Report Template Update  = 04-30-05_rev.13  
Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

P S
READMISSION  CREENING AND 

R R
ESIDENT  EVIEW FOR 

Y N F
OUNGER  URSING  ACILITY 

R W M
ESIDENTS  ITH  ENTAL 

R
ETARDATION

Daniel R. Levinson

Inspector General 

January 2007

OEI-07-05-00230
 Report Template Update  = 04-30-05_rev.13  
Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIGs internal operations. OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within HHS. 
OCIG also represents OIG in the global settlement of cases arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  Report Template Update  = 04-30-05_rev.13 
  E X E C U T I V E   S U M M A R Y  

OBJECTIVES 
1.	 To examine the extent to which Preadmission Screening and 
Resident Review (PASRR) requirements were addressed for 
Medicaid nursing facility residents aged 22 to 64 with mental 
retardation within selected States and selected nursing facilities. 
2. 	 To assess Federal and State oversight of the PASRR process. 
BACKGROUND 
The Omnibus Budget Reconciliation Act of 1987 (OBRA 87) mandated 
preadmission screening for individuals suspected of having serious 
mental illness and mental retardation to ensure that:  (1) nursing 
facilities admit only individuals needing nursing facility care, (2) these 
individuals needs for specialized services are determined, and (3) these 
individuals obtain the services identified through the preadmission 
screening. The PASRR is the primary mechanism used to meet these 
objectives. This report focuses exclusively on the PASRR as it relates to 
individuals with mental retardation.  We concurrently conducted a 
separate review of the PASRR as it relates to individuals with serious 
mental illness. 
All individuals who apply to or reside in Medicaid nursing facilities are 
required to receive a Level I PASRR screen to identify suspected mental 
retardation.  Those suspected of having mental retardation must receive 
a Level II PASRR evaluation to confirm that they have mental 
retardation, to determine whether they require nursing facility services, 
and to determine whether they require specialized services. 
To assess the PASRR, we reviewed nursing facility resident case files 
and randomly selected Level II PASRR evaluations from each selected 
State.  We conducted structured interviews with the Centers for 
Medicare & Medicaid Services (CMS) staff, State officials, and 
administrators and staff from nursing facilities.  We conducted our 
review in 5 States and 20 nursing facilities, resulting in a review of 
101 resident case files and 121 Level II evaluations. 
FINDINGS 
While Level I screens were present in 88 percent of selected 
resident case files, one-fourth of these were completed late. Federal 
regulations require the States PASRR program to identify all individuals 
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E X E C U T I V E   S U M M A R Y  
who are suspected of having mental retardation; this is termed a Level I 
screen. We found evidence of Level I screens in 89 of the 101 resident 
case files (88 percent).  Of these 89 case files, 22 were not completed prior 
to or on the date of admission.  These 22 Level I screens took place an 
average of 40 days after the resident was admitted to the nursing facility. 
Fifty-two percent of selected resident case files contained neither a 
Level II evaluation nor a Level II determination. If mental retardation 
is suspected, the individual is referred for a Level II PASRR evaluation. 
In one selected State, none of the 24 case files from selected nursing 
facilities contained Level II evaluations.  Of the 18 Level II evaluations 
that were in the case files reviewed in the other 4 States, 7 were not 
completed prior to or on the date of admission.  These seven Level II 
evaluations were completed an average of 23 days after the resident had 
been admitted to the nursing facility.  States must determine whether 
an individual with mental retardation requires a nursing facility level of 
services and whether specialized services are needed.  Of the 101 
selected case files, 56 lacked documented evidence of the Level II 
determination.  
Twenty-two percent of sampled Level II evaluations did not contain 
evidence that the evaluator assessed whether the individuals total 
needs could be met in a community setting. In the remainder of the 
cases, evaluators documented their assessments of the individuals 
medical needs, mental status, and independent living skills to 
substantiate the most appropriate setting for the individual. 
CMS and the survey and certification agencies in the five States that 
we reviewed conducted limited oversight.  Only 2 of the 10 CMS 
regional offices have conducted onsite PASRR reviews in the past 
3 years.  One of the five selected States failed to track and maintain 
Level II evaluations as required.  Survey and certification agencies in 
the five selected States conducted limited oversight of the PASRR 
processes in nursing facilities. 
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E X E C U T I V E   S U M M A R Y

RECOMMENDATIONS 
The OBRA 87 mandated preadmission screening to ensure that 
individuals with mental retardation are not inappropriately placed in 
Medicaid nursing facilities.  The PASRR is the primary mechanism used 
to ensure that individuals with mental retardation require the level of 
services provided by a nursing facility and to determine whether the 
individual requires specialized services.  As such, it is essential that all 
State PASRR systems work effectively. 
We based our findings on selected case files and a random sample of 
Level II evaluations from five selected States.  As such, we do not 
project our results.  However, our findings identify deficiencies that 
should be addressed to ensure that individuals with mental retardation 
are appropriately placed and receive necessary mental retardation 
services.  
We recommend that CMS hold State Medicaid agencies accountable for 
ensuring compliance with Federal requirements.  Specifically, we 
recommend that: 
o	 every nursing facility applicant receive a Level I screen prior to 
nursing facility admission, and 
o	 all individuals with suspected mental retardation receive a Level II 
evaluation and determination prior to nursing facility admission 
and that all Level II PASRR documentation is shared with the 
admitting nursing facility. 
We also recommend that CMS hold States accountable for considering 
community placements during the Level II PASRR process. Finally, we 
recommend that CMS revise survey and certification requirements to 
ensure that State surveyors sample residents with mental retardation 
and review the PASRR documentation for timely completion. 
AGENCY COMMENTS  
CMS concurred with all of our recommendations to ensure that States 
implement an effective and timely Level I and Level II process.  CMSs 
comments did not warrant any revisions to the results of our review or 
to our recommendations. 
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  T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  i

I N T RO DUC T IO N. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

F I N D IN G S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

While LevelI screens were present in 88 percent of selected  

resident case files, one-fourthof these werecompleted late  . . . . . .  9

Fifty-two percent of selected resident case files contained neither 

a Level II evaluation nor a Level II determination  . . . . . . . . . . . . .  9

Level II evaluations did not contain evidence of total needs 

assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

CMS and the survey and certification agencies in the five States   

that we reviewed conducted limited oversight. . . . . . . . . . . . . . . .  11

R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

Agency Comments. . . . . . . . . . . . . . . . . . . . . . .   . . . . . . . . . . . . . .  15

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

A: 	Examples of State Practices Other Than PASRR That May 

   AddressPlacement and Provision of Services  . . . . . . . . . . . . .  16

B:	  PASRR Oversight Practices in One State. . . . . . . . . . . . . . . . .  17

C:	  AgencyComments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

A C K NO WL E D G M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
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  I N T R O D U C T I O N  

OBJECTIVES 
1.	 To examine the extent to which Preadmission Screening and 
Resident Review (PASRR) requirements were addressed for 
Medicaid nursing facility residents aged 22 to 64 with mental 
retardation within selected States and selected nursing facilities. 
2. 	 To assess Federal and State oversight of the PASRR process. 
BACKGROUND 
The Omnibus Budget Reconciliation Act of 1987 (OBRA 87) mandated 
preadmission screening for individuals suspected of having mental 
illness and mental retardation or related conditions1 to ensure that: 
(1) nursing facilities admit only individuals needing nursing facility 
care, (2) these individuals needs for specialized services are determined, 
and (3) these individuals obtain the services identified through the 
preadmission screening.  The PASRR is the primary mechanism used to 
meet these objectives. 
In the 1960s, a number of class action lawsuits revealed poor conditions 
and treatment of patients with mental retardation in large public 
institutions. During the 1970s, legal challenges sought to improve the 
conditions at these facilities and to eliminate unnecessary 
institutionalization of people with mental retardation capable of living 
in the community.2 
In addition, in 1999, the Supreme Court held in Olmstead v. L.C. 
(Olmstead) that the treatment, services, and habilitation for a person 
with developmental disabilities . . . should be provided in the setting 
that is least restrictive of the persons personal liberty.3 Olmstead held 
that States are required to provide community-based treatment for 
persons with mental disabilities when the States treatment 
professionals determine that such placement is appropriate, the affected 
persons do not oppose such treatment, and the placement can be 
1 Related conditions are defined by 42 CFR  435.1009; cerebral palsy and epilepsy are 
examples of related conditions. Hereinafter, references to mental retardation include both 
mental retardation and related conditions. 
2 DeWayne Davis et al.  Deinstitutionalization of Persons with Developmental 
Disabilities: A Technical Assistance Report for Legislators. Available online at 
http://www.ncsl.org/programs/health/Forum/pub6683.htm. Accessed March 7, 2006. 
3 Olmstead v. L.C. 527 U.S. 581 (1999), 138 F.3d 893, affirmed in part, vacated in part, 
and remanded. 
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reasonably accommodated, taking into account the resources available 
to the State and the needs of others with mental disabilities. 
In response to Olmstead, the Secretary of the Department of Health and 
Human Services issued guidance to States in the form of a letter to 
State Medicaid Directors. The letter states that no one should have to 
live in an institution or a nursing facility if they can live in the 
community with the right support.4 In addition, the Presidents New 
Freedom Initiative, begun in 2001, aims to remove barriers to 
community living for persons with disabilities.5 
The Office of Inspector General (OIG) and the Substance Abuse and 
Mental Health Services Administration have conducted studies on 
States implementation of the PASRR for persons with mental illness.6 
Both agencies found a lack of compliance with Federal regulations 
related to the PASRR. To date, no study has been conducted specific to 
the PASRR for persons with mental retardation. 
Preadmission Screening and Resident Review 
Federal law requires that a nursing facility may not admit an applicant 
who is mentally retarded unless the State Mental Retardation 
Authority (SMRA) or its delegate has determined prior to admission 
that the individual requires the level of services provided by a nursing 
facility and, if the individual requires that level of services, whether the 
individual requires specialized services for mental retardation.7 As a 
condition of the Centers for Medicare & Medicaid Services (CMS) 
approval of a Medicaid State plan, the State must operate a 
preadmission screening program that complies with Federal 
regulations.8 The intent of the PASRR is to ensure that individuals 
with mental retardation are appropriately screened, thoroughly 
evaluated, and placed in nursing facilities when appropriate, and that 
they receive all necessary services. 
4 State Medicaid Director Letter, January 14, 2000. 
5 Department of Health and Human Services, The New Freedom Initiative. Available 
online at http://www.hhs.gov/newfreedom/init.html. Accessed May 15, 2006. 
6 2001 OIG report, Younger Nursing Facility Residents With Mental Illness: 
Preadmission Screening and Resident Review (PASRR) Implementation and Oversight 
(OEI-05-99-00700); and U.S. Department of Health and Human Services, Substance Abuse 
and Mental Health Services Administration, PASRR Screening for Mental Illness in 
Nursing Facility Applicants and Residents (2005). 
7 42 U.S.C.  1396r(b)(3)(F)(ii). SMRAs are generally responsible for the planning, policy 
development, and resource allocation of services for persons with mental retardation. 
8 42 CFR  483.104. 
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I N T R O D U C T I O N  
Level I Screens. All individuals who apply to or reside in a 
Medicaid-certified nursing facility, regardless of payer, are required to 
receive a Level I PASRR screen to identify possible mental retardation.9 
These screens typically consist of preprinted forms unique to each State 
and generally record demographic information and diagnoses.  Level I 
screens are completed by hospital discharge planners and nursing 
facility personnel. Individuals suspected of having mental retardation 
must also receive a Level II PASRR evaluation.10 
Level II Evaluations and Determinations.  The Level II PASRR objectives 
are to confirm whether the applicant has mental retardation, assess the 
applicants need for nursing facility services, and determine whether the 
applicant requires specialized services for mental retardation.11 SMRA 
has responsibility for both the evaluation and the determination 
functions, but may delegate by subcontracting these responsibilities to 
another State agency (e.g., State department on aging).12 
SMRA or the contracted agency makes the final determination on 
whether a person requires nursing facility placement.  SMRA may 
verbally convey Level II PASRR determinations to nursing facilities and 
individuals, but must subsequently confirm the determination in 
writing.13 
Determinations made by SMRA as to whether nursing facility level of 
services and specialized services are needed must be based on a Level II 
evaluation. However, SMRA may make determinations for categories of 
persons likely to require nursing facility level of services or for whom 
specialized services are not normally needed (e.g., in cases of terminal 
illness or severe physical illnesses such as coma), which can be based on 
existing sources of data (e.g., hospital or physicians records) and do not 
require a Level II evaluation.14 
9 42 CFR  483.106  and 483.128(a). 

10 42 CFR  483.128(a). 

11 Ibid. 

12 42 CFR  483.106(e). 

13 42 CFR  483.112(c)(2). 

14 42 CFR  483.130. 

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I N T R O D U C T I O N  
Assessment of Individual Needs and Appropriate Placement. Federal 
regulations require evaluators to assess whether an individuals total 
needs can be met in a community setting or only on an inpatient basis 
(e.g., nursing facility, intermediate care facility for the mentally 
retarded, or waiver program).15  Level II determination notices must 
include the placement options that are available given the results of the 
evaluators assessment.16  If an individuals needs can be met in the 
community, then nursing facility services are not needed. 
Determining Services for Nursing Facility Residents With Mental Retardation. 
Level II PASRR evaluations must identify whether specialized services 
are necessary.  For mental retardation, specialized services are the 
services specified by the State which, when combined with services 
provided by the nursing facility or other service providers, result in a 
continuous active treatment program.17  The purpose of the treatment 
program is to:  (1) develop the behaviors necessary for the client to 
function with as much self-determination and independence as possible, 
and (2) prevent or decelerate regression or loss of current optimal 
functional status.18  The State must provide or arrange for the provision 
of specialized services to all nursing facility residents with mental 
retardation requiring continuous supervision, treatment, and training 
by qualified mental retardation professionals as identified in the  
Level II PASRR evaluations.19 
When specialized services are not recommended, Level II PASRR 
evaluations must identify any specific services of lesser intensity that 
are required to meet the individuals mental retardation needs.20  The 
nursing facility must provide mental retardation services of lesser 
intensity to all residents who need such services.21  Medicaid does not 
separately reimburse these services of lesser intensity; they are 
considered a condition of participation and must be paid by the nursing 
facility or under some other arrangement with the State. 
15 42 CFR  483.132. 

16 42 CFR  483.130(l)(3). 

17 42 CFR  483.120(a)(2) and 483.136. 

18 42 CFR  483.440(a). 

19 42 CFR  483.120(b). 

20 42 CFR  483.128(i)(4). 

21 42 CFR  483.120(c). 

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Level II Resident Reviews for Significant Changes in Condition.  In addition to 
initial Level II PASRR evaluations and determinations, nursing facility 
residents may receive subsequent Level II PASRR evaluations and 
determinations during their nursing facility stay. Federal law requires 
resident reviews when there is a significant change in a residents 
physical or mental condition.22 
Federal and State Oversight of the PASRR 
The State Medicaid agencies and CMS share responsibility for enforcing 
PASRR requirements. State Medicaid agencies must deny Medicaid 
payments for nursing facility services provided to individuals who do 
not have a PASRR determination requiring these services.23 
CMS contracts with State Medicaid agencies to survey and certify 
nursing facilities to verify compliance with Federal requirements. Each 
nursing facility is subject to a standard, unannounced survey by a 
multidisciplinary team of professionals at least every 15 months.24 For 
these surveys, a sample of resident records is selected for review. If 
sampled nursing facility residents have mental retardation, then 
surveyors must determine whether nursing facility services and 
specialized services were needed.25 Surveyors cite noncompliance with 
Federal regulations using deficiency tags. 
Concurrent Office of Inspector General Evaluation 
Concurrent with this evaluation, OIG conducted an evaluation on 
Preadmission Screening and Resident Review for Younger Nursing 
Facility Residents With Serious Mental Illness (OEI-05-05-00220). 
These studies were produced separately because in many States the 
mental retardation service delivery system is distinct from the mental 
health service delivery system. 
METHODOLOGY 
We reviewed the PASRR process in five States (Connecticut, Missouri, 
Texas, Washington, and West Virginia). We used the 2004 Minimum 
Data Set (MDS) data to array all States from the highest to the lowest 
proportion of Medicaid nursing facility residents who are younger (aged 
22 42 U.S.C.  1396r(b)(3)(C)(i)(II).

23 42 U.S.C.  1396r (e)(7)(D). 

24 42 U.S.C.  1396r(g)(2)(A)(iii). 

25 CMS State Operations Manual, Appendix PP,  483.20(m). 

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I N T R O D U C T I O N  
22 to 64) and identified as having mental retardation.26  From the 
States with a higher proportion of our target population, we purposively 
selected five States to achieve diversity in areas that included 
geographic location and size of State.  We chose different States from 
the concurrent OIG evaluation to reduce the burden on States 
participating in our reviews. 
Data Collection 
We collected data from six sources for this inspection: (1) case file 
reviews of selected Medicaid nursing facility residents aged 22 to 
64 with mental retardation; (2) structured interviews with agency 
officials from selected States; (3) structured interviews with 
administrators and staff from selected nursing facilities; (4) structured 
interviews with CMS staff; (5) review of oversight documentation from 
selected State agencies and CMS; and (6) review of randomly selected 
Level II PASRR evaluations from each selected State. 
Case File Reviews of Nursing Facility Residents 
Within each selected State, we used the same 2004 MDS data to select 
four nursing facilities in the vicinity of the States capitol city with a 
high prevalence of our target population.  We selected 10 current 
residents from each nursing facility meeting our criteria.  If 10 or fewer 
residents met our criteria, we selected all residents meeting our criteria. 
We reviewed a total of 101 case files. As shown in Table 1, the number 
of files reviewed in each State ranges from 10 to 32.  
Federal law requires nursing 
Table 1:  Nursing Facility 
facilities to maintain the results 
Resident Case Files Reviewed In 
of any preadmission screening.27  Each State 
We sought Level I screens and 
Level II evaluations and  Number of Case Files 
State 
Reviewed 
determinations in each residents 
file. We were able to discern the  1 3 2  
2 2 0  
difference between Level II 
3 2 4  
evaluations and determinations; 
4 1 5  
therefore, we analyzed each  5 1 0  
document separately.  We asked  Total  101 
Source:  OIG, 2005. 
26 Our criteria are based on residents with diagnoses of mental retardation or related 
condition (e.g., epilepsy, cerebral palsy), as indicated in items 9 and 10 of Section AB of the 
MDS.  Many selected residents also had co-occurring diagnoses of mental illness.  Residents 
with such co-occurring diagnoses were included in our review.   
27 42 U.S.C.  1396r(b)(6)(C). 
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nursing facility administrators to produce the PASRR documentation 
when it was not found in the residents file. We also reviewed residents 
files to determine whether Level II PASRR evaluations identified 
specialized mental retardation services to be provided by the State and 
services of lesser intensity to be provided by the nursing facility. We 
then reviewed the residents treatment plan to determine whether 
identified specialized services and services of lesser intensity were 
included. We did not verify whether these services were provided, nor 
did we conduct a medical review to determine the necessity of these 
services. 
Structured Interviews and Documentation Review 
In each of our five selected States, we interviewed representatives from 
the State Medicaid agency, SMRA, State survey and certification 
agency, and Level II PASRR evaluators. We asked questions regarding 
the PASRR processes and oversight. We also collected States Level I 
PASRR forms, Level II PASRR evaluation forms, PASRR-related 
guidance sent to nursing facilities, and PASRR policy documents. 
At each of the 20 selected nursing facilities, we interviewed the nursing 
facility administrator and other nursing facility staff responsible for the 
PASRR process and the coordination and provision of mental 
retardation services. We asked questions regarding the PASRR 
processes, its oversight, and its use in care planning. 
We interviewed the PASRR staff from CMS headquarters and each 
regional office regarding PASRR oversight. We also collected 
documentation of CMS oversight activities, including draft guidance. 
Review of Level II PASRR Evaluations 
To systematically review Level II evaluations, we requested data on the 
total number of Level II PASRR evaluations conducted in 2004 and the 
resulting placements from each of the five States. We reviewed 
30 randomly selected Level II PASRR evaluations conducted in 
2004 from each of 4 States but received only 1 from the fifth State, for a 
total of 121 Level II evaluations. 
Scope 
Our review of the PASRR is limited to Medicaid nursing facility 
residents aged 22 to 64 with mental retardation in five selected States. 
We purposively selected States and the nursing facilities within those 
States. As such, we do not project our results to the universe of States, 
individual States, nursing facilities, or nursing facility residents. 
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I N T R O D U C T I O N  
Standards 
This study was conducted in accordance with Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
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  F I N D I N G S

Federal law requires preadmission 
While Level I screens were present in 88 percent 
screening of all individuals with 
of selected resident case files, one-fourth of 
mental retardation or mental illness 
these were completed late  who apply to or reside in 
Medicaid-certified nursing facilities 
regardless of the source of payment. 28  This report focuses exclusively 
on the PASRR as it relates to individuals with mental retardation.  
These results are not projectable to the universe of States, individual 
States, nursing facilities, or nursing facility residents. 
Federal regulations require the States PASRR program to identify all 
individuals who are suspected of having mental retardation; this is 
termed a Level I screen. 29  We found evidence of Level I screens in 89 of 
the 101 resident case files.  Of these 89 case files, 22 were not completed 
prior to or on the date of admission. These 22 Level I screens took place 
an average of 40 days after the resident was admitted to the nursing 
facility. 
If mental retardation is suspected, the individual is referred for a 
Level II PASRR evaluation. 
Fifty-two percent of selected resident case files  Eighty-one percent of selected 
contained neither a Level II evaluation nor  resident case files did not contain 
Level II evaluations, and 
 a Level II determination 
55 percent did not contain Level II 
determinations.  Only 18 resident case files contained evaluations (7 of 
which were completed late), and 45 resident case files contained 
determinations. 
Level II evaluations were either missing or late 
Federal regulations provide certain circumstances in which SMRA may 
make determinations for categories of persons likely to require nursing 
facility level of services (e.g., in cases of terminal illness or severe 
physical illnesses such as coma) that can be based on existing sources of 
data and do not require a Level II evaluation. 30 In the 101 resident 
case files that we reviewed, 5 contained documentation indicating that 
they met these circumstances and did not require a Level II evaluation. 
28 42 U.S.C.  1396r(e)(7)(A)(1). 

29 42 CFR  483.128(a). 

30 42 CFR  483.128(m) and 483.130(b). 

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F I N D I N G
 S  
Of the remaining 96 resident case files, 78 lacked evidence of a Level II 
evaluation. In 1 selected State, none of the 24 selected case files 
contained Level II evaluations.  Administrators of the four selected 
nursing facilities in the State indicated that all they received was a 
form with a signature indicating that the individual met medical 
necessity criteria for nursing facility placement.  These forms lacked 
other information, such as cognitive tests, that nursing facility staff 
might use in developing a plan of care for the individual.   
Of the 18 Level II evaluations that were in the resident case files, 
7 were not completed prior to or on the date of admission.  These seven 
Level II evaluations were completed an average of 23 days after the 
resident had been admitted to the nursing facility.  For another five 
residents, SMRA deemed that a Level II evaluation was not required, 
but the case file lacked documentation justifying that decision.  During 
our review of selected resident case files in 20 nursing facilities, we 
collected data on the content required by Federal regulations (e.g., 
summary of medical and social history, whether specialized services are 
recommended).  We also sought the treatment plans in resident case 
files to determine whether recommended services were included.  
However, since only 11 resident case files contained timely Level II 
evaluations, a meaningful review of Level II evaluation content was not 
possible. 
Level II determinations were missing   
Of the 101 selected resident case files, 56 lacked documented evidence of 
the Level II determination.  SMRA must determine whether an 
individual with mental retardation requires a nursing facility level of 
services and whether specialized services are needed.31  This 
determination may be conveyed to the nursing facility verbally at first, 
but SMRA must confirm the determination in writing.32  Inasmuch as 
Level II determinations typically are based on Level II evaluations, the 
45 selected resident case files containing evidence of a Level II 
determination suggest that more than 18 residents may have received a 
Level II evaluation.  However, given the lack of Level II evaluations in 
selected case files, we could not ascertain whether these evaluations 
were simply missing or whether the residents did not require such an 
evaluation. 
31 42 CFR  483.130(l)(1)-(2). 

32 42 CFR  483.112(c)(2). 

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The selected resident case files from 
Twenty-two percent of sampled Level II 
nursing facilities we visited 
evaluations did not contain evidence that the 
contained evidence of only 18 Level 
evaluator assessed whether the individuals 
II evaluations. To allow for a more 
total needs could be met in a community setting 
thorough review of Level II 
evaluations, we randomly selected 
Level II evaluations from SMRAs that were completed in 2004 and 
reviewed a total of 121 Level II evaluations from the 5 selected States. 
Federal regulations require evaluators to assess whether an individuals 
total needs can be met in a community setting or only on an inpatient 
basis.33 If an inpatient setting is determined to be the most 
appropriate, then such settings may include intermediate care facilities 
for the mentally retarded, nursing facilities, or waiver programs. If an 
individuals needs can be met in the community, then nursing facility 
services are not needed. Twenty-two percent (27 of 121) of sampled 
Level II evaluations did not contain evidence that the evaluator 
assessed whether the individuals total needs could be met in a 
community setting; instead, these evaluations contained evidence that 
the evaluator assessed solely whether such needs could be met in a 
nursing facility. In the remaining 78 percent (94 of 121) of the sampled 
cases, evaluators documented their assessments of the individuals 
medical needs, mental status, and independent living skills to 
substantiate the most appropriate setting for the individual. 
During our structured interviews, officials from two States described 
practices other than PASRR that may address placement and provision 
of services for persons with mental retardation. These practices are 
described in Appendix A. 
Limited oversight of preadmission
CMS and the survey and certification agencies 
screening processes occurred at 
in the five States that we reviewed conducted 
both the Federal and State levels. 
limited oversight  Only one of the five selected 
States reported specific oversight 
practices aimed at ensuring compliance with the PASRR. These 
practices are described in Appendix B. 
33 42 CFR  483.132. 
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 SS  
Only two CMS regional offices have conducted onsite PASRR reviews in the 
past 3 years 
Staff from 2 of the 10 CMS regional offices conducted onsite State 
reviews of the PASRR during 2002 through 2005. An official from one 
regional office indicated that it was just getting started again with the 
PASRR oversight. Beginning in June 2005, staff from this CMS 
regional office identified the PASRR contact persons in each State in its 
region, developed a survey inquiring about States PASRR processes, 
outlined State responsibilities in initial telephone calls to States, and 
planned to continue telephone calls with States on a quarterly basis. 
Officials from 7 of the 10 CMS regional offices reported that they have 
not conducted oversight related to the PASRR in the past 3 years. 
One of the five selected States failed to track and maintain Level II 
evaluations as required 
When we requested a list of all Level II PASRR evaluations and 
determinations conducted in 2004, one State responded that it do[es] 
not currently have a system for tracking when these [PASRR Level II 
evaluations] are requested or completed other than by looking in the 
[individuals] case file. As a result, the State agency submitted a list of 
43 individuals admitted to nursing facilities in 2004. For these 
individuals, the State reported that only one Level II evaluation was 
completed in 2004. The State identified 4 deceased individuals for 
whom the PASRR status was unknown, and 12 individuals for whom 
there was no record of a completed Level II evaluation. Therefore, this 
State was not in compliance with Federal regulations for establishing 
and maintaining a tracking system for individuals with mental 
retardation residing in nursing facilities. 34 
Survey and certification agencies in the five selected States conducted 
limited oversight of the PASRR processes in nursing facilities 
Surveyors from four States indicated that they would assess PASRR 
compliance if a person with mental retardation appeared in the sample 
or as part of an extended survey.35 A surveyor from the fifth State 
reported that a complaint or hotline referral would prompt further 
investigation into whether the nursing facility was meeting the overall 
care needs of residents with mental retardation. 
34 42 CFR  483.130(p). 
35 An extended survey occurs when a facility is found to have furnished substandard 
quality of care during a standard survey. 
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If surveyors identified noncompliance with Federal regulations 
concerning the PASRR, a deficiency tag (F285) was cited.36 In 2004, 
surveyors cited 101 instances of F285 in approximately 16,000 nursing 
facilities nationwide. While survey and certification officials from all 
five States indicated that they monitor nursing facility compliance with 
PASRR requirements, one State surveyor concluded, PASRR is 
underlooked, not overlooked. 
36 CMS State Operations Manual, Appendix PP,  483.20(m). 
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  R E C O M M E N D A T I O N S  

The PASRR process was created to ensure that individuals with mental 
retardation are not inappropriately placed in Medicaid nursing 
facilities. The PASRR is the primary mechanism to ensure that 
individuals with mental retardation are screened, evaluated, and placed 
in nursing facilities when appropriate, and receive identified needed 
services.  It is essential that all State PASRR systems work effectively. 
This evaluation of the PASRR found that while 88 percent of selected 
resident case files contained Level I screens, only 8 percent met all 
Level II PASRR requirements.  In addition, 22 percent of sampled 
Level II evaluations did not contain evidence that the evaluator 
assessed whether the individuals total needs could be met in a 
community setting.  Finally, CMS and the survey and certification 
agencies in the five States that we reviewed conducted limited oversight 
of the PASRR.  
We based our findings on selected case files and a random sample of 
Level II evaluations from five selected States.  As such, we do not 
project our results.  However, the findings identify deficiencies that 
should be addressed to ensure that individuals with mental retardation 
are appropriately placed and receive necessary mental retardation 
services.  We therefore recommend the following to CMS:  
Hold State Medicaid agencies accountable for ensuring compliance with 
Federal requirements.  Specifically, we recommend that: 
o	 every nursing facility applicant receive a Level I PASRR screen 
prior to nursing facility admission, and 
o	 all individuals with suspected mental retardation receive a Level II 
evaluation and determination prior to nursing facility admission 
and all Level II PASRR documentation is shared with the admitting 
nursing facility. 
To address the above recommendations, we have several specific 
suggestions for CMS to consider.  First, CMS could require that State 
Medicaid agencies provide data to CMS regarding the number of 
completed Level I PASRR screens and the number of expected and 
completed Level II evaluations and determinations, and nursing facility 
confirmation of receipts of the PASRR documentation.  Alternatively, as 
part of CMSs current efforts to modify the MDS, CMS could consider 
adding a data element to indicate whether a Level I PASRR screen and 
Level II evaluation and determination have been completed. Finally, 
we suggest that CMS distribute both its draft State self-assessment 
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form and its draft regional office assessment form as tools to regularly 
collect information about each States PASRR processes. 
Hold States accountable for considering community placements during the 
Level II PASRR process 
Revise survey and certification requirements to ensure that State surveyors: 
o sample residents with mental retardation, and 
o review all PASRR documentation for timely completion. 
AGENCY COMMENTS 
CMS concurred with all of our recommendations. CMS intends to 
remind States of their obligation to implement effective and timely 
Level I and Level II processes, clarifying for States all of the Level II 
elements required by Federal regulation. In addition, CMS intends to 
review State claims, if necessary, to ensure that States recoup Federal 
Financial Participation from nursing facilities for any days claimed 
prior to the completion of all PASRR documentation. CMS intends to 
review the forms and tools used by each State for the PASRR Level II 
evaluation and determination to assess whether they include 
consideration of community placement. To address our final 
recommendation regarding revising survey and certification 
requirements to ensure oversight of PASRR, CMS stated it will ensure 
that a resident requiring a Level II PASRR is included in the resident 
sample during a nursing facility survey. CMSs comments did not 
warrant any revisions to the results of our review or to our 
recommendations. For the full text of CMSs comments, see 
Appendix C. 
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  A P P E N D I X   ~   A  
Examples of State Practices Other Than PASRR That May Address 
Placement and Provision of Services 
Through our evaluation, we identified a significant level of missing or 
late PASRR documentation.  However, during structured interviews 
with officials from five States, respondents described a few examples of 
efforts to address placement and provision of services for individuals 
with mental retardation through processes other than the PASRR. For 
example, State Medicaid agencies define level-of-care criteria for 
nursing facility placement, which can include such things as amount of 
assistance an individual requires with mobility, diet, or personal care. 
We found that this process either preceded or was combined with the 
PASRR Level I screens in the five States. 
Instances in which States employed processes other than the PASRR to 
address placement and/or provision of services for nursing facility 
residents with mental retardation include the following: 
o	 Officials in Washington used a decision tree when considering 
placement of persons with mental retardation.  This process 
considered all other residential settings, such as personal care 
services provided in the home, adult family home services, group 
homes, supported living, and shared living, with nursing facility 
placement as a last resort. 
o	 Officials in Connecticut described significant involvement by the 
case managers of SMRA in the placement and care planning process 
for nursing facility residents with mental retardation.  In that State, 
individuals with mental retardation may be placed in nursing 
facilities for 30 days based on a medical diagnosis.  A Department of 
Mental Retardation employee monitors the resident during the 
30-day period and determines whether additional time in the 
nursing facility is needed. The nursing facility staff that we 
interviewed in Connecticut confirmed that case managers are 
involved in quarterly care planning meetings.  If a nursing facility 
resident experiences a significant change of condition while in the 
nursing facility, the case manager is contacted and changes to the 
care plan are discussed.  Finally, the case manager ensures that the 
nursing facility resident receives any recommended specialized 
services financed by the State. 
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  A P P E N D I X   ~   B  

PASRR Oversight Practices in One State 
One selected State implemented two oversight mechanisms aimed at 
ensuring that nursing facilities comply with Federal regulations 
concerning the PASRR.  In West Virginia, the Department of Health 
and Human Resources sends a memorandum outlining the PASRR 
process to the nursing facility each time a prospective resident is 
referred for a Level II evaluation.  The memorandum delineates the 
steps that the nursing facility must take to arrange for the initial 
Level II evaluation, the circumstances in which a subsequent Level II 
evaluation is required as a result of significant change in the residents 
condition, and how the nursing facility should notify the State that a 
Level II evaluation will not be completed after referral. State officials 
indicated that this practice has been helpful in communicating PASRR 
requirements to nursing facility staff, which may experience frequent 
turnover. In addition, West Virginia conducts annual followup on the 
status of Level II evaluations that have been referred, but not 
conducted. If a nursing facility resident never received a Level II 
evaluation, State officials direct the nursing facility to arrange for one. 
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  A P P E N D I X   ~   C  

Centers for Medicare & Medicaid Services Comments 
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A G E N C Y   C O M M E N T S

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A G E N C Y   C O M M E N T S

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A G E N C Y   C O M M E N T S

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  A C K N O W L E D G M E N T S  

This report was prepared under the direction of Brian T. Pattison, 
Regional Inspector General for Evaluation and Inspections in the 
Kansas City regional office, and Gina C. Maree, Deputy Regional 
Inspector General.  Other principal Office of Evaluation and Inspections 
staff who contributed include: 
Tricia Fields, Team Leader 
Michael Barrett, Program Analyst 
Scott Horning, Program Analyst 
Amber Meurs, Program Analyst 
Dennis Tharp, Program Analyst 
Sandy Khoury, Program Specialist 
Tricia Davis, Director, Medicare Branch 
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