Sec.   483.112(c)
                                                                                          Timeliness of
                                                                                          determinations.
Sec.   483.112(c)(1).................  (1) untitled...........  Redesignated and         Sec.   483.112(c).
                                                                 revised.
Sec.   483.112(c)(2).................  (2) untitled...........  Removed................  n/a.
Sec.   483.112(c)(3).................  (3) untitled...........  Redesignated and         Sec.   483.130(j)(3).
                                                                 retititled.
Sec.   483.112(c)(4).................  (4) untitled...........  Redesignated and         Sec.   483.130(j)(4).
                                                                 retitled.
Sec.   483.114.......................  Annual review of NF      Retitled...............  Sec.   483.114 Review
                                        residents.                                        of NF residents.
Sec.   483.114(a)....................  (a) Individuals with     Removed................  n/a.
                                        mental illness.
Sec.   483.114(b)....................  (b) Individuals with     Removed................  n/a.
                                        intellectual
                                        disability.
Sec.   483.114(c)....................  (c) Frequency of review  Removed................  n/a.
Sec.   483.114(d)....................  (d) April 1, 1990        Removed................  n/a.
                                        deadline for initial
                                        review.
n/a..................................  Referral for resident    Added..................  Sec.   483.114(a)(1)-
                                        review.                                           (4).
n/a..................................  Level II resident        Added..................  Sec.   483.114(b)(1)-
                                        review.                                           (2).
n/a..................................  Timing for referral      Added..................  Sec.   483.114(c)(1)-
                                        from NF.                                          (2).
n/a..................................  Timeliness of            Added..................  Sec.   483.114(d).
                                        determination.
n/a..................................  Resident review          Added..................  Sec.   483.114(e).
                                        determinations.
Sec.   483.116.......................  Residents and            .......................  Sec.   483.116.
                                        applicants determined
                                        to require NF level of
                                        services.
Sec.   483.116(a)....................  (a) Individuals needing  No change..............  Sec.   483.116(a).
                                        NF services.
Sec.   483.116(b)....................  (b) Individuals needing  Technical changes......  Sec.   483.116(b).
                                        NF services and
                                        specialized services.
Sec.   483.118.......................  Residents and            .......................  Sec.   483.118.
                                        applicants determined
                                        not to require NF
                                        level of services.
Sec.   483.118(a)....................  (a) Applicants who do    No change..............  Sec.   483.118(a).
                                        not require NF
                                        services.
Sec.   483.118(b)....................  (b) Residents who        Technical changes......  Sec.   483.118(b).
                                        require neither NF
                                        services nor
                                        specialized services
                                        for MI or IID.
Sec.   483.118(c)....................  (c) Residents who do     Revised................  Sec.   483.118(c).
                                        not require NF
                                        services but require
                                        specialized services
                                        for MI or IID.
Sec.   483.120.......................  Specialized services...  Retitled...............  Sec.   483.120
                                                                                          Specialized services
                                                                                          and NF services.
Sec.   483.120(a)(1)-(2).............  (a) Definition.........  Revised................  Sec.   483.120(a)(1)-
                                                                                          (6).
Sec.   483.120(b)....................  (b) Who must receive     Retitled and revised...  Sec.   483.120(b)
                                        specialized services.                             Provision of
                                                                                          specialized services.
Sec.   483.120(c)....................  (c) Services of lesser   Retitled...............  Sec.   483.120(c)
                                        intensity.                                        Provision of NF
                                                                                          services.
n/a..................................  Duplication with NF      Added..................  Sec.   483.120(d).
                                        services prohibited.
n/a..................................  Coordination with plan   Added..................  Sec.   483.120(e).
                                        of care.
n/a..................................  Coordination with other  Added..................  Sec.   483.120(f).
                                        program services.
Sec.   483.122.......................  FFP for NF services....  .......................  Sec.   483.122.
Sec.   483.122(a)....................  (a) Basic rule.........  Revised................  Sec.   483.122(a).
Sec.   483.122(b)....................  (b) FFP for late         Technical changes......  Sec.   483.122(b).
                                        reviews.
Sec.   483.124.......................  FFP for specialized      .......................  Sec.   483.124.
                                        services.
Sec.   483.124.......................  FFP for specialized      Redesignated and         Sec.   483.124(a)(1)-
                                        services.                revised.                 (2).
n/a..................................  Reserved...............  Added..................  Sec.   483.124(b).
Sec.   483.126.......................  Appropriate placement..  Retitled...............  Sec.   483.126 Level I
                                                                                          identification
                                                                                          criteria.
Sec.   483.126.......................  Untitled...............  Removed................  n/a.
n/a..................................  Level I identification   Added..................  Sec.   483.126(a).
                                        of individuals with
                                        possible MI or ID.
n/a..................................  Possible MI............  Added..................  Sec.   483.126(b)(1)-
                                                                                          (4).
n/a..................................  Possible ID............  Added..................  Sec.   483.126(c)(1)-
                                                                                          (3).
n/a..................................  Personnel..............  Added..................  Sec.   483.126(d).
n/a..................................  Data...................  Added..................  Sec.   483.126(e).
n/a..................................  Referral after positive  Added..................  Sec.   483.126(f).
                                        identification.

[[Page 10013]]

 
Sec.   483.128(a)....................  (a) Level I:             Retitled, redesignated   Sec.   483.126(g)
                                        Identification of        and revised.             Documentation of
                                        individuals with MI or                            completed
                                        IID.                                              identification screen.
Sec.   483.128(b)....................  (b) Adaptation to        Redesignated and         Sec.   483.106(f).
                                        culture, language,       revised.
                                        ethnic origin.
Sec.   483.128(c)....................  (c) Participation by     Removed................  n/a.
                                        individual and family.
n/a..................................  Purpose................  Added..................  Sec.   483.128(a)(1)-
                                                                                          (2).
n/a..................................  Personnel..............  Added..................  Sec.   483.128(b)(1)-
                                                                                          (2).
Sec.   483.128(d)....................  (d) Interdisciplinary    Redesignated and         Sec.   483.128(c).
                                        coordination.            technical changes.
Sec.   483.128(e)....................  (e) untitled...........  Removed................  n/a.
Sec.   483.128(f)....................  (f) Data...............  Removed................  n/a.
n/a..................................  Data to confirm Level I  Added..................  Sec.   483.128(d)(1)-
                                        identification or                                 (2).
                                        significant change.
n/a..................................  Data for evaluations     Added..................  Sec.   483.128(e)(1)-
                                        needed for NF level of                            (10).
                                        services and
                                        specialized services.
n/a..................................  Face-to-face interviews  Added..................  Sec.   483.128(f).
Sec.   483.128(g)....................  (g) Preexisting data...  Technical changes......  Sec.   483.128(g).
Sec.   483.128(h)....................  (h) Findings...........  Technical changes......  Sec.   483.128(h).
Sec.   483.128(i)(1)-(6).............  (i) Evaluation report:   Retitled and technical   Sec.   483.128(i)
                                        Individualized           changes.                 Evaluation report.
                                        determinations.
Sec.   483.128(j)(1)-(4).............  (j) Evaluation report:   Retitled and revised...  Sec.   483.128(j)
                                        Categorical                                       Evaluation report:
                                        determinations.                                   Terminated
                                                                                          evaluations.
Sec.   483.128(k)....................  (k) Interpretation of    Technical changes......  Sec.   483.128(k).
                                        findings to individual.
Sec.   483.128(l)(1) through (5).....  (l) Evaluation report..  Retitled and revised...  Sec.   483.128(l)
                                                                                          Evaluation report
                                                                                          submission.
Sec.   483.128(m)(1) through (2).....  (m) untitled...........  Titled and revised.....  Sec.   483.128(m)
                                                                                          Termination before
                                                                                          evaluations for NF and
                                                                                          specialized services.
Sec.   483.130.......................  PASARR determination     Retitled...............  Sec.   483.130 Level II
                                        criteria.                                         PASRR determination
                                                                                          criteria.
Sec.   483.130(a)....................  (a) Basis for            Technical changes......  Sec.   483.130(a).
                                        determinations.
n/a..................................  Personnel..............  Added..................  Sec.   483.130(b).
n/a..................................  Determination of need    Added..................  Sec.   483.130(c)(1)-
                                        for NF level of                                   (3).
                                        services.
n/a..................................  Determination of need    Added..................  Sec.   483.130(d).
                                        for specialized
                                        services.
Sec.   483.130(b)....................  (b) Types of             Removed................  n/a.
                                        determinations.
Sec.   483.130(c)....................  (c) Group                Removed................  n/a.
                                        determinations by
                                        category.
Sec.   483.130(d)....................  (d) Examples of          Removed................  n/a.
                                        categories.
Sec.   483.130(e)....................  (e) Time limits........  Removed................  n/a.
Sec.   483.130(f)....................  (f) untitled...........  Removed................  n/a.
Sec.   483.130(g)....................  (g) Categorical          Removed................  n/a.
                                        determinations: No
                                        positive specialized
                                        treatment
                                        determinations.
Sec.   483.130(h)....................  (h) Categorical          Removed................  n/a.
                                        determinations:
                                        Dementia and IID.
Sec.   483.130(i)....................  (i) untitled...........  Removed................  n/a.
Sec.   483.130(j)....................  (j) Recording            Redesignated and         Sec.   483.130(e).
                                        determinations.          technical changes.
Sec.   483.130(k)....................  (k) Notice of            Redesignated and         Sec.   483.130(f).
                                        determination.           revised.
Sec.   483.130(l)....................  (l) Contents of notice.  Redesignated and         Sec.   483.130(g).
                                                                 revised.
Sec.   483.130(m)....................  (m) Placement options..  Removed................  n/a.
Sec.   483.130(n)....................  (n) Specialized          Removed................  n/a.
                                        services needed in a
                                        NF.
Sec.   483.130(o)....................  (o) Record retention...  Redesignated and         Sec.   483.130(h).
                                                                 technical changes.
Sec.   483.130(p)....................  (p) Tracking system....  Redesignated and         Sec.   483.130(i).
                                                                 technical changes.
n/a..................................  Reporting..............  Added..................  Sec.   483.130(j)(1)-
                                                                                          (4).
Sec.   483.132.......................  Evaluating the need for  Retitled...............  Sec.   483.132
                                        NF services and NF                                Evaluating the need
                                        level of care (PASARR/                            for NF level of
                                        NF).                                              services.
Sec.   483.132(a)....................  (a) Basic rule.........  Removed................  n/a.

[[Page 10014]]

 
Sec.   483.132(b)....................  (b) Determining          Removed................  n/a.
                                        appropriate placement.
Sec.   483.132(c)....................  (c) Data...............  Removed................  n/a.
Sec.   483.132(d)....................  (d) untitled...........  Removed................  n/a.
n/a..................................  Evaluation for           Added..................  Sec.   483.132(a)(1)-
                                        appropriate settings.                             (2).
n/a..................................  Evaluation of            Added..................  Sec.   483.132(b).
                                        preferences.
n/a..................................  Evaluation for NF        Added..................  Sec.   483.132(c).
                                        services.
n/a..................................  Data...................  Added..................  Sec.   483.132(d).
n/a..................................  Relationship to NF       Added..................  Sec.   483.132(e).
                                        level of care.
Sec.   483.134.......................  Evaluating whether an    Retitled...............  Sec.   483.134
                                        individual with mental                            Evaluating whether an
                                        illness requires                                  individual requires
                                        specialized services                              specialized services.
                                        (PASARR/MI).
Sec.   483.134(a)....................  (a) Purpose............  Removed................  n/a.
Sec.   483.134(b)....................  (b) Data...............  Removed................  n/a.
Sec.   483.134(c)....................  (c) Personnel            Removed................  n/a.
                                        requirements.
Sec.   483.134(d)....................  (d) Data interpretation  Removed................  n/a.
n/a..................................  Basic rule.............  Added..................  Sec.   483.134(a)(1)-
                                                                                          (3).
n/a..................................  Review of specialized    Added..................  Sec.   483.134(b).
                                        services.
n/a..................................  Data...................  Added..................  Sec.   483.134(c).
Sec.   483.136.......................  Evaluating whether an    Removed................  n/a.
                                        individual with
                                        intellectual
                                        disability requires
                                        specialized services
                                        (PASARR/IID).
Sec.   483.136(a)....................  (a) Purpose............  Removed................  n/a.
Sec.   483.136(b)....................  (b) Data...............  Removed................  n/a.
Sec.   483.136(c)....................  (c) Data interpretation  Removed................  n/a.
Sec.   483.138.......................  Maintenance of services  .......................  Sec.   483.138.
                                        and availability of
                                        FFP.
Sec.   483.138(a)....................  (a) Maintenance of       No change..............  Sec.   483.138(a).
                                        services.
Sec.   483.138(b)....................  (b) Availability of FFP  No change..............  Sec.   483.138(b).
----------------------------------------------------------------------------------------------------------------

IV. Collection of Information Requirements

    Consistent with our implementing PASARR regulation (November 30, 
1992; 57 FR 56504) section 4214(d) of OBRA '87 exempts this rule's 
proposed nursing home reform amendments from the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). In this regard, 
Office of Management and Budget review under the authority of the PRA 
is not applicable. The projected costs and savings of this proposed 
rule are discussed in the Regulatory Impact Analysis section of this 
proposed rule.

V. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

VI. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule intends to modernize the requirements for 
Preadmission Screening and Resident Review (PASRR), currently referred 
to in the regulation as Preadmission Screening and Annual Resident 
Review. PASRR proposes to incorporate statutory changes, which reflects 
updates to diagnostic criteria for mental illness and intellectual 
disability. It will also reduce duplicative requirements and other 
administrative burdens on state PASRR programs, and makes the process 
more streamlined and person-centered.

B. Overall Impact

    We have examined the impacts of this proposed rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (Pub. L. 96-
354, enacted on September 19, 1980) (RFA), section 1102(b) of the Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 
enacted on March 22, 1995) (UMRA), Executive Order 13132 on Federalism 
(August 4, 1999), and Executive Order 13771 on Reducing Regulation and 
Controlling Regulatory Costs (January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.

C. Anticipated Effects

    As discussed in the Collection of Information section of this 
proposed rule, the proposed collections of information in this rule are 
exempt from Paperwork Reduction Act. However, we will identify here the 
estimated costs and savings associated with this proposed rule.

[[Page 10015]]

1. Wage Estimates
    To derive average costs for this estimate, we used data from the 
U.S. Bureau of Labor Statistics' May 2018 National Occupational 
Employment and Wage Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 2 presents 
the mean hourly wage, the cost of fringe benefits and overhead 
(calculated at 100 percent of salary), and the adjusted hourly wage.

                          Table 2--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                      Fringe
                                                    Occupation      Mean hourly    benefits and      Adjusted
                Occupation title                       code         wage ($/hr)    overhead ($/   hourly wage ($/
                                                                                        hr)             hr)
----------------------------------------------------------------------------------------------------------------
Social and Community Services Managers..........         11-9151           34.46           34.46           68.92
Healthcare Social Worker........................         21-1022           28.11           28.11           56.22
Registered Nurse................................         29-1141           36.30           36.30           72.60
----------------------------------------------------------------------------------------------------------------

    As indicated, we are adjusting our employee hourly wage estimates 
by a factor of 100 percent. This is necessarily a rough adjustment, 
both because fringe benefits and overhead costs vary significantly from 
employer to employer, and because methods of estimating these costs 
vary widely from study to study. Nonetheless, we believe that doubling 
the hourly wage to estimate total cost is a reasonably accurate 
estimation method.
2. Minimum Data Set Data
    Unless otherwise noted, numbers drawn from the Minimum Data Set 
(MDS) were generated from internal analysis of MDS data reported to CMS 
by NFs.
3. Estimated Costs of the Proposed Regulations
    Note that all of states' costs associated with the proposed 
regulation changes would be considered administrative costs related to 
administering PASRR and eligible for 75 percent FFP per Sec.  
433.15(b)(9).
a. Updated Terminology, Definition and Data Collection (Sec. Sec.  
483.102, 483.128, 483.132, 483.134)
    We are proposing to replace the name ``Preadmission Screening and 
Annual Resident Review'' with ``Preadmission Screening and Resident 
Review'' in the regulation, to reflect the fact that the statutory 
obligation of ``annual'' Resident Review was removed from section 
1919(e)(7)(B) of the Act in 1996. It is our understanding that most 
states have already updated their program materials to reflect the 
statutory requirement. For states that do retain references to 
``PASARR'' in their documents, we presume the states would make that 
change while making other updates to program documents, and that the 
cost would be absorbed into the cost estimates calculated in the next 
paragraph.
    In Sec.  483.102(b), we propose to update the definitions of MI, 
dementia, and ID, as well as update the diagnostic manuals that would 
be used to identify these conditions. Currently, Sec.  483.102(b)(1) 
and (2) requires that clinicians use the DSM-III-R when identifying MI 
and dementia; we propose that clinicians would use the most current 
edition of the DSM, the DSM-5. Currently, Sec.  483.102(b)(3) also 
requires use of an outdated diagnostic manual for the identification of 
ID; we propose that clinicians instead would use the most current 
edition of the American Association on Intellectual and Developmental 
Disabilities' manual, ``Intellectual Disability: Definition, 
Classification, and Systems of Support, 11th edition''. It is our 
understanding that most clinicians are already using the most current 
versions of diagnostic manuals when identifying MI, dementia, and ID, 
and have been performing a crosswalk between the current manuals and 
those included at Sec.  483.102. We believe that no longer having to 
perform this crosswalk would reduce burden on clinicians. Making this 
update, however, may require that PASRR programs make updates to some 
of their program materials where they have retained references to the 
outdated manuals. We also propose at Sec. Sec.  483.128, 483.132 and 
483.134 to consolidate and simplify the data that must be collected 
from individuals as part of the Level II evaluation process.
    We do not provide or prescribe specific program materials or forms 
for the Level I identification screen and the Level II evaluation and 
determinations (that is, states develop their own documents). We 
presume that these proposed updates described above would necessitate 
revisions to states' internal program documents and Level I and II 
PASRR documents.
    We note that we maintain a technical contract (the PASRR Technical 
Assistance Center) that is a free resource to states, and would be 
available to provide assistance with helping state PASRR programs align 
documents with changes to federal PASRR requirements once they are 
finalized. Assuming states take advantage of this free resource, we 
estimate it would take 16 hours at $68.92/hr for a social and community 
services manager to review and update the program materials. Including 
the state PASRR programs of all 50 states and the District of Columbia 
performing this activity, we estimate a one-time burden of 816 hours 
(51 programs x 16 hr) at a cost of $56,239 (816 hr x $68.92/hr).
b. Preadmission Screening of NF Applicants: Exempted Hospital Discharge 
(Sec.  483.112)
    We propose in Sec.  483.112 to clarify that all individuals, 
including those who qualify for an exemption from Level II Preadmission 
Screening under the exempted hospital discharge would still receive a 
Level I identification screen. (See discussion of Sec.  483.112 for 
information on the exempted hospital discharge and this proposed 
clarification.) The current regulations do not prohibit such 
individuals from receiving Level I identification screens, and it is 
our understanding that at least 15 of the 51 states and District of 
Columbia (29 percent of state PASRR programs) already do perform Level 
I identification screens or collect some other kind of preadmission 
documentation for these individuals.\2\ We believe that our proposed 
change to Sec.  483.112 would not significantly impact these states; we 
provide here an estimate of the cost impact on the states that may not 
currently be collecting preadmission documentation from individuals 
being admitted to NFs under an exempted hospital discharge.
---------------------------------------------------------------------------

    \2\ PASRR Technical Assistance Center, ``Revised 2017 National 
PASRR,'' May 2018. Available at https://www.medicaid.gov/medicaid/ltss/downloads/institutional/2017-pasrr-national-report.pdf. Last 
accessed: August 27, 2019. Data taken from page 7, showing that 15 
states reported they collect data on admissions of people with 
exempted hospital discharges.

---------------------------------------------------------------------------

[[Page 10016]]

    Using nursing home data collected as part of the MDS we estimate 
that there were 2,998,840 individuals admitted to NFs from acute care 
hospitals nationwide in 2016. A portion of these individuals would have 
been eligible for an exempted hospital discharge. We reduce the total 
number of these admissions from acute care hospitals by 29 percent, to 
2,129,176 because, as previously mentioned, 29 percent of states 
collect preadmission documentation from exempted hospital discharges. 
This leaves 2,129,176 individuals potentially admitted to a NF under an 
exempted hospital discharge without a Level I identification screen or 
other collection of preadmission documentation.
    MDS data indicates that 56 percent of individuals admitted to a NF 
from an acute care hospital will end up staying in the NF for more than 
30 days (at which point these individuals would be required to receive 
a Level I identification screen under current rules at Sec.  
483.106(b)(2)(ii)). This means that 1,192,338 individuals (2,129,176 
individuals x 0.56) would still have required a Level I identification 
screen performed post-admission. Under our proposed rule at Sec.  
483.112(b), performing all Level I identification screens preadmission 
would obviate the need for a post-admission Level I identification 
screen. Thus, these 1,192,338 individuals would not represent a new 
cost to state PASRR programs resulting from this proposed rule because 
they would have received a Level I identification screen under the 
current regulations.
    We then presume that the 44 percent of residents discharged before 
30 days may have been eligible for an exempted hospital discharge and 
would not have received a Level I identification screen either before 
or after admission. This would mean that 936,837 individuals (2,129,176 
individuals x 0.44) a year who might not otherwise have received a 
Level I identification screen would now receive a screen under our 
proposed revisions. (We believe this number is on the high end. We are 
assuming here that all individuals admitted from an acute care hospital 
qualified for an exempted hospital discharge, even though many of these 
individuals may have not qualified and thus received a Level I 
identification screen prior to admission.)
    It is our experience that the Level I identification screens take 
0.25 hours at $56.22/hr for a hospital discharge planner (who are often 
social workers) to complete. With one Level I identification screen 
being performed for 936,837 individuals, we estimate an ongoing annual 
burden of 234,209 hours (936,837 screens x 0.25 hr/screen) at a cost of 
$13,167,244 (234,209 hr x $56.22/hr) to complete the Level I 
identification screens.
    Additionally, both current and proposed regulations require that 
only positive Level I identification screens would be forwarded to 
PASRR programs for tracking purposes. According to MDS data, roughly 7 
percent of people who are admitted to NFs are identified as having MI 
or ID, which means that of the 936,837 potential additional Level I 
identification screens, 65,578 (936,837 screens x 0.07) of the Level I 
identification screens may be forwarded to the PASRR programs by the 
Level I screeners. We estimate it would take 6 minutes (0.1 hr) at 
$68.92/hr for a community and social services manager to review and 
process the completed form. In aggregate we estimate an ongoing annual 
burden of 6,558 hours (65,578 screens x 0.1 hr/screen) at a cost of 
$451,967 (6,558 x $68.92/hr) for processing the additional positive 
Level I identification screens.
c. Reporting on Timeliness (Sec.  483.130(j)(1))
    Each state's PASRR program is currently required to comply with the 
requirements at Sec.  483.112(c)(1) which specify that preadmission 
screening must be completed within an average of 7-9 working days, and 
requirements at Sec.  483.106(b)(2)(ii) which specify that Resident 
Reviews for expired exempted hospital discharges be completed within 40 
days of admission. State PASRR programs should already be tracking 
their completion rates to ensure compliance with these requirements. To 
ensure better oversight of compliance with the timeliness standards, we 
propose new language at Sec.  483.130(j)(1) which would require that 
the state report to the Secretary on an annual basis the annual 
averages for the completion of determinations.
    In calculating the cost of this reporting, we assume that states' 
PASRR programs already have in place an effective means to track 
timeliness, as they are already expected under current regulations at 
Sec.  483.112(c) to comply with timeliness requirements. The reporting 
would require the SMHA and SIDA to cooperate with the state Medicaid 
agency (SMA) by providing data to the SMA, which would be responsible 
for reporting the data to the Secretary. We anticipate that the staff 
in each of the SMHA, SIDA, and SMA would be of comparable positions and 
salaries, namely social and community service managers with an adjusted 
wage of $68.92/hr. We estimate that in both the SMHA and the SIDA, 
staff would each require 1 hour to generate, review and submit the data 
to the SMA. We also estimate that the SMA staff would require 1 hour to 
assemble the reported data and submit a report electronically to CMS, 
using a CMS-generated template. This is a total of 3 hours (1 hr SMHA + 
1 hr SIDA + 1 hr SMA). We expect that all 50 states and the District of 
Columbia would submit timeliness annual reports, for an ongoing annual 
burden of 153 hours (3 hr x 51 respondents) at a cost of $10,545 (153 
hr x $68.92/hr).
d. Reporting on Dispositions (Sec.  483.130(j)(2))
    Section 1919(e)(7)(C)(iv) of the Act requires that each state 
report annually to the Secretary the number and disposition of 
individuals who are discharged from NFs because they have been 
determined by the PASRR program to no longer needed NF level of 
services (but still needed specialized services) and individuals who 
are discharged from NFs because they were determined by the PASRR 
program to no longer need NF level of services or specialized services. 
We have not previously issued robust guidance on how to comply with 
this statutory requirement or what kind of information relating to 
discharge should be reported. This rule proposes new language at Sec.  
483.130(j)(2) which would clarify that states must report annually on 
the number of people with MI or ID who are diverted or discharged from 
NFs each year because the PASRR program has determined that the 
individual:
     Does not meet, or no longer meets, the state's criteria 
for NF level of care,
     Requires the level of services offered in another 
institutional setting; or
     Elects to receive services in a non-institutional setting.
    This rule proposes to include reporting on both diversion for 
applicants and discharge for residents, as we believe the intent of 
this statutory reporting requirement was to demonstrate efficacy of the 
PASRR process. The proposed requirement is designed to more effectively 
implement section 1919(e)(7)(C)(iv) of the Act, thus providing better 
insight into whether PASRR programs are fulfilling the statutory goals 
of avoiding unnecessary NF placements.
    Since states do not consistently report on the outcomes for 
applicants and residents, we are using data collected on NF residents 
as part of the MDS to approximate the time that would be spent 
gathering this data. In 2016, approximately 62,000 individuals with

[[Page 10017]]

PASRR-level MI or ID in all 50 states and the District of Columbia were 
discharged from Medicaid-certified NFs into one of the settings we 
contemplate would be reportable under proposed Sec.  483.130(j)(2) 
(community, psychiatric hospital or intermediate care facility for 
individuals with intellectual disabilities). We note here that the 
following cost estimates presumes that all 62,000 PASRR-identified 
individuals discharged from NFs in a year were discharged as a result 
of a PASRR determination. The MDS data does not indicate how many of 
these individuals were discharged as a result of PASRR program 
intervention; some portion of these individuals will have been 
discharged for reasons unrelated to the PASRR program's determination 
and thus would not be subject to the proposed reporting requirement. 
Thus, our cost estimates related to this proposal will be on the high 
end. However, in the absence of more precise data, we will use the 
figure 62,000 discharged individuals for our time and cost estimates.
    We assume that in order to confirm the recommended discharge has 
occurred, NFs may need to send confirmation of the discharges of PASRR-
identified individuals directly to the state PASRR program by a method 
identified by the state. It is our understanding that in many NFs a 
social worker is tasked with PASRR-related duties, taking approximately 
6 minutes (0.1 hr) at $56.22/hr per discharged individual. In aggregate 
we estimate an ongoing annual burden of 6,200 hours (0.1 hr x 62,000 
discharges) at a cost of $348,564 (6,200 hr x $56.22/hr) for all NFs to 
report to their respective state PASRR programs the discharge outcome 
for PASRR-identified individuals.
    Additionally, we estimate that state PASRR program staff would need 
to enter this information from NFs into the PASRR program's tracking 
system. Per each discharged individual we estimate it would take 6 
minutes (0.1 hr) at $68.92/hr for a social and community services 
manager to perform this task. In aggregate, we estimate an ongoing 
annual burden of 6,200 hours (0.1 hr x 62,000 discharges) at a cost of 
$427,304 (6,200 hr x $68.92/hr).
    We also estimate it would take 1 hour at $68.92/hr for a social and 
community services manager to assemble this data into a report and 
submit it to CMS. We anticipate that this report will be submitted 
electronically to CMS via a CMS-developed template and we do not 
estimate additional materials costs to states. In aggregate, we 
estimate an ongoing annual burden of 51 hours (51 respondents x 1 hr/
response) at a cost of $3,515 (51 hr x $68.92/hr).
4 Estimated Savings of the Proposed Rule
a. Changes to State Plan Requirements (Sec.  483.104)
    Section 483.104 requires that states have a PASRR program as a 
condition of approval of the Medicaid State Plan. Currently in the 
Medicaid State Plan, states provide an assurance that they have a PASRR 
program on plan page 4.39. This page is a preprint created by CMS that 
contains boilerplate language regarding PASRR requirements and does not 
require states to provide additional information. As a result of this 
proposed rule, page 4.39 of the Medicaid State Plan would be revised by 
CMS. It was issued in 1993 and contains obsolete references to 
``Preadmission Screening and Annual Resident Review.'' In this proposed 
rule we propose to remove ``annual'' before ``Resident Review,'' and 
replace the acronym ``PASARR'' with ``PASRR,'' to reflect the statutory 
change made in 1996 (by Pub. L. 104-315) that removed the ``annual'' 
requirement for Resident Review. Page 4.39 would also be impacted by 
our proposal to remove categorical determination requirements (as 
discussed in Sec.  483.130 of this rule), so we would need to remove 
references to that requirement. Because the page simply contains 
boilerplate language and does not require the state to provide 
additional information, we do not believe it would be administratively 
efficient to require states to go through the State Plan Amendment 
(SPA) process to affirm the updated preprint. Rather, as page 4.39 
(which is currently paper-based) is slated to be included in CMS' 
transition of the Medicaid State Plan to an electronic format (MACPro), 
we propose to make the necessary updates when page 4.39 is added to 
MACPro (CMS-10434, OMB control number: 0938-1188) as part of the 
routine business of that transition. No action would be required of 
states, aside from receiving electronic notice of the updated page.
    However, by proposing to eliminate categorical determinations (as 
is discussed in Sec.  483.130 of this proposed rule), we would 
eliminate the requirement for states to submit an attachment to page 
4.39 describing the categorical determinations that they apply in their 
program. States are not required to update this page on a regular 
schedule, but rather submit updates via the SPA process whenever 
changes are made to their program. All 50 states and the District of 
Columbia have a PASRR program, and almost all of these programs have 
made updates to these attachments since the PASRR requirements were 
originally issued. We estimate that revising the attachment to page 
4.39 takes 4 hours at $68.92/hr for a social and community service 
manager to generate and submit their state's 4.39 page attachment to 
CMS for approval. Since this rule proposes to remove the requirement 
for the attachment, we estimate a one-time savings of 204 hours (1 SPA 
x 4hr/response x 51 programs). This amounts to a one-time savings of 
$14,060 (204hr x $68.92/hr).
b. Provisional Admissions (Sec.  483.102(b)(3))
    We propose in Sec.  483.112(b)(3) to eliminate the need for Level 
II Preadmission Screening of individuals who are admitted to NFs as a 
``provisional admission'' meaning the individual was admitted with 
delirium or as part for emergency, respite, or convalescent reasons. 
Under current regulations at Sec.  483.130(d), these individuals would 
be required to receive a Level II categorical determination.
    While we do not collect information from state PASRR programs on 
the number of categorical determinations they perform in a year, MDS 
data suggests that about 7 percent of NF residents are identified as 
having MI or ID for PASRR purposes. We estimate that there are 
3,748,550 new admissions to NFs each year (from both acute care 
hospitals and other settings), of which roughly 7 percent or 262,399 
individuals (3,748,550 new admissions x 0.07) may be identified as 
having MI or ID necessitating a Level II screen. Of those individuals, 
we further estimate that half of these individuals, or 131,200 
individuals (262,399/2) would be eligible for a provisional admission 
who would have previously been required to receive a Level II 
categorical determination prior to admission.
    Anecdotal evidence suggests that categorical determinations take 2 
hours at $72.60/hr for a registered nurse to complete the Level II 
categorical determination and communication the information to the 
admitting NF. In aggregate we estimate an annual savings of 262,400 
hours (2 hr x 131,200) and $19,050,240 (262,400 hr x $72.60/hr).
c. Terminating Evaluations (Sec.  483.128)
    We propose to revise the language at Sec.  483.128(m), which 
specifies when evaluators may terminate evaluations. We propose to 
expand on the number of conditions under which an evaluation could be 
terminated. The current Sec.  483.128(m) allows evaluators to

[[Page 10018]]

terminate the evaluation if: (1) The evaluator finds that the 
individual being evaluated does not have MI or ID within the definition 
of proposed Sec.  483.102 or (2) the individual has MI but also has 
primary dementia. We propose to revise Sec.  483.128(m) to indicate the 
evaluations may be terminated without further evaluation of the need 
for NF level of services or specialized services if the evaluator finds 
that the individual being evaluated (1) does not have MI or ID within 
the definition of Sec.  483.102; (2) has not experienced a qualifying 
significant change in physical or mental condition as defined in 
proposed Sec.  483.114(b)(2); or (3) has a severe physical illness 
(such as ventilator dependency; advanced Parkinson's disease, 
Huntington's disease, amyotrophic lateral sclerosis; or is comatose or 
functioning at a brain stem level), terminal illness; or advanced 
dementia (as defined in Sec.  483.102(b)(2) which results in a level of 
impairment so severe that the individual could not be effectively 
evaluated for the need for NF level of services and specialized 
services.
    The first condition of our proposed change to Sec.  483.128(m) 
mirrors the current regulation (allowing evaluators to terminate an 
evaluation if the individual does not have MI or ID.) The second 
proposed condition (the individual did not experience a qualifying 
significant change in physical or mental condition) is intended to 
memorialize what we believe to be current practice among PASRR 
programs. We do not expect this part of our proposed change to Sec.  
483.128(m) to have an impact on PASRR program expenditures.
    The list of physical and neurocognitive conditions that we propose 
in Sec.  483.128(m) would replace the current categorical 
determinations criteria in current Sec.  483.130(d) and (h). Under the 
current regulations, categorical determinations function as expedited 
determinations for people with certain conditions. As discussed in the 
narrative above, we consider the current framework of categorical 
determinations to add unnecessary complexity to the PASRR process and 
propose to eliminate categorical determinations. We propose to expand 
the number of conditions under which a Level II evaluation may be 
terminated in order to retain the principle that evaluations should not 
be performed needlessly on individuals who, as a result of severe 
physical illness or cognitive impairment, cannot participate in the 
evaluations (and would not be expected to benefit from specialized 
services.)
    We believe this proposal would reduce costs for PASRR programs. 
Because there is great variability among states' current use of 
categorical determinations for NF applicants with severe illness, 
terminal illness, and co-occurring ID/dementia, we cannot estimate the 
exact impact of this proposal. For states with a robust or highly 
expedited system of categorical determinations, we expect that 
terminating an evaluation for people with severe physical illness, 
terminal illness, or co-occurring ID/dementia would require comparable 
effort as performing the categorical determination for those same 
individuals. For states that do not use categorical determinations--
meaning that NF applicants with severe physical illness, terminal 
illness and co-occurring ID/dementia receive complete Level II 
evaluations and determinations--we expect the savings to be greater, 
since those state PASRR programs would not need to perform as many 
comprehensive Level II evaluations for these individuals. We welcome 
public comment on the potential costs and savings associated with this 
proposal.
d. Telehealth (Sec.  483.128)
    We propose at Sec.  483.128(f) that, for evaluations that would 
otherwise need to be conducted face-to-face, telehealth evaluations may 
be performed if conducting a face-to-face interview would, due to 
resource limitations, geographical distances, or other circumstances, 
prevent timely completion of the PASRR Level II evaluation and 
determination process. We believe this proposal would present a cost 
savings for PASRR programs. Using telehealth technologies in states 
with large geographical areas, for instance, would likely be less 
expensive than paying for the time and travel costs for staff who would 
otherwise need to travel long distances to reach NF applicants and 
residents.
    We cannot estimate the cost savings that would result from this 
proposal because we expect that implementation of this proposal would 
vary greatly among the states. Some states have already begun piloting 
telehealth technologies in their PASRR programs, so will not incur new 
cost savings as a result of this proposed regulation. Many states may 
be able to fulfill all of their evaluation obligations without needing 
telehealth technology and will not be impacted by this proposal. Of the 
states that might choose to decide to use telehealth technologies as a 
result of this proposal, the technologies that they use and the 
associated costs or savings will vary, as will the number of 
individuals reached via telehealth. We would note that the use of 
telehealth is not proposed as a requirement, but rather presented as an 
option for states to explore if the states individually determine that 
using telehealth technology would provide them with cost savings or 
other meaningful benefit. We welcome public comment on the potential 
costs and savings associated with this proposal.
5. Summary of Estimated Costs and Savings

                                      Table 3--Estimated Costs and Savings
----------------------------------------------------------------------------------------------------------------
                                                                 Total estimated annual   Total estimated annual
 Provision under Title 42 of the CFR      Responsible entity              cost                   savings
----------------------------------------------------------------------------------------------------------------
Sec.  Sec.   483.102, 483.128,         State PASRR programs...  $56,239 (one-time).....
 483.132, 483.134--Updating PASRR
 Level I and Level II forms.
Sec.   483.112--Level Is for exempted  State's designated       $13,167,244 (ongoing)..
 hospital discharges performed          Level I entities.
 preadmission.
Sec.   483.112--PASRR programs         State PASRR programs...  $451,957 (ongoing).....
 processing Level Is for exempted
 hospital discharges.
Sec.   483.130(j)(i)--Reporting on     State PASRR programs...  $10,545 (ongoing)......
 timeliness.
Sec.   483.130(j)(ii)--Reporting on    NFs....................  $348,564 (ongoing).....
 dispositions to PASRR program.
Sec.   483.130(j)(ii)--Collecting      State PASRR programs...  $427,304 (ongoing).....
 information on dispositions.
Sec.   483.130(j)(ii)--Reporting on    State PASRR programs...  $3,515 (ongoing).......
 dispositions to CMS.

[[Page 10019]]

 
Sec.   483104--State Plan changes....  State PASRR programs...  .......................  ($14,060) (one-time).
Sec.   483.112--Provisional            State PASRR programs...  .......................  ($19,050,240)
 admissions.                                                                              (ongoing).
                                                               -------------------------------------------------
    Total............................  .......................  $14,465,378............  ($19,064,300).
        Net costs/savings (Year 1)...  .......................  .......................  ($4,598,922).
        Net costs/savings (ongoing)..  .......................  .......................  ($4,641,101).
----------------------------------------------------------------------------------------------------------------

    The Regulatory Flexibility Act (RFA) requires agencies to analyze 
options for regulatory relief of small entities, if a rule has a 
significant economic impact on a substantial number of small entities. 
For purposes of the RFA, we estimate that many NFs are small entities 
as that term is used in the RFA (including small businesses, nonprofit 
organizations, and small governmental jurisdictions). Many nursing 
facilities and hospitals are small entities, either by being nonprofit 
organizations or by meeting the Small Business Administration's (SBA) 
definition of a small business having revenues of less than $25.5 
million in any 1 year (see the SBA's website at http://www.sba.gov/content/small-business-size-standards). However, while NFs would be 
subject to the proposed rule, we do not believe this proposed rule will 
have a significant economic impact on a substantial number of small 
entities. As noted above, the estimated total impact on NFs as a result 
of this rule is projected at an annual cost of $348,564, resulting from 
the proposed requirement that NFs confirm with state PASRR programs 
when PASRR-identified residents are discharged from the after the PASRR 
program has determined the resident no longer needs NF services. As 
noted in the analysis of this proposed cost, we believe the estimate of 
$348,564 to NFs is on the high end. (See discussion in the section on 
Estimated Costs of the Proposed Rule, above.) This total cost would be 
distributed among nearly 15,000 NFs. (According to recent data, there 
are 14,524 dually-certified nursing homes and 354 Medicaid-only nursing 
homes, all of which would be subject to PASRR requirements and would 
share in the total estimated annual costs associated with this proposed 
rule.) Because the Secretary certifies that rule will not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities, a regulatory flexibility analysis is not required.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This 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 that is located outside of 
a metropolitan statistical area and has fewer than 100 beds. This rule 
will not have a significant impact on the operations of a substantial 
number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2020, that 
threshold is approximately $156 million. This rule does not contain 
mandates that will impose spending costs on state, local, or tribal 
governments in the aggregate, or by the private sector, in excess of 
the threshold.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a proposed rule that imposes 
substantial direct compliance costs on state and local governments, 
preempts state law, or otherwise has Federalism implications. This rule 
does not have a substantial direct cost impact on state or local 
governments, nor does it preempt state law.

D. Alternatives Considered

    This proposed rule contains a range of other proposed policies. We 
have provided descriptions of the statutory provisions that are 
addressed, identified the proposed policies, and presented rationales 
for our decisions. We have attempted to make proposals that would 
adequately address the need to update the PASRR requirements, promote 
better oversight, and improve outcomes for PASRR-identified 
individuals. We solicit feedback on this proposed rule, including any 
alternative policies stakeholders identify that would support the 
principles of efficiency, accountability, quality, and self-direction 
in long-term care.
    We did consider a specific alternative regarding inclusion of 
people with acquired and traumatic brain injury. We proposed updates to 
the definitions of mental illness, intellectual disability, and 
dementia in Sec.  483.102. Sections 1919(e)(7)(G)(i) and 
1919(e)(7)(G)(ii) of the Act provide broad definitions for PASRR-
eligible mental illness and intellectual disability. We are aware that 
people who experience acquired or traumatic brain injuries sometimes 
require supports that overlap with those provided to people with 
intellectual disability. While individuals who acquire a brain injury 
prior to age 22 sometimes qualify for PASRR consideration due to having 
a ``related condition'' as defined in Sec.  435.1010. We are aware, 
however, that individuals who have acquired brain injuries after the 
age 22 are typically regarded as ineligible for PASRR. We considered 
the possibility of explicitly expanding PASRR eligibility to 
individuals with acquired or traumatic brain injury (without an age 
restriction), but were not certain that this expansion would be 
supported by section 1919(e)(7) of the Act or the definition of 
``related conditions'' provided in Sec.  435.1010. We were also 
concerned that attempting to add traumatic brain injury to the 
definition of ``related conditions'' in Sec.  435.1010 could have 
unintentional consequences for other programs or policies that rely on 
this definition.
    We considered a specific alternative in the requirements relating 
to provisional admissions. We propose in Sec.  483.112(b)(3) to create 
a set of conditions under which someone may be considered a provisional 
admission to a NF and does not require Preadmission Screening. Among 
these conditions we propose that individuals admitted for a 
convalescent care stay would be eligible for this Preadmission 
Screening exemption so long as the convalescent stay is not expected to 
exceed 30 days. (See discussion of this proposal in the discussion of 
Sec.  483.112(b)(3).) We considered extending this length of time to 60 
days, but were concerned that this might compromise the care for 
individuals admitted under this provisional admission. For individuals 
in need of specialized services, 60 days without these reports could 
may put the individuals at risk of decompensation or

[[Page 10020]]

functional loss. While we do not want to require unnecessary Level II 
evaluations for individuals staying in NFs for comparatively short 
periods, we also want to ensure that individuals with MI or ID receive 
appropriate supports in NFs.

E. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. This proposed rule, 
if finalized, is expected to be an E.O. 13771 deregulatory action. We 
estimate that this rule generates $3.4 million in annualized cost 
savings, discounted at 7 percent relative to year 2016, over a 
perpetual time horizon. Details on the estimated cost savings of this 
rule can be found in the preceding analyses.

F. Conclusion

    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 431

    Grant programs--health, Health facilities, Medicaid, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 433

    Administrative practice and procedure, Child support, Claims, Grant 
programs--health, Medicaid, Reporting and recordkeeping requirements.

42 CFR Part 435

    Aid to Families with Dependent Children, Grant programs--health, 
Medicaid, Reporting and recordkeeping requirements, Supplemental 
Security Income (SSI), Wages.

42 CFR Part 441

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

42 CFR Part 483

    Grant programs--health, Health facilities, Health professions, 
Health records, Incorporation by reference, Medicaid, Medicare, Nursing 
homes, Nutrition, Reporting and recordkeeping requirements, Safety.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth 
below:

PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION

0
 1. The authority for part 431 is revised to read as follows:

    Authority:  42 U.S.C. 1302.

0
2. Section 431.200 is amended by revising paragraph (c)(2) to read as 
follows:


Sec.  431.200   Basis and scope.

* * * * *
    (c) * * *
    (2) Is adversely affected by the preadmission screening or the 
resident review that are required by section 1919(e)(7) of the Act and 
further described in part 483, subpart C of this chapter.
* * * * *
0
3. Section 431.201 is amended by revising the definition of ``Date of 
action'' to read as follows:


Sec.  431.201   Definitions.

* * * * *
    Date of action means the intended date on which a termination, 
suspension, reduction, transfer or discharge becomes effective. It also 
means the date of the determination made by a State with regard to the 
preadmission screening and resident review requirements under part 483, 
subpart C of this chapter.
* * * * *
0
4. Section 431.206 is amended by revising paragraph (c)(4) to read as 
follows:


Sec.  431.206   Informing applicants and beneficiaries.

* * * * *
    (c) * * *
    (4) At the time an individual receives an adverse determination by 
the State with regard to the preadmission screening and resident review 
requirements under part 483, subpart C of this chapter.
* * * * *
0
5. Section 431.213 is amended by revising paragraph (g) to read as 
follows:


Sec.  431.213   Exceptions from advance notice.

* * * * *
    (g) The notice involves an adverse determination made with regard 
to the preadmission screening and resident review requirements under 
part 483, subpart C of this chapter; or
* * * * *
0
 6. Section 431.220 is amended by revising paragraph (a)(3) to read as 
follows:


Sec.  431.220   When a hearing is required.

    (a) * * *
    (3) Any individual who requests it because he or she believes the 
State has made an erroneous determination with regard to the 
preadmission screening and resident review requirements under part 483, 
subpart C of this chapter.
* * * * *
0
7. Section 431.241 is amended by revising paragraph (c) to read as 
follows:


Sec.  431.241   Matters to be considered at the hearing.

* * * * *
    (c) A State determination with regard to the preadmission screening 
and resident review requirements under part 483, subpart C of this 
chapter.
0
8. Section 431.244 is amended by revising paragraph (f)(3)(i) to read 
as follows:


Sec.  431.244   Hearing decisions.

* * * * *
    (f) * * *
    (3) * * *
    (i) For a claim related to eligibility described in Sec.  
431.220(a)(1), or any claim described in Sec.  431.220(a)(2) (relating 
to a nursing facility) or Sec.  431.220(a)(3) (related to preadmission 
screening and resident review), as expeditiously as possible and, 
effective no later than the date described in Sec.  435.1200(i) of this 
chapter, no later than 7 working days after the agency receives a 
request for expedited fair hearing; or
* * * * *


Sec.  431.250   [Amended]

0
 9. Section 431.250 is amended in paragraph (f)(4) by removing the word 
``annual''.


Sec.  431.621   [Amended]

0
10. Section 431.621 is amended--
0
a. In paragraphs (a) and (c)(3), (6), and (7) by removing the term 
``PASARR'' and adding in its place the term ``PASRR'';
0
b. In paragraphs (a) and (c)(4) by removing the word ``annual'';
0
c. In paragraphs (a), (b), (c) introductory text, and (c)(2), (5), and 
(6) by removing the phrase ``Intellectual Disability'' and adding in 
its place the phrase ``intellectual disability'';
0
d. In paragraph (c)(4) by removing the reference ``483.114(c)'' and 
adding in its place the reference ``Sec.  483.114(d)'';
0
e. In paragraphs (c)(4) and (5) by removing the word ``part'' and 
adding in its place the word ``chapter'';.
0
f. In paragraph (c)(6) by removing the phrase ``under its approved 
State plan''; and
0
g. In paragraph (c)(8) by removing the reference ``483.136'' and adding 
in its place the reference ``483.138 of this chapter''.

[[Page 10021]]

PART 433--STATE FISCAL ADMINISTRATION

0
11. The authority citation for part 433 is revised to read as follows:

    Authority:  42 U.S.C. 1302.


Sec.  433.15   [Amended]

0
12. Section 433.15 is amended in paragraphs (b)(9) by removing the term 
``PASARR'' and adding in its place the phrase ``PASRR''; and by 
removing the word ``annual''.

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE 
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA

0
 13. The authority citation for part 435 is revised to read as follows:

    Authority:  42 U.S.C. 1302.


Sec.  435.1010  [Amended]

0
14. Section 435.1010 is amended in the definition of ``Persons with 
related conditions'' in paragraph (a)(2) by removing the phrase 
``mentally retarded persons,'' and adding in its place the phrase 
``people with intellectual disabilities,''.

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

0
 15. The authority citation for part 441 continues to read as follows:

    Authority:  42 U.S.C. 1302.

0
8. Section 441.303 is amended--
0
a. By revising paragraph (f)(4); and
0
b. In paragraph (f)(9) by removing the term ``PASARR'' and adding in 
its place the phrase ``PASRR''.
    The revision reads as follows:


Sec.  441.303   Supporting documentation required.

* * * * *
    (f) * * *
    (4) In making estimates of average per capita expenditures for a 
separate waiver program that applies only to individuals with 
developmental disabilities who are identified through the preadmission 
screening and resident review (PASRR) process, residents of a NF, or 
require the level of care provided in an ICF/IID as determined by the 
State on the basis of an evaluation under Sec.  441.303(c), the agency 
may determine the average per capita expenditures that would have been 
made in a fiscal year for those individuals based on the average per 
capita expenditures for residents in an ICF/IID. When submitting 
estimates of institutional costs without the waiver, the agency may use 
the average per capita costs of ICF/IID care even though the 
deinstitutionalized individuals with developmental disabilities were 
residents of NFs.
* * * * *

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

0
16. The authority citation for part 483 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1320a-7, 1395i, 1395hh and 1396r.

0
17. Section 483.20 is amended--
0
a. In paragraphs (e) introductory text and (e)(1) by removing the term 
``PASARR'' and adding in its place the term ``PASRR'';
0
b. In paragraph (e)(1) removing the word ``recommendations'' and adding 
in its place the word ``findings'', and by removing the phrase ``, care 
planning, and transitions of care'';
0
c. By revising paragraph (e)(2);
0
d. In paragraph (k) subject heading, by adding ``and resident review'' 
after ``Preadmission screening'';
0
e. In paragraph (k) heading, by removing the phrase ``mental disorder'' 
and adding in its place the phrase ``mental illness'';
0
f. In paragraph (k)(1)(i) introductory text, by removing the phrase 
``Mental disorder'' and adding in its place the phrase ``Mental 
illness'';
0
g. In paragraph (k)(2)(i) by adding the phrase ``Level I identification 
screening and Level II evaluations and'' before the word 
``determinations'';
0
h. By revising paragraph (k)(2)(ii) introductory text;
0
i. By adding paragraph (k)(2)(iii);
0
j. In paragraphs (k)(3)(i), by removing the phrase ``mental disorder'' 
and adding in its place the phrase ``mental illness''; and
0
k. By revising paragraph (k)(4).
    The revisions and additions read as follows:


Sec.  483.20   Resident assessment.

* * * * *
    (e) * * *
    (2) Referring all residents with newly evident or possible mental 
illness or an intellectual disability or related condition for Level II 
resident review within 72 hours of when the facility identifies 
conditions indicating possible mental illness or intellectual 
disability or related condition as described in Sec.  483.126.
* * * * *
    (k) * * *
    (2) * * *
    (ii) The State must apply Level I identification screening, but may 
choose not to apply Level II preadmission screening under paragraph 
(k)(1) of this section, to the admission to a nursing facility of an 
individual--
* * * * *
    (iii) The State must apply Level I identification screening, but 
may choose not to apply the Level II preadmission screening program 
under paragraph (k)(1) of this section, to the admission to a nursing 
facility of an individual who qualifies as a ``provisional admission'' 
in accordance with Sec.  483.112(b)(3).
* * * * *
    (4) Residents with mental illness or intellectual disability who 
are experiencing a significant change in physical or mental condition 
(as defined in paragraph (b)(2)(ii) of this section) must be referred 
by the nursing facility within 72 hours of the significant change to 
the state mental health authority or state intellectual disability 
authority, as applicable, for a resident review.
0
18. Section 483.21 is amended--
0
a. In paragraph (a)(1)(ii)(F) by removing the term ``PASARR'' and 
adding in its place the term ``PASRR''; and
0
b. Revising paragraph (b)(1)(iii).
    The revision reads as follows:


Sec.  483.21  Comprehensive person-centered care planning.

* * * * *
    (b) * * *
    (1) * * *
    (iii) Any specialized services (provided or arranged for by the 
state) or specialized rehabilitative services (provided by the nursing 
facility) as a result of PASRR recommendations. If a facility disagrees 
with the PASRR recommendations, it may request a Level II resident 
review. Changes to PASRR recommendations in the plan of care must be 
authorized by the PASRR program as part of a Level II determination in 
accordance with Sec.  483.130.
* * * * *

Subpart C--Preadmission Screening and Resident Review for 
Individuals with Mental Illness or Intellectual Disability

0
19. The heading for subpart C is revised to read as set forth above.


Sec.  483.100  [Amended]

0
20. Section 483.100 is amended--
0
a. By removing the term ``annual''; and
0
b. By removing the term ``PASARR'' and adding in its place the term 
``PASRR''.
0
21. Section 483.102 is amended--
0
a. By revising paragraphs (b)(1) and (2) and (b)(3)(i);

[[Page 10022]]

0
b. In paragraph (b)(3) introductory text by adding a subject heading; 
and
0
c. By adding paragraph (c).
    The revisions and addition read as follows:


Sec.  483.102  Applicability and definitions.

* * * * *
    (b) * * *
    (1) Mental illness. An individual is considered to have a mental 
illness (MI) if:
    (i) The individual has within the past year had a serious and 
persistent mental disorder meeting the criteria specified within the 
Diagnostic and Statistical Manual of Mental Disorders, 5th edition 
(2013), incorporated by reference in paragraph (c) of this section, 
with the exception of conditions that would fall under DSM-5 ``V'' 
codes, substance use or substance/medication-induced disorders, 
neurodevelopmental disorders, and neurocognitive disorders;
    (ii) The disorder has been determined by a qualified clinician to 
be acute or in partial remission, have recurrent or persistent features 
and, if the DSM includes a severity scale for the disorder, the 
severity level of the disorder is moderate to severe;
    (iii) The disorder has resulted in functional impairment which has 
substantially interfered with or limited one or more major life 
activity (including activities of daily living; instrumental activities 
of daily living; or functioning in social, family, and academic or 
vocational contexts), or would have caused functional impairment 
without the benefit of treatment or other support services; and
    (iv) A qualified clinician has found that the mental illness is not 
a secondary characteristic of a primary diagnosis of dementia (or 
neurocognitive disorder due to Alzheimer's disease or related 
conditions), as defined in paragraph (b)(2) of this section.
    (2) Dementia. An individual is considered to have dementia if he or 
she has a primary diagnosis of a major neurocognitive disorder (other 
than delirium) as described in the Diagnostic and Statistical Manual of 
Mental Disorders, 5th edition, revised in 2013. An individual with co-
occurring diagnoses of MI and major neurocognitive disorder would not 
be automatically considered to have ``primary dementia'' unless a 
qualified clinician has confirmed that the individual's primary 
diagnosis is a major neurocognitive disorder.
    (3) Intellectual Disability. * * *
    (i) A disability, with onset before age 18, which is characterized 
by significant limitations in both intellectual functioning and 
adaptive behavior, as described in the American Association on 
Intellectual and Developmental Disabilities' Intellectual Disability: 
Definition, Classification, and Systems of Support, 11th edition 
(2010), incorporated by reference in paragraph (c) of this section; or
* * * * *
    (c) Incorporation by reference. The standards incorporated by 
reference in this section are approved for incorporation by reference 
by the Director of the Office of the Federal Register in accordance 
with 5 U.S.C. 552(a) and 1 CFR part 51. You may obtain the material 
from the sources listed below. You may inspect a copy at the CMS 
Information Resource Center, 7500 Security Boulevard, Baltimore, MD or 
at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. If any changes in this 
edition of the Code are incorporated by reference, CMS will publish a 
document in the Federal Register to announce the changes.
    (1) Diagnostic and Statistical Manual of Mental Disorders, 5th 
edition (2013).
    (2) Association on Intellectual and Developmental Disabilities' 
Intellectual Disability: Definition, Classification, and Systems of 
Support, 11th edition (2010).


Sec.  483.104  [Amended]

0
22. Section 483.104 is amended by removing the word ``annual''.
0
23. Section 483.106 is revised to read as follows:


Sec.  483.106  Basic rules and responsibilities.

    (a) Purpose. The preadmission screening and resident review process 
must result in determinations based on a physical and mental evaluation 
of each individual with MI or ID, that are described in Sec. Sec.  
483.112 and 483.114.
    (b) Requirement. The State PASRR program must require:
    (1) Identification of all applicants for admission to and residents 
of Medicaid certified NFs who have possible MI or ID;
    (2) Preadmission screening of all eligible new admissions with MI 
or ID who apply to Medicaid NFs and tracking of individuals with 
possible MI or ID admitted under preadmission screening exceptions, in 
accordance with Sec.  483.112; and
    (3) Resident review of eligible residents with MI or ID in 
accordance with Sec.  483.114.
    (c) State Medicaid agency responsibilities. The State Medicaid 
agency is responsible for:
    (1) Ensuring that the PASRR process is in compliance with this 
subpart;
    (2) Executing and enforcing written interagency agreements with the 
State mental health and intellectual disability authorities as required 
at Sec.  431.621 of this chapter;
    (3) Designating an entity to perform evaluations of individuals 
with MI;
    (4) Ensuring timely and accurate reporting of data in accordance 
with Sec.  483.130(j); and
    (5) All PASRR functions not otherwise assigned to another entity by 
statute or regulation.
    (d) Responsibility for evaluations and determinations. The PASRR 
determinations of whether an individual requires NF level of services 
and whether specialized services are needed--
    (1) For individuals with MI, must be made by the State mental 
health authority and be based on a physical and mental evaluation 
performed by a person or entity that is independent from the State 
mental health authority; and
    (2) For individuals with ID, must be made by the State intellectual 
disability authority based on a physical and mental evaluation 
performed by the State intellectual disability authority or its 
designee.
    (e) Delegation of responsibility. The State Medicaid agency and the 
State mental health and intellectual disability authorities may 
delegate by subcontract or otherwise the functions for which they are 
responsible to another entity only if:
    (1) The State Medicaid agency and the State mental health and 
intellectual disability authorities retain ultimate control and 
responsibility for the performance of their statutory obligations;
    (2) The entity to which the State Medicaid agency delegates the 
evaluation function for individuals with MI is independent from the 
State mental health authority; and
    (3) The entity to which the delegation is made for evaluation and 
determinations is not a NF or an entity that has a direct or indirect 
affiliation or relationship with a NF.
    (f) Adaptation to culture, language, ethnic origin. Evaluations 
performed under PASRR and PASRR-related communications must be adapted 
to the cultural background, language, ethnic origin and means of 
communication used by the individual being evaluated. At no cost to the 
individual, evaluations should include as needed qualified

[[Page 10023]]

interpreters as required by section 1557 of the Affordable Care Act and 
Title VI of the Civil Rights Act of 1964, and qualified sign language 
interpreters and auxiliary aids as required by section 1557 of the 
Affordable Care Act and section 504 of the Rehabilitation Act of 1973, 
to ensure there is effective communication.
0
24. Section 483.108 is amended--
0
a. By revising the section heading.
0
b. In paragraph (a) by removing the term ``PASARR'' each time it 
appears and adding in its place the term ``PASRR''; and
0
c. By revising paragraphs (b) and (c).
    The revisions read as follows:


Sec.  483.108  Relationship of PASRR to other Medicaid processes.

* * * * *
    (b) In making their determinations, however, the State mental 
health and intellectual disability authorities must not use criteria 
relating to the need for NF level of services or specialized services 
that are inconsistent with this regulation and any supplementary 
criteria adopted by the State Medicaid agency.
    (c) To the maximum extent practicable, in order to avoid 
duplicative testing and effort, information gathered by the PASRR 
process must be incorporated into the routine resident assessments 
required by Sec.  483.20(b), whenever possible.
0
25. Section 483.110 is revised to read as follows:


Sec.  483.110  Out-of-state arrangements.

    The State in which the individual is a State resident (or would be 
a State resident at the time he or she becomes eligible for Medicaid), 
as defined in Sec.  435.403 of this chapter, must pay for the PASRR and 
make the required determinations, in accordance with Sec.  431.52(b) of 
this chapter.
0
26. Section 483.112 is revised to read as follows:


Sec.  483.112  Preadmission screening of applicants for admission to 
NFs.

    (a) Preadmission Level I. All individuals applying to Medicaid 
certified NFs as new admissions as defined in paragraph (b)(1) of this 
section, must receive a Level I identification screen (pursuant to 
Sec.  483.126) prior to admission to a Medicaid certified NF.
    (b) Who must receive Level II preadmission screening. New 
admissions with positive Level I screens (as described in Sec.  
483.126) who are applying to become a new resident of a Medicaid 
certified NF must receive preadmission screening prior to admission. 
Preadmission screening, also referred to in these regulations as Level 
II preadmission screening, consists of a Level II evaluation and 
determination in accordance with Sec. Sec.  483.128 and 483.130.
    (1) New admission. An individual is a new admission if he or she is 
admitted to any NF for the first time or does not qualify as a 
readmission as described in paragraph (b)(4) of this section or inter-
facility transfer as described in paragraph (b)(5) of this section. 
With the exception of certain hospital discharges described in 
paragraph (b)(2) of this section or provisional admission described in 
paragraph (b)(3) of this section, new admissions are subject to Level 
II preadmission screening (as defined in paragraph (b) of this 
section).
    (2) Exempted hospital discharge. Exempted hospital discharges are 
considered new admissions and require Level I identification screening 
(as described in Sec.  483.126), but are exempted from Level II 
preadmission screening (as defined in paragraph (b) of this section).
    (i) An exempted hospital discharge means an individual--
    (A) Who is admitted to any NF directly from a hospital after 
receiving acute inpatient care at the hospital;
    (B) Who requires NF services for the condition for which he or she 
received care in the hospital; and
    (C) Whose attending physician has certified before admission to the 
facility that the individual is likely to require less than 30 days of 
nursing facility services.
    (ii) If an individual with possible MI or ID (as identified by the 
Level I identification process) who enters a NF as an exempted hospital 
discharge is later found to require more than 30 days of NF care, the 
State PASRR program must complete a resident review within 40 calendar 
days of admission.
    (3) Provisional admissions. Provisional admissions are considered 
new admissions and require Level I identification screening (as 
described in Sec.  483.126), but are not considered new residents, and 
may be exempted from Level II preadmission screening (as defined in 
paragraph (b) of this section).
    (i) A provisional admission means an individual is being admitted 
to a NF for a short, time-limited stay. Provisional admissions are 
admissions for:
    (A) Emergency stays due to emergency evacuations or protective 
services placements, with placement in the NF not to exceed 14 days;
    (B) Delirium, where an accurate diagnosis cannot be made until the 
delirium clears, but is expected to clear within 14 days;
    (C) Respite stays of up to 30 consecutive days to provide respite 
to in-home caregivers; or
    (D) Convalescent stays of up to 30 days in which an applicant:
    (1) Requires a stay in the NF to recover from an acute physical 
illness that required hospitalization; and
    (2) Does not meet all the criteria for an exempted hospital 
discharge described in paragraph (b)(2) of this section.
    (ii) If an individual with possible MI or ID (as identified by the 
Level I identification process) who enters a NF as a provisional 
admission is later found to require more than 14 days of NF care (for 
emergency admissions or delirium) or more than 30 days of NF care (for 
respite or convalescent stay admissions), the State PASRR program must 
complete a resident review in accordance with Sec.  483.114 within 24 
calendar days of admission (for emergency admissions or delirium) or 
within 40 calendar days of admission (for respite or convalescent stay 
admissions).
    (4) Readmissions. An individual's status is deemed to be a 
``readmission'' if he or she was readmitted to a facility from a 
hospital to which he or she was transferred for the purpose of 
receiving care. Readmissions who received Level I identification 
screens and Level II evaluation and determinations (if applicable) as 
new admissions do not need to repeat these processes upon readmission. 
Readmissions may still be subject to resident review as needed, in 
accordance with Sec.  483.114.
    (5) Inter-facility transfers. (i) An inter-facility transfer occurs 
when an individual is transferred from one NF to another NF, with or 
without an intervening hospital stay. With the exceptions noted in 
paragraphs (b)(5)(ii) and (iii) of this paragraph, residents receiving 
inter-facility transfers who previously received Level I identification 
screens as new admissions and Level II preadmission screening or 
resident review (if applicable) do not need a new Level I 
identification screen or Level II preadmission screening upon inter-
facility transfer.
    (ii) In cases of transfer of a resident to another NF, with or 
without an intervening hospital stay, the receiving NF is responsible 
for ensuring that copies of the resident's most recent Level I and, if 
applicable, Level II PASRR documentation accompany the transferring 
resident. If such paperwork is missing, or does not reflect the 
individual's current physical and mental condition, the individual must 
be treated as a new admission.

[[Page 10024]]

    (iii) Individuals who are transferred from one NF to another with 
an intervening stay in an inpatient facility in which the individuals 
received inpatient psychiatric treatment or active treatment (as 
defined at Sec.  483.440(a) of this part) must be treated as new 
admissions.
    (c) Timeliness of determination. A preadmission Level II 
determination must be made electronically or in writing within an 
annual average of 9 calendar days of referral of the individual with 
possible MI or ID by whatever agent performs the Level I 
identification, under Sec.  483.126, to the State PASRR program for 
preadmission screening. Level II preadmission screening determinations 
must be completed prior to the individual's admission to the NF.
    (d) Preadmission screening determinations. NF applicants referred 
to the State PASRR program for determination must receive a 
determination of need for NF level of services and, if found to require 
NF level of services, a determination of need for specialized services, 
in accordance with Sec.  483.130.
0
27. Section 483.114 is revised to read as follows:


Sec.  483.114  Review of NF residents.

    (a) Referral for resident review. Referral for resident review of 
NF residents is required:
    (1) When a resident previously confirmed by a Level II evaluation 
and determination as having MI or ID experiences a possible significant 
change in physical or mental condition, as defined in Sec.  
483.20(b)(2)(ii);
    (2) Upon the expiration of an exempted hospital discharge or 
provisional admission, as described in Sec.  483.112(b)(2) and (3);
    (3) When the NF identifies, through any means not otherwise 
described in this section, that a resident has a possible MI or ID (as 
described in Sec.  483.126) that was not previously identified by a 
preadmission screen or resident review; or
    (4) Upon other conditions designated by the State.
    (b) Level II resident review. Resident review consists of a Level 
II evaluation and determination (also referred to in these regulations 
as Level II resident review), as described in Sec. Sec.  483.128 and 
483.130. The purpose of a resident review is to provide:
    (1) First-time Level II evaluation and determination for residents 
with possible MI or ID who had not previously received Level II 
evaluation and determination, in order to make the determination 
required in Sec.  483.114(e); or
    (2) A new Level II evaluation and determination for residents who 
have previously been confirmed by Level II determination to have MI and 
ID, but are experiencing a significant change in physical or mental 
condition (as defined in Sec.  483.20(b)(2)(ii)) such that the PASRR 
program will need to revise the findings of the previous Level II 
determination.
    (c) Timing for referral from NF. NFs must notify the State PASRR 
program of the need for resident review within--
    (1) 72 hours of when a resident experiences one of the conditions 
described in paragraphs (a)(1) or (3) of this section.
    (2) 24 hours of the expiration of an exempted hospital discharge or 
provisional admission, as described in paragraph (a)(2) of this 
section.
    (d) Timeliness of determination. A Level II resident review 
determination must be made electronically or in writing within an 
annual average of 9 calendar days from the date the resident was 
referred to the State PASRR program for resident review.
    (e) Resident review determination. NF residents referred to the 
State PASRR program for determination must receive a determination of 
need for NF level of services (or the need for the level of services 
provided by an resident psychiatric hospital for individuals under age 
21, an institution providing medical assistance for individuals over 
age 65, or an ICF/IID), and a determination of need for specialized 
services, in accordance with Sec.  483.130.


Sec.  483.116  [Amended]

0
28. Section 483.116 is amended in paragraph (b) introductory text by 
removing ``for the mental illness or intellectual disability''.
0
29. Section 483.118 is amended--
0
a. In the paragraph (b) subject heading, paragraph (b) introductory 
text, and the paragraph (c) subject heading by removing the phrase 
``for MI or IID'';
0
b. By revising paragraph (c)(1) introductory text;
0
c. In paragraph (c)(1)(iv) by removing the phrase ``for the mental 
illness or intellectual disability'' '
0
d. By revising paragraph (c)(2) introductory text; and
0
e. In paragraph (c)(2)(iii) by removing the phrase ``for the mental 
illness or intellectual disability''.
    The revisions read as follows:


Sec.  483.118  Residents and applicants determined not to require NF 
level of services.

* * * * *
    (c) * * *
    (1) Long term residents. For any resident who has continuously 
resided in a NF for at least 30 months before the date of the 
determination, and who requires only specialized services as defined in 
Sec.  483.120, the State must, in consultation with the resident's 
family or legal representative and caregivers.
* * * * *
    (2) Short term residents. For any resident who requires only 
specialized services as defined in Sec.  483.120 and who has not 
continuously resided in a NF for at least 30 months before the date of 
the determination, the State must, in consultation with the resident's 
family or legal representative and caregivers--
* * * * *
0
30. Section 483.120 is revised to read as follows:


Sec.  483.120  Specialized services and NF services.

    (a) Definition. Specialized services are State-defined services for 
NF residents with MI or ID as determined by the Level II process. These 
services must be--
    (1) Developed by an interdisciplinary team, which includes, at 
minimum, a physician and a mental health or intellectual disability or 
developmental disability professional, as appropriate;
    (2) Designed to address needs related to MI or ID;
    (3) Of greater intensity, frequency or customization than the NF 
services for MI or ID mandated in subpart B of this part;
    (4) Designed in a person-centered manner to promote self-
determination and independence;
    (5) Designed to prevent or delay loss of or support increase in 
functional abilities; and
    (6) If applicable, designed to support the individual's goals of 
transition to the most integrated setting, if the individual is 
admitted to or remains in an institutional setting (including a NF, 
ICF/IID, inpatient psychiatric facility for individuals under age 22, 
or an IMD for individuals over 65).
    (b) Provision of specialized services. The State must provide or 
arrange for the provision of specialized services, in accordance with 
this subpart, to all NF residents with MI or ID determined to need 
specialized services in accordance with Sec. Sec.  483.130 and 483.134. 
The State must ensure that the services are provided by qualified 
personnel, and must periodically review the specialized services to 
ensure that they continue to be effective for the individual.
    (c) Provision of NF services. The NF must provide mental health or 
intellectual disability services which are

[[Page 10025]]

of a lesser intensity than specialized service to all residents who 
need such services.
    (d) Duplication with NF services prohibited. Specialized services 
delivered to NF residents may not duplicate NF services as described in 
subpart B of this part.
    (e) Coordination with plan of care. For individuals who are 
admitted to or retained by a NF, NF services and specialized services 
recommended by the PASRR program must be coordinated with the 
individual's care plan, as required at Sec.  483.21(b)(1)(iii).
    (f) Coordination with other program services. If an individual 
requiring specialized services is discharged to another institutional 
setting or to a community program in which the individual is receiving 
long-term services and supports, services offered in those settings may 
satisfy the specialized services requirement.
0
31. Section 483.122 is amended--
0
a. By revising paragraph (a) introductory text;
0
b. In paragraph (a)(1) by removing the phrase ``NF care'' and adding in 
its place the phrase ``NF level of services'';
0
c. In paragraph (a)(2) by removing the phrase ``NF services'' and 
adding in its place the phrase ``NF level of services'';
0
d. In paragraph (b) by removing the phrase ``annual review'' ' and 
adding in its place ``resident review''; and
0
e. In paragraph (b) by removing the reference ``Sec.  483.114(c)'' and 
adding in its place the reference ``Sec.  483.114(d)''.
    The revision reads as follows:


Sec.  483.122  FFP for NF services.

    (a) Basic rule. FFP is available in State expenditures for NF 
services provided to a Medicaid eligible individual subject to the 
requirements of this part only if the individual has been determined--
* * * * *
0
32. Section 483.124 is revised to read as follows:


Sec.  483.124  FFP for specialized services.

    (a) FFP is available for specialized services furnished to NF 
residents so long as the services:
    (1) Have been described by the State in its approved State plan; 
and
    (2) Do not duplicate NF services included in payments to the NF.
    (b) [Reserved]
0
33. Section 483.126 is revised to read as follows:


Sec.  483.126  Level I identification criteria.

    (a) Level I identification of individuals with possible MI or ID. 
The State's PASRR program must have a Level I identification screening 
process to identify all individuals with possible MI or ID (as defined 
in paragraphs (b) and (c) in this section) who require Level II 
preadmission screening or Level II resident review.
    (b) Possible MI. An individual may be considered to have a positive 
Level I identification screen for possible MI if any of the following 
criteria are met:
    (1) The individual has received a diagnosis of MI that appears to 
meet the definition of MI in Sec.  483.102(b)(2); or
    (2) Within the last 12 months the individual has experienced 
significant challenges to interpersonal or cognitive functioning, such 
as hallucinations or delusions, attempts to harm self or others, or 
suicidal ideation; or
    (3) Within the last 12 months the individual has required 
psychiatric treatment including residential treatment, partial 
hospitalization, or inpatient hospitalization; or
    (4) The Level I identification screener cannot rule out possible MI 
based on the available data.
    (c) Possible ID. A person is considered to have a positive Level I 
identification screen for possible ID if:
    (1) The individual has received a diagnosis of ID or a related 
condition that appears to meet the definition of ID in Sec.  
483.102(b)(3); or
    (2) Within the past 12 months the individual has received active 
treatment (as defined in Sec.  483.440(a)) in an intermediate care 
facility for individuals with intellectual disabilities; or
    (3) The Level I identification screener cannot rule out possible ID 
or related condition based on the available data.
    (d) Personnel. The State may designate who can perform a Level I 
identification screen.
    (e) Data. Level I identification screeners may conduct the screen 
using existing data, including hospital records, physicians' 
evaluations, election of hospice status, school records, records of 
community mental health centers or community intellectual disability or 
developmental disability providers, and other information provided by 
the individual or the individual's legally authorized representative. 
Level I identification screeners must certify that the data supports 
the screener's conclusion regarding whether the individual has possible 
MI or ID and, if applicable, whether the individual qualifies for an 
exempted hospital discharge or provisional admission, as defined in 
Sec.  483.112.
    (f) Referral after positive identification. Individuals with 
possible MI or ID must be referred to the State PASRR program for Level 
II preadmission screening or resident review. Individuals who qualify 
for a preadmission screening exception per Sec.  483.112 must still be 
referred to the Level II authority so it may track the individual's 
need for a resident review, as described in Sec.  483.112(b)(2) and 
(3).
    (g) Documentation of completed identification screen. The State's 
performance of the Level I identification function must provide a copy 
of the completed Level I identification screen to the individual, the 
individual's legal representative and the admitting or retaining NF (if 
applicable). The Level I identification screen must clearly indicate 
whether the individual is being referred to the State PASRR program for 
Level II evaluation and determination.
0
34. Section 483.128 is revised to read as follows:


Sec.  483.128  Level II PASRR evaluation criteria.

    (a) Purpose. The purpose of the evaluation is to provide the SMHA 
or SIDA with enough information to:
    (1) Confirm the individual has MI or ID, as defined in Sec.  
483.102, or has experienced a qualifying significant change in physical 
or mental condition, as defined in Sec.  483.114(b)(2); and
    (2) Make the determinations regarding need for NF level of services 
and specialized services as required by Sec.  483.130(c) and (d).
    (b) Personnel. The State may designate the mental health or 
intellectual or developmental disability professionals who perform the 
evaluations. The State must ensure that:
    (1) Evaluators are qualified to make or confirm clinical diagnoses; 
and
    (2) Evaluations are conducted by appropriate personnel in 
accordance with Sec.  483.106(d).
    (c) Interdisciplinary coordination. When parts of a PASRR 
evaluation are performed by more than one evaluator, or are performed 
for individuals with co-occurring possible or known MI and ID, the 
State must ensure that there is interdisciplinary coordination among 
the evaluators.
    (d) Data to confirm Level I identification and significant change 
in condition. (1) For individuals with positive Level I screens for 
possible MI or ID, including individuals receiving resident review 
after an expired exempted hospital discharge or provisional admission 
as described in Sec.  483.112(b), evaluators must collect and review 
data reflecting the individual's current condition in order to confirm 
that the individual has MI or ID. This data at a minimum must include-
    (i) A review of current medical and psychiatric conditions and 
current medications;

[[Page 10026]]

    (ii) A medical history and physical exam that has been performed by 
a qualified clinician as identified by the state;
    (iii) A history of medication and prescription and illegal drug 
use;
    (iv) For MI evaluations, an evaluation of psychiatric history 
performed by a qualified mental health professional;
    (v) For ID evaluations, an evaluation of intellectual functioning 
performed by a licensed psychologist or psychiatrist; and
    (vi) Other documentation or information provided to or gathered by 
the evaluator deemed necessary to confirm a diagnosis.
    (2) For individuals identified as needing a Level II resident 
review due to a significant change of physical or mental condition(s) 
(as defined in Sec.  483.114(b)(2)) evaluators must collect and review 
at a minimum recent medical, psychiatric and medication records, recent 
resident assessments performed under Sec.  483.20(b), and other 
documents or information provided to or gathered by the evaluator 
deemed necessary to confirm the significant change.
    (e) Data for evaluations needed for NF level of services and 
specialized services. The data relied on for evaluations for the NF 
level of services and specialized services, described in Sec. Sec.  
483.132 and 483.134, respectively, should include:
    (1) Review of the relevant history of the physical status.
    (2) Focused relevant physical examination (either as recorded in 
chart or conducted by the evaluator).
    (3) Review of relevant psychiatric history including diagnoses, 
date of onset, treatment history.
    (4) Focused relevant mental status examination, including 
observations and professional opinion regarding intellectual and memory 
functioning, impulse control, irritability and ability to be 
redirected, likelihood that individual may pose a threat to self or 
others, agreeableness to participate in activities of daily living 
(that is, how likely the patient is to resist activities such as 
bathing, eating, grooming, etc.).
    (5) Functional assessment (activities of daily living and 
instrumental activities of daily living).
    (6) Psychosocial evaluation (for example, living arrangements, paid 
and unpaid supports);
    (7) Social, academic and vocational history;
    (8) Service plans from community-based providers, if applicable;
    (9) Relevant sections of the individual's plan of care (as defined 
in Sec.  483.21(b)) if the individual is a NF resident; and
    (10) Person-centered interviews including--
    (i) The individual being evaluated;
    (ii) The individual's legal representative, if one has been 
designated under State law; and
    (iii) The individual's family, friends or caregivers, at the 
individual's discretion.
    (f) Face-to-face interviews. The person-centered interviews 
required in paragraph (e)(10) of this section must be conducted face-
to-face. Telehealth evaluations conducted via live videoconferencing 
may be performed if conducting a face-to-face interview would, due to 
resource limitations, geographical distances, or other circumstances, 
prevent completion of the determination within the timeframe required 
by Sec. Sec.  483.112(c) and 483.114(e).
    (g) Preexisting data. Evaluators may use relevant evaluative data, 
obtained prior to initiation of preadmission screening or resident 
review, if the data are considered valid and accurate and reflect the 
current functional status of the individual. However, to supplement and 
verify the currency and accuracy of existing data, the State's PASRR 
program may need to gather additional information necessary to assess 
proper placement and treatment.
    (h) Findings. Findings of the evaluation must correspond to the 
person's current functional status as documented in medical and social 
history records.
    (i) Evaluation report. The evaluation findings and recommendations 
must be issued in the form of a written evaluative report which--
    (1) Identifies the name and professional title of person(s) who 
performed the evaluation(s) and the date on which each portion of the 
evaluation was administered;
    (2) Provides a summary of the medical and social history, including 
the positive traits or developmental strengths and weaknesses or 
developmental needs of the evaluated individual;
    (3) If NF services are recommended, identifies the specific 
services which are required to meet the evaluated individual's needs, 
including any specific intellectual disability or mental health 
services which are of a lesser intensity than specialized services that 
are required to meet the evaluated individual's needs;
    (4) If specialized services are recommended, identifies the 
specific intellectual disability or mental health services required to 
meet the evaluated individual's needs; and
    (5) Includes the bases for the report's conclusions.
    (j) Evaluation report: Terminated evaluations. If an evaluator 
terminates an evaluation pursuant to Sec.  483.128(m) of this section, 
findings must be issued in the form of an abbreviated written 
evaluative report which--
    (1) Identifies the name and professional title of the person 
performing the evaluation;
    (2) Explains the reason for the termination of the evaluation;
    (3) Identifies, to the extent possible, based on the available 
data, NF services, including any behavioral health or specialized 
psychiatric rehabilitative services (as described in Sec. Sec.  483.40 
and 483.65, respectively), that may be needed; and
    (4) Includes the bases for the report's conclusions.
    (k) Interpretation of findings to individual. The findings of the 
evaluation must be interpreted and explained to the individual and, 
where applicable, to a legal representative designated under State law.
    (l) Evaluation report submission. The evaluator must send a copy of 
the evaluation report to the State mental health or intellectual 
disability authority, as appropriate, in sufficient time for the State 
authorities to meet the times identified in Sec.  483.112(c) for 
preadmission screens and Sec.  483.114(d) for resident reviews;
    (m) Termination before evaluations for NF level of services and 
specialized services. The evaluation may be terminated without further 
evaluation of the need for NF level of services or specialized services 
(as described in Sec. Sec.  483.132 and 483.134) and an abbreviated 
evaluation report issued per paragraph (j) of this section if the 
evaluator finds that the individual being evaluated--
    (1) Does not have MI or ID within the definition of Sec.  483.102;
    (2) Did not experience a qualifying significant change in physical 
or mental condition as defined in Sec.  483.114(b)(2); or
    (3) Has a severe physical illness (such as ventilator dependency, 
advanced Parkinson's disease, Huntington's disease, amyotrophic lateral 
sclerosis; or is comatose or functioning at a brain stem level), a 
terminal illness (as defined in Sec.  418.3 of this chapter) or 
dementia (as defined in Sec.  483.102(b)(2)), which results in a level 
of impairment so severe that the individual could not be effectively 
evaluated for the need for NF level of services or for specialized

[[Page 10027]]

services as required in Sec. Sec.  483.132 and 483.134.
0
35. Section 483.130 is revised to read as follows:


Sec.  483.130  Level II PASRR determination criteria.

    (a) Basis for determinations. Determinations made by the State 
mental health or intellectual disability authority as to whether NF 
level of services and specialized services are needed must be based on 
an evaluation of data concerning the individual, as specified in Sec.  
483.128(e) of this section.
    (b) Personnel. The State may designate the medical, mental health, 
intellectual disability, or developmental disability professionals who 
perform the determinations. Personnel cannot have a direct or indirect 
relationship with a NF.
    (c) Determination of need for NF level of services. An individual 
with MI or ID shall be determined to need NF level of services only 
when:
    (1) The individual meets the State's criteria for NF admission;
    (2) The individual's total needs do not exceed the services which 
can be delivered in the NF to which the individual is admitted either 
through NF services alone or, where necessary, through NF services 
supplemented by specialized services; and
    (3) Placement in a home and community based program cannot be 
achieved because:
    (i) The individual's total needs pursuant to Sec.  483.128(e) 
exceed or cannot currently be accommodated by the State's home and 
community based programs: or
    (ii) The individual does not want community placement.
    (d) Determination of need for specialized services. An individual 
with MI or ID shall be determined to need specialized services if the 
individual's total needs are such that services described in Sec.  
483.120(a) are necessary to maintain the individual in or transition 
the individual to the most integrated setting possible, and the 
individual would benefit from such services.
    (e) Recording determinations. All determinations made by the State 
mental health and intellectual disability authority must be recorded in 
the individual's record.
    (f) Notice of determination. The State mental health or 
intellectual disability authority must notify in writing or 
electronically the following entities of a determination made under 
this subpart:
    (1) The evaluated individual and his or her legal representative;
    (2) The admitting or retaining NF;
    (3) The physician most involved in the individual's medical care, 
as identified by the individual; and
    (4) The discharging hospital, unless the individual is exempt from 
preadmission screening as provided for at Sec.  483.106(b)(2).
    (g) Contents of notice. Each notice of the determination made by 
the State mental health or intellectual disability authority must 
include--
    (1) Whether the individual was found to have MI or ID (as defined 
in Sec.  483.102 of this subpart) or a significant change of physical 
or mental condition (as described in Sec.  483.114(b)(2) of this 
subpart);
    (2) If the individual was found to have MI or ID or a significant 
change in physical or mental condition--
    (i) Whether a NF level of services is needed;
    (ii) Whether specialized services are needed;
    (iii) The placement options that are available to the individual 
consistent with these determinations, as described in Sec. Sec.  
483.116 and 483.118;
    (3) The rights of the individual to appeal the determination under 
subpart E of this part; and
    (4) A copy of the evaluation report generated in accordance with 
Sec.  483.128(i) or (j), as appropriate.
    (h) Record retention. The State PASRR system must maintain records 
of evaluations and determinations in order to support its 
determinations and actions and to protect the individual's appeal 
rights related to PASRR determinations.
    (i) Tracking system. The State PASRR system must establish and 
maintain a tracking system for all individuals with MI or ID in NFs to 
ensure that appeals and future reviews are performed in accordance with 
this subpart and subpart E of this part.
    (j) Reporting. The State must report to the Secretary on an annual 
basis:
    (1) The annual averages for completing determinations as required 
in Sec. Sec.  483.112(c) and 483.114(d).
    (2) The number of people with MI or ID as defined in Sec.  483.102 
who are diverted and who are discharged from NFs each year in 
accordance with Sec.  483.118 because the PASRR program has determined 
that the individual:
    (i) Does not meet, or no longer meets, the State's criteria for NF 
admission,
    (ii) Requires the level of services offered in another 
institutional setting; or
    (iii) Elects to receive services in a non-institutional setting.
    (3) The State may report separate annual averages for the 
determinations made by the State mental health and intellectual 
disability authorities as required in paragraph (j)(1) of this section 
and report separately for persons with MI and ID the outcomes required 
in paragraph (j)(2) of this section.
    (4) The Secretary may grant an exception to the timeliness standard 
of Sec. Sec.  483.112(c) and 483.114(d) or of the annual reporting 
requirement as described in this section at the Secretary's discretion.
    (5) Reports should be submitted to the Secretary on March 1 of each 
year, and report on data for previous calendar year.
0
36. Section 483.132 is revised to read as follows:


Sec.  483.132  Evaluating the need for NF level of services.

    (a) Evaluation for appropriate settings. For each NF applicant for 
admission to a NF and each NF resident who has MI or ID, the evaluator 
must assess whether--
    (1) The individual has the option of placement in a home and 
community based services program and a non-institutional placement is 
desired, or
    (2) The individual's total needs are such that they can be met only 
on an inpatient basis and
    (i) The NF (with or without specialized services) is an appropriate 
institutional setting for meeting those needs; or
    (ii) The NF is not the appropriate setting for meeting the 
individual's needs and another institutional setting is an appropriate 
setting for meeting those needs.
    (b) Evaluation of preferences. The evaluator must assess the 
individual's preferences for where the individual may receive long term 
services and supports, including whether the individual and the 
individual's legal representative, if applicable, have received 
information about the types of long term care setting options available 
to the individual.
    (c) Evaluation for NF services. For individuals for whom NF 
placement is considered an appropriate option by the evaluator (per the 
evaluation in paragraphs (a) and (b)) of this section), the evaluator 
must assess what services for MI or ID the individual may need which 
are offered as part of standard NF services, including behavioral 
health services and specialized rehabilitative services described at 
Sec. Sec.  483.40 and 483.65, respectively.
    (d) Data. At a minimum, the data relied on to perform the 
evaluation must include the data listed in Sec.  483.128(e).
    (e) Relationship to NF level of care. Evaluations to determine 
whether an individual meets the State's NF level of

[[Page 10028]]

care criteria are not part of the PASRR process, but PASRR evaluators 
should confirm that the individual has been accurately assessed as 
meeting the State's NF level of care, and may consider the individual's 
level of care assessment as part of the analysis of the individual's 
total needs as described in this section.
0
37. Section 483.134 is revised to read as follows:


Sec.  483.134  Evaluating the need for specialized services.

    (a) Basic rule. For each NF applicant with MI or ID who is 
recommended for NF placement per Sec.  483.132, and each NF resident 
with MI or ID, the evaluator must assess:
    (1) The individual's ability to engage in:
    (i) Activities of daily living; and
    (ii) Instrumental activities of daily living.
    (2) The level of support that would be needed to assist the 
individual to perform these activities successfully in the NF or while 
living in the community; and
    (3) Whether the level of support needed can be provided by standard 
NF services or whether specialized services, as defined at Sec.  
483.120, are required.
    (b) Review of specialized services. If specialized services are 
already being provided to a NF resident, the evaluator must assess 
whether changes need to be made to the specialized services included in 
the resident's care plan.
    (c) Data. At a minimum, the data relied on to perform the 
evaluation must include the data listed in Sec.  483.128(e).


Sec.  483.136   [Removed and Reserved]

0
38. Section 483.136 is removed and reserved.

Subpart E--Appeals of Discharges, Transfers, and Preadmission 
Screening and Resident Review (PASRR) Actions

0
39. The heading for subpart E is revised to read as set forth above.
0
40. Section 483.204 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  483.204  Provision of a hearing and appeal system.

    (a) * * *
    (2) An individual who has been adversely affected by any Level I 
identification or Level II PASRR determination made by the State under 
subpart C of this part to appeal that Level I identification screen or 
Level II determination.
* * * * *

    Dated: January 8, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: January 24, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-03081 Filed 2-14-20; 11:15 am]
 BILLING CODE 4120-01-P