MENTAL ILLNESS

NURSING FACILITY APPLICANTS:

Understanding Federal Requirements

in

for

SCREENING

Policy Report

U.S. Department of Health and

Human Services

Substance Abuse and Mental Health Services

Administration

Center for Mental Health Services

Associate Director for Organization and Financing

5600 Fishers Lane

Rockville, MD 20857

Karen Linkins

Gail Robinson

Julia Karp

Sara Cooper

Joe Liu

Stacey Bush

Policy Report

MENTAL ILLNESS

NURSING FACILITY APPLICANTS:

Understanding Federal Requirements

in

for

SCREENING
ii Policy Report

Acknowledgments

This report was prepared by The Lewin Group for the Center for Mental Health Services

(CMHS), Substance Abuse and Mental Health Services Administration (SAMHSA). Authors

include Karen Linkins, Gail Robinson, Julia Karp, Sara Cooper, Joe Liu, and Stacey Bush,

all of The Lewin Group. Jan Earle, health insurance specialist at the Centers for Medicare

and Medicaid Services (CMS, formerly the Health Care Financing Administration), offered

invaluable assistance as the project coordinator. Shelagh Smith, MPH, was the Government

Project Officer in the Center for Mental Health Services.

Disclaimer

Material for this report was prepared by The Lewin Group for the Substance Abuse and

Mental Health Services Administration (SAMHSA), U.S. Department of Health and

Human Services (DHHS), under contract # 282-98-0015, Center for Mental Health Services.

The content of this publication does not necessarily reflect the views or policies of SAMHSA

or DHHS.

Public Domain Notice

All material appearing in this report is in the public domain and may be reproduced

or copied without permission from the Substance Abuse and Mental Health Services

Administration. Citation of the source is appreciated. However, this publication may not

be reproduced or distributed for a fee without the specific, written authorization of the

Office of Communications, SAMHSA, U.S. Department of Health and Human Services.

Electronic Access and Copies of Publication

This publication can be accessed electronically at the following Internet World Wide Web

connection: http://www.samhsa.gov or http://www.mentalhealth.org. For additional free

copies of this document, please call the CMHS Knowledge Exchange Network, 1-800-789-2647.

Originating Office

Office of the Associate Director for Organization and Financing, CMHS/SAMHSA, 

5600 Fishers Lane, 15-87, Rockville, MD 20857

Suggested Citation

Linkins, K.; Robinson, G.; Karp, J.; Cooper, S.; Liu, J.; and Bush, S. Screening for Mental

Illness in Nursing Facility Applicants: Understanding Federal Requirements. SAMHSA

Publication No. (SMA) 01-3543. Rockville, MD: Center for Mental Health Services,

Substance Abuse and Mental Health Services Administration, July 2001.
Table of Contents

I. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

IV. Understanding Medicaid Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

V. The PASRR Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

VI. Responsibilities of Nursing Facilities, State Medicaid Agencies, 

and Mental Health Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

VII. Frequently Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

VIII. State Variations in PASRR Implementation . . . . . . . . . . . . . . . . . . . . . 19

IX. Current Issues and Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

X. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

XI. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

XII. Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

List of Tables

Table 1. PASRR Program Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Table 2. Criteria for Serious Mental Illness (SMI)

(of 31 States Responding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Table 3. Level I Screen: Responsibility for Conducting Review 

(of 31 States Responding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Table 4. Criteria for Identifying Individuals Who Do Not Meet the 

PASRR Definition of Mental Illness Because of Dementia to 

Whom PASRR Does Not Apply (of 28 States Responding) . . . . . . 56

Table 5. Criteria for Determining Need for Nursing Facility Care

(of 26 States Responding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Table 6. States’ Criteria for Determining the Need for Specialized

Services (of 33 States Responding) . . . . . . . . . . . . . . . . . . . . . . . . 58

Table 7. Level II Screen: Responsibility for Conducting Review 

(of 33 States Responding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Screening for Mental Illness in Nursing Facility Applicants iii

I. Executive Summary

Medicaid law and regulations require States to have a

Preadmission Screening and Resident Review (PASRR)1

program to determine whether nursing facility applicants and residents require nursing facility services and specialized mental health care. Congress developed the PASRR program to prevent

inappropriate admission and retention of people with mental disabilities

in nursing facilities, as part of the Omnibus Budget Reconciliation Act

(OBRA) 1987. Several recent studies raise questions concerning the effectiveness of the PASRR program, suggesting that the program creates barriers for persons requiring nursing facility placements and does not

ensure access to appropriate psychiatric services.

As part of a larger evaluation of the PASRR

program, this paper reviews the literature

concerning PASRR and mental health services for persons in nursing facilities. It details

the Federal laws and regulations concerning

PASRR, reviews key policy issues from the

literature, clarifies frequently asked questions regarding the process, and identifies

additional policy questions to be studied. 

The following is a summary of the findings

of the literature review and the key issues

concerning the implementation of PASRR.

PASRR Process

■ Under the PASRR program, the Medicaid

statute prohibits nursing facilities (NFs)

from admitting any individual with a serious mental illness (SMI) unless the State

Mental Health Authority (SMHA) has

determined that the individual requires

the level of services the facility provides.

Further, the SMHA must determine

whether the individual requires specialized

services to treat his/her mental illness. If

placing the individual in an NF is deemed

appropriate and the individual requires

specialized mental health services, the State

Medicaid agency must provide or arrange

Screening for Mental Illness in Nursing Facility Applicants 1

1 This program was enacted as part of the Nursing

Home Reform Act under the Omnibus Budget

Reconciliation Act OBRA 1987, as amended by

OBRA 1990, 42 U.S.C. 1396r(e)(7). Originally

the program included an annual resident review

and was referred to as the Preadmission Screening

and Annual Resident Review (PASARR) program.

Under the Balanced Budget Amendment of 1996,

P.L. 104-315, or 42 USC 1396r, the requirement

for “annual” resident review, however, was eliminated and replaced with a requirement to screen

when “there is a significant change in physical or

mental condition.” Therefore, the current program

acronym of PASRR will be used to refer to the

program throughout this paper.
for provision of such services. SMHAs also

must review the needs of NF residents with

SMIs for NF services and specialized care. 

■ To determine the universe of NF applicants

who must have a PASRR (i.e., Level II)

evaluation, regulations require that States

conduct a Level I screening to identify

individuals suspected of mental illness. The

Level I identification may be conducted by

the State Medicaid agency, the nursing

home, or any other agent specified by the

State. If Level I identification screening

indicates the individual may have a mental

illness, a Level II screening must be conducted. The Level II screening requires a

two-pronged determination by the State

Mental Health Authority: (1) whether

the individual requires NF services and

(2) whether the individual requires specialized mental health services. Determinations

must be based on an independent evaluation conducted by an entity other than the

State Mental Health Authority or a nursing

home. People with SMI who do not require

NF services may not be admitted to the

NF. If the individual with SMI needs NF

services and specialized services, the State

Medicaid agency must provide or arrange

for such specialized services.

State Variations in

PASRR Implementation

■ Under OBRA 1987 and the resulting 1990

and 1992 regulations, no mandated process

existed for preadmission screening and no

required screening tools were identified for

the States to implement. The 1990 and

1992 regulations granted States enormous

flexibility in implementing even the most

basic operational aspects of PASRR, such as

the criteria that trigger a PASRR screen and

the very definition of what constitutes specialized services. Consequently, any comparison among States must explicitly identify

such differences.

Current Issues and Concerns

■ Funding PASRR screens and specialized

treatment is a challenge for States. If individuals need specialized services to treat their

mental illnesses, the State Medicaid agency

ultimately is responsible for providing or

arranging for provision of those specialized

services. To prevent duplicate payment, no

Federal financial participation (FFP) is available to reimburse specialized services that are

NF services (other than NF services).

However, FFP is available for specialized

services that are state plan services. Although

the Federal Government will match State

expenditures to meet PASRR requirements,

it does not fund alternative placements. 

■ The statutory definition of mental illness

(for PASRR) does not include persons with

dementia, including Alzheimer’s disease and

other organic brain disorders, unless their

primary diagnosis is an SMI. As a result,

the identification and provision of specialized mental health service needs for this

population becomes the responsibility of

the NF within the nursing facility payment. 

■ Although diagnosing SMI is subject to

Federal minimum requirements, States are

allowed to administer their own instruments to screen for suspected mental illness.

Hence, an individual might be identified as

experiencing an SMI in one State but not in

another. Similarly, with no standardized definition for “specialized mental health services,” some States limit these services to acute

inpatient care; others include a combination

of inpatient and community-based services. 

2 Policy Report
II. Introduction

The process of screening and determining whether nursing

facility (NF) services and specialized mental health care are

needed by nursing facility applicants and residents is called

the Preadmission Screening and Resident Review (PASRR) program.

The PASRR program is a required component of each State’s Medicaid

plan. State Medicaid agencies bear the ultimate responsibility for PASRR

program operations, although State Mental Health Authorities have

specific responsibilities under Federal statute and regulations.

More than a decade after Congress enacted

the PASRR program to prevent the inappropriate admission and retention of people

with mental disabilities in nursing facilities,

many concerns regarding the efficacy and

effectiveness of the legislation remain. In

fact, organizations such as the Society for

Social Work Leadership in Health Care, the

American Psychiatric Association, and the

American Association for Geriatric Psychiatry

conclude that while the program’s goals are

laudable, PASRR creates logistical barriers

for persons requiring nursing facility placements and does not ensure access to appropriate (i.e., medically necessary) psychiatric

services. 

This literature review is part of a larger

study, “An Evaluation of PASRR and Mental

Health Services for Persons in Nursing

Facilities,” funded by the Center for Mental

Health Services of the Substance Abuse and

Mental Health Services Administration. The

purpose of the study is to conduct research

and analysis on the (1) intent, scope, and

jurisdiction of PASRR; (2) implementation of

PASRR at the State and nursing facility level;

and (3) effect PASRR has had on the identification of people with serious mental illness

in nursing facilities. 

A number of resources were searched for

literature on treatment of people with mental

illness residing in nursing homes, PASRR, and

related issues such as the use of the Minimum

Data Set (MDS) and the status of Institutions

for Mental Diseases (IMDs). The search

covered a variety of electronic bibliographic

databases, including Medline, HealthStar,

PsycINFO, Mental Health Abstracts, Ageline,

Social SciSearch, Dissertation Abstracts,

Embase, and the Health & Wellness

Database. In addition, the library collection

of the Mental Health Policy Resource Center,

developed between 1988 and 1996, was

searched. The collection contains an extensive

compilation of published and unpublished

literature on issues related to all aspects of

Screening for Mental Illness in Nursing Facility Applicants 3
mental health policy, including mental illness

and nursing homes. In addition, the Centers

for Medicare and Medicaid Services (CMS)

provided technical consultation.

This literature review provides a base of

information for the larger study and identifies

key policy issues concerning PASRR legislation as it exists today and, more generally,

individuals in need of mental health services

in nursing facilities. This paper details the

PASRR policy as specified in the statute and

regulations. It examines several key policy

issues discussed in the literature, clarifies

some of the most frequently asked questions

regarding PASRR, and highlights many of

the pervasive policy questions that remain

unanswered in the research.

This paper is limited in several important

ways. Although an extensive general literature details the implementation and impact

of nursing home reform under the Omnibus

Budget Reconciliation Act of 1987 (OBRA,

1987), literature that addresses PASRR

specifically is less developed (Alexakos et al.,

1995; Colenda et al., 1999; Marek et al.,

1996; Snowden and Roy-Byrne, 1998). For

example, studies that examine the effect of

OBRA 1987 on the use of psychotropic

drugs and physical restraint in nursing facilities only indirectly address the effect of

PASRR on the appropriateness of mental

health services in nursing facilities.2

Additionally, little formal research has been

conducted on the implementation of PASRR

across States. In 2001, the Office of the

Inspector General (OIG), U. S. Department

of Health and Human Services, released two

reports concerning mental illness in nursing

facilities for the non-elderly adult population. One report (OIG, An Unidentified

Population, 2001) attempted to determine

how many younger individuals with mental

illness reside in nursing facilities. A companion report (OIG, PASRR Implementation

and Oversight, 2001) explored the PASRR

screening process for younger Medicaid

beneficiaries in five States.

As a result, the implementation experience

described in this literature review relies heavily on findings from a study conducted by

the Bazelon Center3 (1996), supplemented by

other relevant studies of PASRR and mental

health issues in nursing facilities. Although

the Bazelon Center study surveyed Medicaid

directors in all 50 States, the District of

Columbia, and Puerto Rico, the response

rate was only 63 percent. Therefore, no

information is available on the States that

chose not to participate in the study. In

addition, inconsistencies arose in the way

States reported (or did not report) data,

affecting the item response rates for the

survey. Despite these limitations, the Bazelon

Center study provides valuable data for

understanding how States vary in their

implementation of PASRR. 

4 Policy Report

2 The Office of Inspector General conducted

PASRR-related studies in Chicago and New York.

The Chicago study surveyed all States regarding

their systems for treating Medicaid recipients with

mental illness in nursing facilities. The New York

study assessed the appropriateness of Medicare

Part B payments to Medicare beneficiaries living in

nursing facilities.

3 The Judge David L. Bazelon Center for Mental

Health Law is a nonprofit legal advocacy organization based in Washington, DC. Judge Bazelon was

the Federal appeals court judge whose landmark

decisions pioneered the field of mental health law.
III. Background

To address the effectiveness of PASRR, the historical 

factors that served as catalysts for the legislation must be

understood.

History of PASRR

Congress created the PASRR program under

OBRA 1987 out of concern that, as a result

of the deinstitutionalization movement,

many people with SMI or mental retardation

were inappropriately placed in nursing

homes, where they would not receive the

care or specialized services needed. Based on

both advocacy concerns and empirical data,

Congress became increasingly aware that

some States were using NF placements as a

way to reduce overcrowding in State facilities for people with SMI. States had a financial incentive to place people with SMI in

nursing facilities rather than in institutions

for the mentally ill because Medicaid does

not pay for mental hospital care for persons

aged 22 to 64 (Buck et al., 1995).4 By transferring State hospital residents to Medicaidcertified nursing homes, States were able to

shift approximately 50 percent of the cost of

care to the Federal Government (Goldman &

Frank, 1990). Moreover, under the prevailing

rules for community mental health center

(CMHC) reimbursement under Medicaid,

CMHCs could only be reimbursed for services provided in the CMHC. As a result, many

nursing homes were left without the

resources to provide appropriate care for this

new category of residents (Emerson

Lombardo, 1994; U.S. General Accounting

Office, 1982). 

Congress responded to these concerns

by directing the Centers for Medicare and

Medicaid Services (CMS) and the General

Accounting Office (GAO) to investigate nursing home quality. CMS funded an Institute

of Medicine (IOM) study that reported widespread quality problems and recommended

strengthening Federal regulations for nursing

Screening for Mental Illness in Nursing Facility Applicants 5

4 Medicaid was created in 1965 as an insurance

system for the indigent and medically needy.

It covered both treatment in doctors’ offices and

in general hospitals, as well as long-term care in

nursing facilities. In 1994, Medicaid contributed

47 percent of the expenditures on nursing home

services (Feder et al., 1997). One exception was

its prohibition of covering patients in psychiatric

hospitals. The drafters of the legislation feared

that the cost of covering such patients would be

too great. At the time, State hospital populations

numbered in the thousands. To prevent Medicaid

from assuming State costs, Congress included the

Institutions for Mental Diseases (IMD) exclusion

provision. Psychiatric hospitals were not considered covered services. Later, Congress amended

the IMD rule to permit States the option of

Medicaid reimbursement for individuals under

the age of 22 and over the age of 64 residing in

psychiatric hospitals.
homes (IOM, 1986). Imbedded in the IOM

report was an explicit request that Federal

regulations address patients’ rights, quality

of care, and quality of life in nursing facilities (Morford, 1988). This recommendation

became an especially important catalyst for

nursing home reform.

The GAO (1987) report corroborated the

IOM study findings, indicating that more

than one-third of U.S. nursing homes were

operating at a level below minimum Federal

standards. The report cited evidence of

untrained staff, inadequate health care,

unsanitary conditions, poor food, unenforced

safety regulations, and many other problems

related to quality and safety. This report further convinced Congress to pursue nursing

home reform.

In response to the recommendation of the

IOM study to strengthen Federal regulation

of nursing facilities, CMS proposed and

published two rules in the Federal Register,

one identifying requirements for nursing

homes to participate in Medicare and

Medicaid (CMS, Federal Register, 1987a)

and the second delineating the Federal

processes to enforce compliance with the

requirements (CMS, Federal Register,

1987b). However, concurrent with and independent of CMS’s rule development process,

Congress enacted nursing home reform

under the 1987 Omnibus Budget

Reconciliation Act. Morford (1988) posits

three reasons why Congress passed legislation despite publication of CMS’s two proposed rules. First, the proposed rules did not

offer sufficient assurance that the Federal

Government would publish final rules. After

IOM published its recommendations, it

took more than a year for CMS to produce

the proposed rules. Second, the proposed

rules were a practical but not identical

translation of the IOM recommendations

into regulation. Critical differences remained.

Therefore, Congress believed that legislation

could ensure more comprehensive implementation of the IOM recommendations. Third,

because of IOM’s prestige, implementing its

recommended nursing home reforms was

perceived to be politically viable. 

OBRA 1987’s nursing home reform legislation exceeded the scope of CMS’s proposed

rules and offered assurance that final Federal

regulations would be published and implemented. The statute contained detailed

requirements concerning patients’ rights,

patient assessments, and staffing criteria. The

law added requirements that all States implement new sanctions for NF noncompliance

and granted new authority to the Federal

Government to enforce three types of noncompliance penalties (denial of payment;

fines; and appointment of temporary management to ensure improvements or orderly

closure) (Morford, 1988). The legislation

also included several provisions that pertained directly to the problem of inappropriate placements and inadequate treatment of

people with serious mental illness in nursing

facilities. These provisions included regulation

of the use of antipsychotic medications and

physical restraints, as well as preadmission

screening of individuals with mental illness

to determine if they need the level of care

provided by a nursing facility.

6 Policy Report
Understanding IV. Medicaid Policy

Medicaid policy is a complex framework of State and

Federal laws, regulation, guidance, and court decisions

that begins with the laws passed by Congress under Title

XIX of the Social Security Act. Congress delegates some of its lawmaking powers to the Secretary of the Department of Health and Human

Services (HHS), who promulgates Medicaid regulations that carry the

weight of law. CMS issues guidance to States through the State Medicaid

Manual, letters to State Medicaid agencies, and other communications.

CMS guidance translates Federal requirements in statute and regulations,

providing practical direction for State Medicaid program operations.

Since States are given wide latitude in Medicaid program design, State

statutes and regulations further spell out how individual State Medicaid

programs work. State laws and regulations are reflected in State Medicaid

plans, submitted to CMS to ensure they fulfill Federal requirements.

Courts, at the Federal and State level, also make decisions about how

Medicaid laws and regulations should be interpreted, potentially affecting how they are carried out. Over time, Congress changes statutes, HHS

publishes new regulations, and CMS and courts reinterpret the meaning

of laws and regulation. Thus, Medicaid policy is best characterized as a

patchwork of laws, rules, and interpretations rather than as a seamless

monolithic policy authorized by law, elaborated by regulations, interpreted by guidance, and executed by States.

Likewise, Medicaid policy regarding PASRR is

fragmented and complex. Congress established

PASRR in 1987. PASRR regulations were not

published initially by HHS. Instead, CMS

helped States implement PASRR statutory

requirements by issuing interim guidance in

the State Medicaid Manual. In 1990, Congress

made several changes to PASRR law.5

Though these changes made the guidance in

the interim State Medicaid Manual moot,

CMS still plans to revise and update the State

Medicaid Manual sections concerning

PASRR. In 1992, HHS published final PASRR

regulations that reflected the 1990 statutory

changes (CMS, Federal Register, 1992). In

1996, Congress revisited the PASRR program

and removed the requirement for annual resident review, replacing it with a requirement to

Screening for Mental Illness in Nursing Facility Applicants 7

5 For an overview of the 1990 legislative changes,

see Mental Health Law Project, 1991.
conduct reviews when a resident’s physical or

mental status changes. Neither Federal regulations nor State Medicaid Manual sections

have been changed to reflect the 1996 statutory amendments. Regulations and the State

Medicaid Manual offer no guidance on how

to implement the 1996 amendments.

Title XIX provisions concerning PASRR

must be examined to understand what

Federal policy requires of State Medicaid

agencies, Mental Health Authorities, and

nursing facilities. PASRR regulations also

have the force of law, but regulations concerning the annual frequency of resident

reviews were superseded by 1996 statutory

changes and may be ignored. The State

Medicaid Manual does not carry the force

of law and can be consulted only to interpret PASRR provisions not superseded by

the statutory changes in 1990 and 1996

and by regulations published in 1992. The

following analysis of PASRR policy is based

on a review of current law, regulations,

and guidance. It is not a legal analysis and

does not examine congressional intent or

statutory construction. Thus, it does not

necessarily reflect how a court may interpret

the law and regulations. 

8 Policy Report
The PASRR Process

Screening for Mental Illness in Nursing Facility Applicants 9

Table 1 (Appendix) provides detail and definitional sources

for the elements of the PASRR program. All Medicaid recipients applying for new admission to a nursing facility must

be screened to identify those suspected of having a mental illness. The

Medicaid statute does not specifically require that all NF applicants be

screened for mental illness. Rather, it requires that all applicants who

have mental illness be screened for their need for NF services and specialized services to treat their mental illness. However, to determine the

universe of nursing facility applicants suspected of having a mental illness, some form of screening must be conducted on all applicants.

Regulations mandate this preliminary screening and refer to it as a Level

I screening. Because Federal regulations provide no rules about the tools

used or personnel involved in Level I screening, the screening may be

conducted by nursing facilities, hospitals, physicians, or any other entity specified by the State’s Medicaid program. 

V.

Patients who are admitted to an NF directly

from a hospital after receiving acute inpatient care; who require NF services for the

condition for which they received hospital

care and whose attending physician has certified prior to admission to the NF that they

are expected to stay in the nursing facility

for less than 30 days are exempt from preadmission screening requirements. Patients

being readmitted to a nursing facility or

being transferred from one nursing facility to

another are not considered new admissions

and, thus, resident review requirements

apply. 

Applicants suspected of having a mental

illness (who rated “positive” in the Level I

screen) undergo a more extensive preadmission review called Level II screening. Level II

screening requires an independent evaluation

of applicants’ physical and mental health

status. Independent evaluators must not have

any ties to nursing facilities, nor may they

be part of a State Mental Health Authority

(SMHA). The independent evaluator must

verify whether the applicant has a serious

mental illness. Applicants without serious

mental disorders may be admitted to the

nursing facility without further PASRR

review. 

A serious mental illness is defined as a

mental disorder that may lead to a chronic

disability and is diagnosable under the

DSM-III-R other than dementia, unless

the primary diagnosis is a major mental
disorder. The disorder must have resulted in

functional limitations in major life activities

within the past 3 to 6 months. In addition,

the applicant must experience at least one

of the following: (1) psychiatric treatments

more intensive than outpatient care or

(2) significant disruption to the normal

living situation requiring supportive services

or intervention by housing or law enforcement personnel.

For applicants diagnosed with a serious

mental illness, SMHAs must use the independent evaluation to determine whether the

applicant requires the level of care offered by

the nursing facility and whether specialized

services are necessary to treat the applicant’s

mental illness. Applicants with SMI may be

admitted only if they are determined to

require the level of nursing care the facility

provides. Applicants who do not need NF

services cannot be admitted to the facility.

If it is determined that an applicant also

needs specialized services to treat a mental

illness, the State Medicaid agency ultimately

is responsible for providing or arranging for

the provision of those services. Congress

authorized HHS to define specialized services

through regulations. In turn, HHS published

regulations defining specialized services as

those “specified by the State” for the continuous and aggressive treatment of a nursing

facility resident’s mental illness. Thus,

Federal law and regulations provide no specific definition of the specialized services that

must be provided to nursing home residents

with SMI. The mandate to provide such services extends only to those specialized services

a State includes in its definition. 

Furthermore, Medicaid statute requires

nursing facilities to provide treatment and

services “not otherwise provided or arranged

for (or required to be provided or arranged

10 Policy Report

for) by the State.” This requirement is interpreted in regulations to include all “services

of lesser intensity than specialized services.”

The absence of a definition of specialized

services in either Federal law or regulations

has resulted in considerable confusion about

the services to be provided by States and

those to be provided by nursing facilities.

If a State chooses to limit its definition of

specialized services to reduce the scope of

this unfunded mandate, it shifts a greater

burden onto nursing facilities to provide

or arrange for psychiatric services. 

Before the 1996 amendments (Public Law

104-315), individuals residing in nursing

facilities were required to be screened for

mental illness at least annually as if they were

new admissions. Current law does not

require that NF residents be screened on an

annual basis for mental illness. Instead, the

statute requires nursing facilities to report

significant changes in a resident’s mental

condition promptly to the State Mental

Health Authority. Regulations specify that

SMHAs must conduct a Level II screen to

evaluate such residents and determine if

their placements continue to be appropriate

and whether their specialized services needs

have changed. 

All NF residents determined by State

Mental Health Authorities to require NF

services may continue to reside there.

Residents who do not need NF services may

choose to continue residing in the facility

only if they both need specialized services

and have continuously lived in a nursing

facility for at least 30 months. All other

residents with mental illness must be discharged. States must provide specialized

services to residents found to need such

services, regardless of whether they may

stay in the nursing facility. 
Screening for Mental Illness in Nursing Facility Applicants 11

I

n general, the Medicaid statute can be described as a series of State

Medicaid plan requirements. States must designate a single State

agency to administer and manage the State Medicaid program.

Thus, State Medicaid agencies bear the ultimate responsibility for fulfilling all Medicaid requirements, including those associated with PASRR. 

VI. Responsibilities of

Nursing Facilities,

State Medicaid

Agencies, and Mental

Health Authorities

Regulations specifically require State

Medicaid agencies to include a PASRR program in their State plan and to develop a

written agreement with the State Mental

Health Authority detailing the operation of

the PASRR program. State Medicaid agencies also bear the final responsibility for providing or arranging for specialized services

to NF residents with mental illness or residents discharged from nursing facilities

because of PASRR. Medicaid agencies may

delegate the function of providing or arranging for specialized services to the SMHA or

another agency, but the ultimate responsibility remains with the Medicaid agency. State

Medicaid agencies may not claim any nursing facility services provided to individuals

with mental illness not screened by PASRR

as Medicaid expenditures eligible for Federal

financial participation. In addition, State

Medicaid agencies must protect patients’

rights by establishing an appeals system,

providing culturally/linguistically/ethnically

appropriate notices to persons with SMI

and their families, retaining records, and

tracking persons to ensure that appeals are

heard and that future reviews are performed. 

Federal regulations articulate the required

elements of written agreements between State

Medicaid agencies and State Mental Health

Authorities. The agreement must specify the

respective responsibilities of the State

Medicaid agency and the Mental Health

Authority for 

■ conducting joint planning; 

■ providing access by the Medicaid agency

to SMHA records; 
■ recording, reporting, and exchanging

medical and social information about

individuals subject to PASRR; 

■ ensuring that preadmission screenings

and resident reviews are performed in

a timely manner;

■ ensuring that if the SMHA delegates

its determination responsibility, this

delegation complies with regulations; 

■ ensuring that PASRR determinations

made by the SMHA are not countermanded by the Medicaid agency; 

■ designating the independent person or

entity that performs Level II PASRR

evaluations for individuals with mental

illness; and

■ ensuring that all requirements of PASRR

are met. 

Nothing prohibits States from addressing

other issues such as the provision of specialized services in these written agreements; nor

do Federal law and regulations spell out the

division of functions between State Medicaid

agencies and SMHAs. Thus, States are granted considerable flexibility to design the operations of their PASRR program. 

Federal law and regulations require State

Mental Health Authorities to perform certain

PASRR duties. SMHAs must determine

whether persons with mental illness need

nursing facility services and whether they

12 Policy Report

need specialized services. SMHAs must base

their determinations on independent evaluations that are in no way connected to a nursing facility. Determinations must be made on

an annual average of 7 to 9 working days

after an applicant is referred for a Level II

screening. Anticipating that State Mental

Health Authorities may delegate or contract

determination decisions to others, the statute

and regulations prohibit delegation to entities related to nursing facilities. 

Nursing facilities are obligated to perform

certain duties under PASRR as well. The

Medicaid statute bars nursing facilities from

admitting any new resident who has a mental illness unless the State Mental Health

Authority has conducted a Level II (PASRR)

assessment and determined that NF services

are needed. The law also requires that nursing facilities notify the SMHA promptly after

a significant change in the physical or mental

condition of a resident. Forthcoming regulations will elaborate further on NF duties

with regard to resident review and changes

in a resident’s condition. The statute also

requires nursing facilities to provide services

of lesser intensity than specialized services to

their residents with mental illness. The scope

of this requirement is not articulated fully by

Federal law and regulations, and depends

on the definitions and policies adopted at

the State level regarding specialized services.

PASRR Screens Responsibility for Oversight Eligible to Conduct Screen

Level I ■ State Medicaid Agency All involved parties, including nursing facilities, State 

Mental Health Authority, or an independent entity

Level II ■ State Mental Health Authority Independent entity (other than the State Mental 

for mental illness Health Authority) without ties to a nursing facility

Change in ■ State Mental Health Authority, Independent entity (other than the State Mental 

condition assessment after NF identifies change Health Authority) without ties to a nursing facility
Regulations also require that nursing facilities transfer PASRR reports when residents

with mental illness are transferred to a hospital or another nursing facility. Because States

have great flexibility in designing their

PASRR programs, they may place additional

responsibilities on nursing facilities. 

Screening for Mental Illness in Nursing Facility Applicants 13

Screening for Mental Illness in Nursing Facility Applicants 15

Frequently Asked

Questions

1. Under PASRR, can an applicant

with only mental illness be admitted

to a nursing facility?

Yes. An applicant with mental illness may

be admitted to a nursing facility if the State

Mental Health Authority determines that

the applicant requires the level of services

provided by the facility. Regulations require

that the SMHA, when making the determination of whether NF services are needed,

assess whether the total needs of an applicant with mental illness can be met in a

community setting or must be met on an

inpatient basis. If inpatient care is appropriate, the SMHA must assess whether a

nursing facility is an appropriate setting. NF

placement may be considered appropriate if

the applicant meets the minimum standards

of admission and if the applicant’s treatment

needs do not exceed the level of services that

can be delivered by the NF—combined with

any required specialized services provided or

arranged for by the State. 

2. Can nursing facilities conduct

any part of the Level I or II screens? 

Nothing in Federal law or regulations precludes NF involvement in Level I screens to

identify applicants or residents suspected of

having a mental illness. However, nursing

facilities may not conduct Level II evaluations or determinations, although they may

ascertain whether existing data are sufficient to determine that an applicant fits a

category established by the State for an

advance group determination. Evaluations

for mental illness must be conducted by an

independent entity (other than the State

Mental Health Authority) with no direct

or indirect relationship with any nursing

facility. Determinations are the responsibility

of State Mental Health Authorities, but

SMHAs may delegate or contract that

responsibility to any entity without direct

or indirect ties to any nursing facility.

3. Under what circumstances can

an applicant be admitted to a nursing

facility before the Level I or II screens

are completed?

None. Regulations require a Level I screen

prior to admission for every nursing facility

applicant, including private pay. The Level I

screen identifies applicants who may have

mental illness and thus will require the Level

II evaluation. Federal law bars nursing facilities from admitting new applicants with

mental illness unless the State Mental Health

Authority has determined, on the basis of a

PASRR Level II evaluation, that the person

needs NF services. States cannot seek Federal

Medicaid reimbursement for eligible NF

services provided to residents with mental

illness who were not determined by a

PASRR program to require such services.

CMS is prohibited from providing Federal

financial participation until a PASRR screen

is conducted. 

VII.
16 Policy Report

However, regulations allow States to

expedite certain nursing facility admissions

through advance group determinations—

Level II determinations based on categories

for which NF services are normally needed.

Some examples in regulation include provisional admissions pending further assessment in cases of delirium and emergency

protective services. States must specify an

appropriate time limit for provisional admissions. Further, a person later determined to

need a longer stay must be given an individualized Level II resident review before continuation of the stay is permitted and payment made for care beyond the State’s time

limit. In cases of delirium in which an accurate diagnosis cannot be made until the

delirium resolves and in emergency situations requiring protective services, patients

may be admitted provisionally pending further assessment. An emergency admission

must not exceed 7 days. Most persons who

meet the criteria for a categorical NF determination must still have an individualized

evaluation for the need for specialized services. In only two circumstances are specialized services categorical determinations permitted: in the provisional admissions

categories for emergencies requiring protection and respite.

4. Can the state mental health

authority delegate determinations? 

Yes. Federal statute and regulations anticipate that State Mental Health Authorities

may delegate or contract determination decisions to others by prohibiting delegation to

entities related to nursing facilities. SMHAs

may delegate admission and continued stay

determinations to any entity without direct

or indirect ties to a nursing facility. However,

SMHAs retain ultimate control and responsibility for the determinations.

5. Are nursing facilities obligated

to provide services recommended

by the State Mental Health Authority

on the basis of Level II screens?

Yes, but only those services of lesser intensity than specialized services. State Mental

Health Authorities are required to determine

whether nursing facility applicants and residents with mental illness need specialized

services, and the State must provide or

arrange for those services. The Medicaid

statute mandates that nursing facilities provide treatment and services required by residents with SMI that are not otherwise provided or arranged for (or required to be

provided or arranged for) by the State.

Regulations interpret the statutory language

to require provision of mental health services of lesser intensity than specialized services to all residents who need such services.

However, if the treatment needs of an applicant or resident with SMI cannot be met by

the nursing facility or through specialized

services provided by the State, placement is

not considered appropriate and the individual may not stay in the nursing facility.
6. What constitutes specialized

services? Can they be defined any

way a state chooses?

Congress authorized HHS to define

specialized services in regulation. The

resulting HHS regulations define specialized services as those “specified by the

State” that, combined with services provided by the nursing facility, result in the

continuous and aggressive implementation of an individualized plan of care.

The plan of care must be developed and

supervised by an interdisciplinary team,

which includes a physician, qualified

mental health professional, and other

professionals as appropriate. It must

prescribe specific therapies and activities

for the treatment of acute episodes of

serious mental illness. The plan must

also be directed toward diagnosing and

reducing the resident’s behavioral symptoms that necessitated institutionalization, improving independent functioning, and achieving a level of function

that enables the elimination of specialized services at the earliest possible time.

Within the definition of specialized services articulated in Federal regulations,

States maintain considerable flexibility

in the definition of specific services and

treatment.

Screening for Mental Illness in Nursing Facility Applicants 17

7. Can specialized services be

defined as those services provided in

a psychiatric hospital or psychiatric

unit of a general hospital? 

Yes. PASRR’s purpose is to determine

whether NF care for persons with SMI is

appropriate and whether specialized services

are needed. In States that define specialized

services as intensive mental health services

provided in an inpatient psychiatric hospital

or general hospital, PASRR determinations

that specialized services are needed mean

that NF services are not needed. The State

then becomes involved in the person’s placement in an appropriate alternative setting

(e.g., an inpatient psychiatric hospital, an

IMD, or a psychiatric wing of a general

hospital). 

Screening for Mental Illness in Nursing Facility Applicants 19

State Variations 

in PASRR

Implementation

VIII.

Screening Process

Level I Screens

The Bazelon Center (1996) found that

approximately 70 percent (22 of 31) of the

States responding to questions on Level II

screening rely on Federal criteria specified

under PASRR regulations to determine

whether an individual is suspected of having

a mental illness and qualifies for a Level II

screen. States that did not use Federal criteria

(9 of 31) reported they applied broader definitions to determine the presence of mental

illness (see Table 2 in Appendix).

States also differ in determining who is

responsible for conducting the Level I screen

and who is qualified to administer it

(Table 3 in Appendix). According to the

Bazelon Center study (1996), only 2 of the

31 reporting States retained responsibility

for the reviews. The majority (45 percent)

use a mix of State agencies and private

providers. The other States use an array

of contracting arrangements, including

a mix of individual private health care

providers (16 percent), private agencies

(13 percent), treating physicians (6 percent),

nursing facilities (6 percent), and a combination of nursing facilities and hospitals

(6 percent). 

With regard to personnel qualified

to administer the Level I screen, there is

Medicaid is a State/Federal program that provides each

State a great deal of flexibility in the design and administration of its program within broad Federal guidelines. Neither OBRA 1987 nor the resulting 1990 and 1992 regulations

mandated a process for States to implement preadmission screening or

stipulated the use of specific screening tools. The 1990 and 1992 regulations granted States great flexibility to implement even the most basic

operational aspects of PASRR, such as the PASRR screening criteria and

the definition of mental illness. Therefore, a great deal of variation exists

in how PASRR is implemented across the States. The following section

describes the various ways in which States have interpreted and implemented the program, including screening, specialized services, and alternative placements.
variation in terms of professional background (e.g., registered nurse, social worker,

doctor, mental health professional, or discharge planner) and organizational affiliation

(e.g., nursing facility; State Agency on Aging;

or a State department, hospital, or independent entity contracted to conduct PASRR

screens). For example, in Washington State

staff at the admitting NF complete Level I

screens, while in Maine screens may be

completed by the hospital discharge planner,

social worker, registered nurse, psychologist,

psychiatrist, doctor, or nursing facility staff

(Borson, Loebel, Kitchell, Domoto, & Hyde,

1997; Maine Department of Human

Services, 1997). According to the Society

for Social Work Leadership in Health Care

(SSWLHC) report (1995), the amount of

flexibility in who is authorized to complete

a Level I screen is correlated with the

complexity and bureaucracy involved in

a State’s PASRR process. 

States also vary considerably in the type

and complexity of screening tools used for

Level I screens. For example, Washington

State relies on three separate sources of data

in Level I: admission and medical records,

staff interviews with an aide or nurse

(depending on whether the individual is

being discharged from a hospital or currently resides in the NF), and a complete resident examination (including a psychiatric

diagnostic interview, the Mini-Mental State

Examination, the Hamilton Depression

Rating Scale, and the Brief Psychiatric

Rating Scale) (Borson et al., 1997). In

Maine, Level I screens are much less complex; screeners are required to complete only

one instrument, the Med ’96 Module V

(Maine Department of Human Services,

1997). Some States, such as Oklahoma,

include the Minimum Data Set (MDS) as

20 Policy Report

an instrument for the Level I screen since

the MDS already is part of the assessment

process for individuals applying for NF

placement (Oklahoma Department of

Mental Health and Substance Abuse

Services [DMHSAS], 1997).

Level II Screens

As with the Level I screen, States vary in

their implementation of the Level II screen.

Definitions, responsibilities, and personnel

qualifications for conducting the screen vary,

as do the screening instruments used.

Not all individuals identified as meeting a

State’s criteria for mental illness are referred

for Level II screens. Hospital discharges are

exempt from PASRR prior to an NF admission when they meet certain criteria and

their attending physician certifies (prior to

admission) that fewer than 30 days of convalescent care is needed for the condition for

which they were hospitalized. SMHAs can

make determinations in advance for certain

categories that have been approved by CMS

and included in the State plan. The

approved categories are based upon the fact

that certain diagnoses, severity of illness, or

need for a particular service indicate that

NF admission is appropriate. For MI, a category can indicate that specialized services

are not needed only for provisional emergency admissions (limited to 7 days) and

short-term respite stays. All other categorical

determinations that a person needs NF services must still have an individualized Level

II evaluation for specialized services. There

cannot be an advance determination that

specialized services are needed. Other examples of categorical determinations are persons with a terminal illness and severe medical conditions prohibiting mental health

treatment, including coma. The number of
advance determinations made by category

(aka categorical determinations) established

by States varies, ranging from none to eight

(Snowden, Piacitelli, & Koepsell, 1998;

SSWLHC, 1995). States vary in the criteria

used to make categorical determinations as

well.

With regard to the determination of need

for NF-level care, CMS permits each State

to develop its own medical necessity criteria

for nursing facility admissions and Federal

guidelines require the SMHA to use the

State criteria when making its PASRR determinations. The Bazelon Center (1996) found

that 91 percent (30 of 33 responses) of the

States defined specialized services as 24-hour

inpatient psychiatric care (Table 6 in

Appendix). The other three States defined

specialized services as a broad spectrum of

rehabilitative services designed to develop

skills necessary for living independently in

the community. 

States vary regarding who is responsible

for conducting Level II screens and who is

qualified to administer the screen (see Table

7 in Appendix). Most State Medicaid agencies authorize private entities to complete

Level II screens. The Bazelon Center (1996)

found that 52 percent of States (26 States)

contract with private entities, 24 percent use

community mental health agencies, and 15

percent delegate screening to an independent

State agency. In most cases, the referring

individual contacts the designated entity only

if a Level II screen is required (SSWLHC,

1995). For example, in Oklahoma, the Level

II screens can only be completed by a

CMHC that is not owned by the State.

Individuals identified as requiring a Level II

screen are referred to the Oklahoma Health

Care Authority PASRR Unit, which in turn

refers them to a State psychiatric consultant.

Screening for Mental Illness in Nursing Facility Applicants 21

The consultant refers individuals to an

authorized CMHC, which completes the

screen and sends it to the Oklahoma

Department of Mental Health and

Substance Abuse Services for review

(Oklahoma DMHSAS, 1997). Often, the

Level II screen involves input from interdisciplinary teams, including physicians, social

workers, and licensed professional counselors or family therapists (Oklahoma

DMHSAS, 1997). In Washington State, the

Mental Health Division contracts with certified mental health professionals to conduct

Level II PASRR screens. Licensed psychiatrists are required to review and sign each

screen (Snowden et al., 1998). In Maine,

Level I screens that meet the criteria are

submitted to the Mental Health Authority,

which is the final authority on whether

individuals should be referred for a Level II

screen. The Mental Health Authority then

refers the individual to an independent

assessor from a local CMHC to conduct

the Level II screen (Maine Department of

Human Services, 1997). 

The way in which screens are conducted

also differs among the States. For example, a

few States, such as Hawaii, require discharging hospitals to gather and send all required

information for individuals requiring Level II

screens to the State Mental Health Agency or

contracted agency for review. Other States,

such as Kentucky, require a face-to-face psychiatric assessment conducted by the agency

contracted to perform Level II screens

(SSWLHC, 1995).

Screening tools also vary across States.

Some States, such as Nebraska, require as

many as nine different forms to be completed; other States only require one or two.

Although some States do not require the use

of standard forms for the Level II screen,
most States do collect common data elements

(SSWLHC, 1995) as required in Federal regulations. For example, Maine and Oklahoma

have similar requirements for Level II

screens, including the mandatory information on medical history, neurological systems,

comprehensive drug history, psychosocial

evaluation, psychiatric history, and an evaluation of the need for specialized services

(Maine Department of Human Services,

1997; Oklahoma DMHSAS, 1997). 

Specialized Services

Another area of State variation concerns

the type and availability of alternative

placement options, as well as the mental

health services available in nursing facilities.

While PASRR regulations mandate that

States arrange for the provision of specialized mental health services to individuals

requiring clinical intervention for acute

manifestations of mental illness, CMS

allows each State to create its own requirements for the kinds of services that would

qualify as “specialized.” For example,

Maine and Oklahoma specify a range of

specialized services, such as special staffing;

diagnostic assessment by an interdisciplinary team that includes a psychiatrist; emergency detention (provided only for patients

in danger of harming themselves or others);

intensive one-to-one supervision; seclusion

or physical restraint (if providing less intensive treatment fails); psychotropic medication; group therapy; individual therapy;

psychiatric testing; recreation therapy; and

neurological exams (Maine Department

of Human Services, 1997; Oklahoma

DMHSAS, 1997). Some States contract with

entities or mental health professionals for

a variety of reasons. For example, several

services, such as emergency detention, are

22 Policy Report

difficult for nursing facilities to provide and

still comply with the nursing home residents’ rights regulations. Because many

facilities choose not to make the necessary

modifications, the State is unable to contract with the facility to provide certain

specialized services. Another reason States

might choose not to provide specialized

services in nursing facilities is because of

the risk that a facility might unintentionally

become an IMD and lose its Medicaid payment for persons age 22–64. A third reason

is that nursing facilities do not have mental

health professionals on staff and the general

staff does not have the skills required to

provide adequate care for persons with

intensive mental health needs. Also, many

States believe that the many younger people

who require specialized services may pose a

risk to their elderly and frail residents.

Some States mandate that these services be

provided at inpatient psychiatric facilities;

other States have authorized community

mental health centers or other outpatient

facilities to provide them in the form of day

treatment. These individuals residing in

nursing facilities at the time of treatment

receive outpatient specialized mental health

services provided by an agency contracted

through the State.

Community-Based Alternatives 

Studies of PASRR implementation suggest

that increasingly States rely on communitybased alternatives for providing specialized

mental health services. The Bazelon Center

study (1996) found that 25 percent of individuals receiving specialized treatment in

1993 were referred to psychiatric hospitals,

compared with 51 percent in 1991. The

number of individuals receiving services

from nonpsychiatric inpatient placements
and nursing facilities increased during the

same period. Alternative placements in

community-based programs increased from

19 percent in 1991 to 22 percent in 1993,

while the percentage of individuals remaining in nursing facilities and receiving specialized services from contracted agencies

increased from 30 percent to 53 percent,

respectively (Bazelon Center, 1996). There

is one caveat to interpreting these data,

however. Texas accounted for 76 percent

of individuals receiving treatment from

nursing facilities in 1993. Hence, the

increase in referrals to community-based

alternatives may be less substantial than

the percentages suggest. However, Snowden

and colleagues (1998) also found fewer

referrals to inpatient psychiatric units in

a study of PASRR implementation in

Washington State, reporting that only

0.8 percent of Medicaid recipients were

referred to inpatient psychiatric care

in 1992 and 1993, while 74 percent of

individuals were referred to non-nursing

long-term care facilities during this same

period. 

According to the Bazelon Center study

(1996), 36 percent of States (18) believe

that PASRR had resulted in increased funding for community-based care; 39 percent

(19) indicated no increased funding. Hence,

reliance on community-based care varies

across States and may relate to the State’s

own policies for increasing reliance on less

restrictive settings for treatment. For example, although some States—such as Texas—

are increasing reliance on alternative community-based options for specialized

services, some State Mental Health

Authorities still prefer referrals to more

traditional inpatient facilities. For example,

Maine’s description of its OBRA program

Screening for Mental Illness in Nursing Facility Applicants 23

specifically designates psychiatric units of

community hospitals as the best location

for residents discharged from nursing

facilities as a result of PASRR (Maine

Department of Human Services, 1997).

Oklahoma advises referring entities to

place individuals in psychiatric units for

specialized services since treatment is often

short-term (Oklahoma DMHSAS, 1997). 

Outcomes of PASRR

Screening Process

An estimated 5.4 percent of all U.S. adults

are considered to have a serious mental illness; further, it is estimated that a total of

9 percent of adults have mood disorders or

SMI and experience functional impairment

(U.S. Department of Health & Human

Services, 1999). 

No detailed studies address whether the

PASRR program is achieving appropriate

treatment for individuals with mental illness.

However, a number of studies address

the extent to which the PASRR screening

process identifies people with serious

mental illness. 

Level I Screen

A recent Office of the Inspector General

report (PASRR Implementation and

Oversight, 2001) found States conducted

Level I PASRR screens for only 47 percent

of sampled residents with a serious mental

illness. Of the screens completed, 16 percent

were dated more than 2 months after admission to the facility. Compliance varied widely

by State; the proportion of residents receiving Level I screens ranged from 11 to 100

percent.

In their review of PASRR, Borson and colleagues (1997) report that around 7 percent

of individuals who received Level I screens
24 Policy Report

ultimately were referred for Level II screens.

This figure is consistent with other studies.

For example, in the Bazelon Center study

(1996), the number of reviews conducted

ranged from 14,314 per State in 1991 to

19,775 per State in 1993. Of the States

reporting both the number of reviews conducted and the number referred for Level II

screens, average referral rates were 6.2

percent in 1991 and 5.8 percent in 1993.

Referral rates varied greatly among the

States, with Washington State reporting the

highest referral rate in both 1992 and 1993—

63.4 percent and 92.1 percent, respectively

(Bazelon Center, 1996). 

The purpose of the Level I screen is to

identify NF applicants and residents who are

suspected of having SMI. The Level I often is

administered by hospital discharge personnel

and NF staff who are not mental health professionals, and thus, Federal regulations

require the diagnosis of SMI not to be

included in the Level I, but to be part of the

actual PASRR evaluation, which is the Level

II. By regulations, the Level I cannot require

a person to meet the definition of mental illness in order to be triggered to have a Level

II PASRR evaluation. The Office of the

Inspector General report (2001), however,

recounted finding States that did not comply

with this requirement and only referred for a

Level II persons who met all 3 parts of the

PASRR definition of mental illness.

Snowden and colleagues (1998) found that

of individuals identified by Level I screens,

the majority (59.7 percent) were found to

have schizophrenia or schizoaffective disorder; 20.1 percent of individuals exhibited

major depression. Borson, Loebel, Kitchell,

Domoto, & Hyde (1997) examined diagnosis

by age and found that 26 percent of individuals receiving Level I screens were younger

than 65. Of these individuals, 57 percent

were diagnosed with psychosis and 23 percent with dementia or mental retardation

with predominantly psychiatric or behavioral

presentation. The major diagnoses were more

evenly distributed for individuals over 65

years old: 21 percent were found to have psychosis and 26 percent to have dementia or

mental retardation.

Level II Screen

The intent of PASRR screening is to ensure

that NFs only admit individuals with serious

mental illness who actually need NF services

and to assure that States provide needed specialized mental health services to residents

who need them. When the PASRR program

was enacted, by April 1, 1990, States were

required to conduct a Level II PASRR evaluation on each nursing facility resident who

had mental illness or mental retardation and

determine whether they required nursing

facility services and specialized services.

Except for certain long-term residents, any

resident with SMI or MR who did not need

NF services was required to be discharged.

Forty-six States found significant numbers

of residents with serious mental illness and

mental retardation who were determined

not to need NF services and who submitted

requests to CMS (previously HCFA) for

additional time to develop alternative programs in which to place them. 

The Bazelon Center (1996) found that the

average number of Level II screens conducted per State in 1991 and 1993 was 1,009

and 923, respectively. Most States reported

identifying very few NF applicants with serious mental illness who were not appropriate

for NF care. The percentage of individuals

found to be inappropriate for NF care averaged 12 percent in 1991 and 9 percent in
1993. Interestingly, Illinois found 80 percent

of applicants inappropriate for NF care in

1991 and 31 percent in 1993 (Bazelon

Center, 1996), which may reflect the fact

that Illinois initially had a high proportion

of persons with SMI residing in nursing

homes who subsequently transitioned from

these facilities or were diverted out through

the PASRR program. Other studies have

confirmed Bazelon’s findings of an average

diversion rate (those found to be inappropriate for NF care) of less than 10 percent. For

example, the SSWLHC study (1995) found

an average diversion rate of 6 percent for

the 20 States reporting data between 1992

and 1994. An even earlier survey of State

Mental Health Authorities by the National

Association of State Mental Health Program

Directors reported a diversion rate of 9 percent of 32,171 screens in 1989, 5 percent of

76,471 screens in 1990, and 10 percent of

43,853 screens in 1991 (SSWLHC, 1995). 

Eight percent of nursing facility applicants

who received a Level II preadmission screen

in 1991 were found to need specialized services, 8 percent in 1992, and 7 percent in

1993. Of the nursing facility residents who

received an annual resident review, 5 percent

were found to need specialized services in

1991, 4 percent in 1992, and 7 percent in

1993 (Bazelon Center, 1996). No information was available to compare the percentage

of individuals identified as needing both specialized services and nursing facility care with

the percentage of individuals referred to alternative placements for specialty services. Such

information would be useful, as it would provide a perspective on how often nursing facilities are responsible for arranging mental

health services for individuals with serious

mental illness.

Screening for Mental Illness in Nursing Facility Applicants 25

Treatment Issues

Several studies have documented the inadequacy of mental health treatment for nursing home residents with serious mental illness prior to enactment of PASRR (Borson

et al., 1997; Burns et al., 1993; Emerson

Lombardo, 1994), but no studies have been

published concerning the adequacy of mental health services for this population since

PASRR implementation. Using type of treatment recommended and nursing facility

compliance with recommendations as proxies for adequacy of services, Snowden et al.

(1998) found that among the Medicaid NF

residents receiving PASRR screens between

1992 and 1993 in Washington State, mental

health services other than medication therapy were limited. The majority (87 percent)

of residents screened in the study were

already receiving medication therapy. Of

these, 59 percent received recommendations

for new treatment. Therapy was the most

common new treatment recommended (39.8

percent), although it was the least common

treatment already being provided. This finding is confirmed by other studies that report

widespread use of psychotropic medications

in nursing homes (Abrams et al., 1992;

Beers et al., 1988). Snowden et al. (1998)

identified that consultation was another

highly recommended new treatment (27

percent of individuals received recommendations for this service). 

Information on whether nursing facilities

are complying with Level II screening recommendations also indicates that PASRR

has had only limited impact on the appropriateness of mental health services for individuals with SMI in nursing facilities. One

of PASRR’s intents was to ensure that such

individuals received treatment other than

medication for their illness (U.S. Congress,
26 Policy Report

1987). Phillips, Hawes, Morris, Mor, and

Fries (1994) compared pre- and post-OBRA

1987 data from more than 250 nursing

facilities in 10 States. Their results suggest

that OBRA 1987 has positively affected

treatment alternatives in NFs, as more nursing facilities were providing psychological

therapy and behavior management programs

in 1993 than before OBRA 1987. Although

this study was unable to separate out the

effect of PASRR from other components

of OBRA 1987, such as the Resident

Assessment Instrument (RAI) and OBRA

1990 that added a requirement for NFs to

provide or arrange for mental health services, the findings indicate that nursing facilities are beginning to provide more appropriate mental health services for their residents.

Such improvements appear to be limited,

however, as Snowden et al. (1998) found

that individuals were much less likely to

comply with nonpharmaceutical services.

Indeed, while 94 percent of residents complied with recommendations for medication

therapy, only 30.5 percent followed recommendations for new nonpharmaceutical

treatments. Only 52 percent of residents recommended for therapy and 7 percent recommended for consultation complied with

orders for these two most commonly recommended nonpharmacological treatments.

Overall, individuals were much less likely to

comply with a recommendation for a new

treatment (34.9 percent) than to continue an

existing treatment (91.4 percent), and the

majority of existing treatment was pharmaceutical. Snowden and colleagues hypothesized that it might be easier for nursing facilities to provide medication treatment since

medication management does not require

NF staff to have a particular knowledge of

mental health issues. Hence, while the

PASRR program may help identify individuals needing mental health services, the program appears to have limited impact on the

nature of treatment received. 
Screening for Mental Illness in Nursing Facility Applicants 27

Because data specific to PASRR are limited, it is difficult to

assess the nature of PASRR’s impact on identifying individuals in need of mental health services. Organizations such as

the American Psychiatric Association and the American Association for

Geriatric Psychiatry expressed support for the program in their 1998

joint testimony to the Committee on Improving Quality in Long-Term

Care. The same organizations, however, believe the program has made

limited progress in providing the target population with necessary care

(Colenda et al., 1999). Current concerns include the following:

Current Issues

and Concerns

Lack of Funding for PASRR Screens,

Specialized Services or Alternative

Treatment 

Expenditures for PASRR determinations

(an administrative expense) are eligible for 75

percent Federal financial participation. Level

II determinations—the PASRR determination

of whether an individual with SMI requires

(1) nursing facility services and (2) specialized services—must be conducted by State

Mental Health Authorities. However, the

State share may come from any State agency.

The only prohibition is that it may not come

from another Federal funding source.

Funding PASRR screens and specialized

treatment is a challenge for States. If individuals need specialized services to treat their

mental illnesses, the State Medicaid Agency

ultimately is responsible for providing or

arranging for the provision of those services.

Federal reimbursement is available for specialized services that are covered under the

Medicaid State plan. Although the Federal

Government will match State expenditures

on meeting PASRR requirements, PASRR

only evaluates individuals to determine the

need for nursing facility services and specialized services. Finding and funding alternative

placement is not a PASRR function. 

Statutory Exemptions for Dementia

When OBRA 1987 was initially proposed,

professional organizations such as the

National Association of State Mental Health

Program Directors were concerned that

PASRR would force removal of residents

with dementia from nursing facilities. To

ensure that such individuals were not denied

nursing facility care, they recommended

that PASRR apply only to individuals with

serious mental illness (Emerson Lombardo,

et al., 1996). As a result, Congress amended

IX.
the law, constricting the definition of mental

illness to SMI and does not include persons

with dementia unless the person has a primary diagnosis of SMI. Because States are

not required to conduct Level II screens on

these populations, the statutory definition

of mental illness inadvertently has failed to

identify the need for specialized services for

many individuals who have Alzheimer’s disease or related disorders. Once individuals

are diagnosed with dementia from a Level I

identification screen, they are not required to

go through a Level II PASRR screen unless it

is suspected the person has a primary diagnosis of a serious mental illness. While nursing facilities are required to provide mental

health services of lesser intensity than specialized services to residents who need them,

the absence of a Level II evaluation reduces

the possibility that they will receive any

intensive treatment needed to address symptoms of the disease. Yet several studies have

documented that individuals with dementia

can benefit from mental health services

(Bazelon Center, 1996; Emerson Lombardo,

1994; Emerson Lombardo et al., 1996;

Streim, 1995).

Lack of Clear Definitions

in the Legislation

The ambiguous language contained in the legislation regarding serious mental illness and

specialized services has been a concern since

the enactment of PASRR (Bazelon Center,

1996; Robinson, 1990). Although Federal

minimum requirements for diagnosing serious

mental illness exist, States are allowed to

administer their own instruments to screen

for suspected mental illness—instruments

that might establish broader guidelines than

Federal statute. Hence, an individual might

be defined as having a serious mental illness

28 Policy Report

in one State but not in another. The broad

definition of “specialized services” leads to a

similar situation—there is wide variation in

the types of services that States provide to

people with serious mental illness. 

Barriers to Meeting PASRR Objectives

With few resources to monitor States and

limited statutory penalties except closing a

facility, denying payment, or imposing fines,

CMS has had difficulty enforcing PASRR.

Consequently, advocates and policymakers

suspect that PASRR is not having the full

intended results (Bazelon Center, 1996;

Borson et al., 1997; Marek et al., 1996;

Sherrell et al., 1998). 

Because PASRR is a Medicaid program

that is designed by each State within broad

Federal guidelines, little consistency among

States exists. Furthermore, because PASRR

is unique in that it requires coordination

between State agencies that are not accustomed to working together, there are communication problems and lack of consistency

within States as well. Such inconsistency can

pose problems, affecting everything from a

State’s ability to measure outcomes to a hospital’s understanding of the process when it

serves individuals from more than one State

(Sherrell et al., 1998; SSWLHC, 1995). For

example, Sherrell and colleagues (1998)

found that Illinois relied on 27 different

PASRR agencies, each contracting with its

own independent consulting firm to conduct

Level II screens. Inconsistencies among nursing facilities in Chicago, a product of disparate measurement instruments and the

structures of final reports, hindered the

researchers’ ability to draw meaningful conclusions about PASRR’s outcomes. In addition, Sherrell and colleagues assert that psychologists conducting Level II screens were
unfamiliar with the resources of the nursing

facilities. Therefore, many of their recommendations for treatment were either inappropriate or not available in nursing facilities. For example, although the primary

symptom identified in the Level II screens

was social withdrawal, 64 percent of individuals screened were placed on psychotropic

medications that were not helpful in managing withdrawal. Moreover, treatment recommendations did not vary by diagnosis, age,

dementia, level of independence in daily

activities, or symptoms (Sherrell et al., 1998). 

Inefficient Utilization of the Expertise

of Mental Health Professionals

The question of who provides mental health

services to nursing home residents remains

controversial in the current debate over

PASRR. Emerson Lombardo and colleagues

(1996) found that psychiatrists and other

mental health professionals must dedicate

their time to evaluation and medication management, leaving them unable to provide

therapy and other more direct modes of

treatment (Emerson Lombardo et al., 1996).

In an unpublished study, Shea et al. (1995)

found that only 29 percent of nursing home

residents were receiving mental health services from a mental health professional

(Emerson Lombardo et al., 1996). Some

researchers say that the underlying problem

limiting the use of psychiatrists and psychologists is low reimbursement rates under

Medicare and Medicaid. Although there have

been changes in Medicare reimbursement to

encourage utilization of psychologists, Shea

et al. (1995) found that fewer than 5 percent

of residents in treatment were receiving services from psychologists (Emerson Lombardo

et al., 1996). Furthermore, there is concern

over the lack of knowledge about mental

Screening for Mental Illness in Nursing Facility Applicants 29

health issues among nursing facility staff.

Unless staff members are trained in mental

health issues, they will be unable to provide

an environment conducive to improving each

resident’s mental health (Emerson Lombardo

et al., 1996).

Administrative Burden and Cost 

A study by Marek and colleagues (1996)

reports that government officials and nursing

facility staff are concerned by increased

paperwork, administrative burden, and

costs associated with OBRA 1987. Increased

administrative costs are seen as effectively

reducing the resources available for direct

care. A study by SSWLHC (1995) indicates

that the PASRR process is redundant of

other nursing facility requirements to conduct assessments (e.g., RAI/MDS) of applicants after admission. Like PASRR,

RAI/MDS collects information on psychiatric

diagnosis. SSWLHC argues that this process

alone is adequate in ensuring appropriate

nursing facility placement, however, this view

disregards the reality that the nursing facility

resident assessment, under the minimum data

(RAI/MDS) occurs after the admission when

resident protections are in effect that provide

the resident a 30-day notice and limit the

reasons for which a facility can discharge or

transfer a resident involuntarily. Regulations

also provide the resident with the right to an

appeal, which would extend an inappropriate nursing facility placement.

Prompted by concerns about high administrative burden and information redundancy,

some organizations argue that PASRR should

be repealed. However, it is not clear that the

data collected in RAI/MDS, albeit completed

after admission by nursing facility staff that

often has no MH training, would be sufficient for determining the appropriate place-
30 Policy Report

ment needs for mentally ill individuals. In

their joint testimony to the Committee on

Improving Quality in Long-Term Care, the

American Psychiatric Association and the

American Association for Geriatric

Psychiatry note that RAI screens may not

be useful in indicating need for specialized

services or developing quality monitors

(Colenda et al., 1999). More research is

needed to determine the extent to which

other assessment instruments would be able

to replace PASRR.

With regard to cost, SSWLHC (1995)

reported that no cost/benefit analysis of

PASRR has been performed. Studies that

measure costs related to PASRR for particular areas document variation in the level of

spending between States. For example, States

responding to the Bazelon Center survey

demonstrated an average of $2.10 million

per State for individuals with SMI in 1991

and $2.13 million per State in 1993. Yet

Texas exhibited spending levels of $12 million and $26 million alone for those 2 years,

respectively (Bazelon Center, 1996).

According to the SSWLHC (1995) survey of

State Mental Health Authorities, program

directors reported an average expenditure of

$373 per Level II screen in 1989 and $336

per Level II screen in 1991. Neither study

examined cost per individual in need of specialized services, although such information

would be useful in determining whether the

costs outweigh the benefits of the legislation.

Delays in Placement

Hospitals and NF staff report concerns over

placement delays caused by the PASRR

screening process (SSWLHC, 1995).

According to PASRR regulations, individuals

cannot be placed in nursing facilities until

after the screens have been completed and

must be made in writing within an annual

average of 7 to 9 working days of referral.

Placements can be initiated earlier by telephone or electronic authorization. However,

the SSWLHC study documents that an individual requiring both Level I and Level II

screens can be delayed for as long as 3 weeks

for a final determination. The SSWLHC survey found that Level II screens delayed hospital discharge by between 0 and 24.5 days,

with an average of 8.3 days. The high level

of variation in these findings indicates that

hospital discharge delays differ from one

State to another and between one hospital

and another. Because each State designs its

own PASRR program, some are more or less

efficient than others. Also, hospitals that

begin discharge planning at the time of

admission; conduct a Level I at admission if

it appears nursing facility placement is likely;

and schedule a Level II early, have significantly fewer discharge delays than hospitals

that wait until the time of discharge to perform a Level I. Advocates of PASRR reform,

however, argue that placement delay problems are primarily due to the unnecessary

complexity of the PASRR process.
Screening for Mental Illness in Nursing Facility Applicants 31

Conclusion

This document provides a context for understanding the various issues related to the implementation of PASRR. It will

help establish and refine the research questions and study

design used to evaluate PASRR and mental health services for persons in

nursing facilities.

X.

Screening for Mental Illness in Nursing Facility Applicants 33

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Screening for Mental Illness in Nursing Facility Applicants 37

XII. Appendix
Note: State Medicaid Manual (SMM) PASRR sections 4250–4253 (published 1989) provided interim guidance, pending Federal regulations. Final Fed

1992, replaced the 1989 SMM issuance. CMS still plans to revise and update the SMM. 1 Title XIX of the Social Security Act, Medicaid Program Statute.

2 Code of Federal Regulations. 42 CFR, Parts 405, 431, 433, and 483. (DHHS, Federal Register, 1992)

Overall scope As a condition of State Plan approval, States 1919(e)(7)—PASRR was created in OBRA ‘87 42 CFR 483—Federal regula

must operate a PASRR program; no Federal and technical corrections provided in OBRA updated to reflect statutory payment may be made for nursing facility ’90. In 1996, P.L. 104-315 removed the P.L. 104-315 (in 1996), which (NF) services provided to individuals with requirement that resident reviews be that resident reviews be comental illness (MI) and mental retardation conducted annually.(MR) not screened by a State PASRR 

program.

Applicability: NF All Medicaid NFs must meet PASRR 1919(b)(3)(F)—Precludes NFs from admitting 42 CFR 483.20(m)—Preadm

requirements. persons with MI/MR unless PASRR has individuals with MI/MR.

determined they need NF services and whether specialized care is needed.

Applicability: All MI and MR residents and applicants must 1919(b)(3)(F)—Provides requirements 42 CFR 483.20(m)—PreadmResidents and be screened regardless of payer. relating to preadmission screening for individuals with MI/MR.applicants individuals with MI/MR.

42 CFR 483.102(a)—Applica

Definition: MI An individual must meet specific requirements 1919(e)(7)(G)—“An individual is considered 42 CFR 483.102(b)(1)—“An 

related to diagnosis, level of impairment, to be ‘mentally ill’ if the individual has a to have a serious mental illnand duration of illness to meet the definition serious mental illness (as defined by the meets the following requireof “serious mental illness” (SMI) as Secretary in consultation with the National level of impairment and durdefined by OBRA 1992. Institute of Mental Health) and does not

have a primary diagnosis of dementia Diagnosis: 42 CFR 483.102(b(including Alzheimer’s disease or a related mood, paranoid, panic or odisorder) or a diagnosis (other than a disorder; somatoform disorprimary diagnosis) of dementia and a other psychotic disorder; oprimary diagnosis that is not a serious disorder that may lead to a mental illness.” diagnosable under the DSM

dementia unless the primarmental disorder.”

Policy Report 38Table 1. PASRR Program Requirements Element Description Title XIX1 CFR2
Definition: MI Level of impairment: 42 CFR 

(continued) disorder results in function

activities within the past 3 tappropriate for the individuDuration: 42 CFR 483.102(b)experienced at least one of treatment more intensive thmore than once in the past disruption to the normal livsupportive services to retu

by housing or law enforcem

CMS responsibilities CMS reviews State plans and practice to 1902(a)—Provides general provisions 42 CFR 430.0 through 430.48

ensure that they comply with Federal concerning Medicaid administration.requirements.

1919(f)(8)(A)—Instructs the Secretary to 

CMS develops minimum criteria to make develop minimum criteria for PASRR PASRR determinations. determinations.CMS monitors State compliance with Federal 1919(f)(8)(B)—Requires monitoringPASRR requirements to discharge MI or MR compliance with Federal requirements short-term NF residents not needing NF regarding discharge and placement of MI services but needing specialized services. or MR individuals who resided in NF less than 

30 months, do not need NF care

but need specialized services. 

Medicaid agency PASRR is a required element of State 1919(e)(7)—Provides State requirements 42 CFR 431.621—Requires wresponsibilities Medicaid plans. State Medicaid agencies are for preadmission screening and resident SMHA and State Mental R

responsible for administering and supervising review. detailing the operation of tState Medicaid plans. Thus, State Medicaid agreement must specify thagencies bear overall responsibility for of the State Medicaid agenmeeting PASRR obligations. However, the (1) conducting joint planninState Medicaid agency is not required to the Medicaid agency to the provide services directly and may delegate (3) recording, reporting, anrequired activities unless specifically reporting, and exchanging prohibited by statute. information about individua

(4) ensuring that preadmissresident reviews are perfor

Element Description Title XIX CFR 

Table 1. PASRR Program Requirements (continued)

Screening for Mental Illness in Nursing Facility Applicants 39
Medicaid agency State Medicaid agencies must include a (5) ensuring that if the SMH

responsibilities PASRR program in the State Medicaid plan tion responsibility, this dele(continued) that meets Federal requirements. They must regulations; (6) ensuring th

have a written agreement with the SMHA made by the SMHA are not detailing the operation of the PASRR program. Medicaid agency; (7) desig

person or entity that perfor

They must ensure that specialized services for individuals with MI; and are provided or arranged for MI or MR requirements of PASRR are residents in NFs and for individuals needingsuch specialized services who resided in 42 CFR 483.104—“As a conNFs but did not need NF services and were [Medicaid] plan, the State discharged or chose to leave because of preadmission screening anPASRR. program that meets the req

through 483.138.”42 CFR 483.120(b)—“The Starrange for the provision oaccordance with this subpMI or MR whose needs are supervision, treatment and mental health or mental retnecessary, as identified by 

483.130 or 483.134 and 483.

NF responsibilities NFs must not admit any new MI or MR 1919(b)(3)(F) —“A nursing home must not 42 CFR 483.20(m)—Prohibit

resident who has not received a PASRR admit any new resident who is mentally ill determination that NF servdetermination that the individual requires NF unless the State mental health authority” has services and whether the individual needs conducted a PASRR determination and 42 CFR 483.20(b)(2)—Requspecialized services for MI. was determined to need NF services. within 14 days after a sign

resident’s physical or ment

NFs must promptly report to the SMHA any 1919(b)(3)(E)—“A nursing facility shall notify of MI or MR).significant changes in the physical or mental State mental health authority promptly after acondition of an NF resident. significant change in the physical or mental 42 CFR 483.120(c)—Require

condition of a resident who is mentally ill.” health services of lesser in

NFs must provide mental health services that services.are less intense than specialized servicesto all residents who need such services.NFs must transfer copies of most recent 1919(b)(4)(vii)—NFs must provide “treatment 42 CFR 483.106(b)(2)(ii)—“In PASRR reports when MI or MR resident is and services required by mentally ill and a resident with MI or MR f

Policy Report 40Table 1. PASRR Program Requirements (continued) Element Description Title XIX CFR 
NF responsibilities transferred to a hospital or another NF. mentally retarded residents not otherwise another NF, the transferring 

(continued) States may specify additional responsibilities provided or arranged for (or required to be ensuring that copies of the 

such as Level I identification of whether provided or arranged for) by the State.” PASRR and resident asses

residents and applicants are suspected of MI. the transferring resident.”

SMHA SMHAs are required to fulfill their responsibili- 1919(b)(3)(F)—“A nursing home must not admit 42 CFR 483.106(d)—“The PAresponsibilities ties detailed in a written agreement with the any new resident who is mentally ill unless the whether an individual requ

State Medicaid agency. State mental health authority” has made a whether specialized servic

PASRR determination that NF services are made by the State mental h

SMHAs must determine whether MI needed.” A State mental health authority... based on an independent pindividuals require NF services and whether may not delegate (by subcontract or evaluation performed by a the individuals need specialized services for otherwise) their responsibilities under this than the State mental healtMI. subparagraph to a nursing facility (or to an 

entity that has a direct or indirect affiliation 42 CFR 483.106(d)—“(1)The 

Regulations specify conditions under which or relationship with such a facility).” authority may delegate by SMHAs may delegate PASRR determination the evaluation and determiresponsibilities. They may not delegate their 1919(e)(7)(B)—Resident reviews must be which [it is] responsible to Level II responsibilities to a NF or other “based on an independent physical and (i) The State mental healthentity related to a NF. mental evaluation performed by a person or ultimate control and respon

entity other than the State mental health mance of [its] statutory obl

Evaluations used in making Level II determina- authority.” determinations as to the netions must be performed by a person or entity for specialized services are other than the SMHA. 1919(e)(7)(B)(iii)—Prompt review is required consistent analysis of the d

upon significant change in resident’s to which the delegation is 

A Level II review and determination must be condition. entity that has a direct or inconducted promptly after a NF notifies the relationship with an NF. (2) SMHA of a change in a resident’s physical retardation authority has reor mental condition. the evaluation and determi

individuals with MR where

N/A health authority has respon

determination function. (3) individuals with MI cannot State mental health authorhave responsibility for this function must be performeother than the State mentadesignating an independenperform MI evaluations, th

Screening for Mental Illness in Nursing Facility Applicants 41

Table 1. PASRR Program Requirements (continued)

Element Description Title XIX CFR 
SMHA NF or an entity that has a d

responsibilities affiliation or relationship w(continued)

May develop advance group determinations 483-130 (b) (1) and C)

by category.

Level I identification The State Medicaid PASRR program must The statute does not indicate how MI and MR 42 CFR 483.128—“The Statof individuals with identify all NF applicants and residents individuals should be identified for PASRR. identify all individuals who MI or MR suspected of having MI or MR in order MI or MR...This identificat

to conduct Level II evaluations and Level I.”determinations.

Level II All applicants for new admission to an NF 1919(e)(7)(A)(i) 42 CFR 483.112—“For each preadmission who are suspected of MI through a Level I or MR, the State mental heascreening screen must be referred for a Level II authority (as appropriate) m

evaluation. A two-pronged determination individual requires the levemust be made. The determinations are an NF... If the individual wit(1) whether the individual requires NF retardation is determined tservices and (2) whether the individual care, the State mental heaneeds specialized services. authority (as appropriate) m

whether the individual requ

Regulations specify that SMHAs may develop categories for advance group determinations 42 CFR 483.128(e)—“The Stbased on minimum evaluation based on must use at least the evaluminimum evaluation criteria when data are 483.130 (if one or both detecurrent, accurate, and sufficient, or they may be made categorically as dmake more extensive individualized or of Secs. 483.132 and 483determinations. in the case of individuals w

Secs. 483.132, 483.134 and extensive individualized ev42 CFR 483.130—No determservices are needed can baddition, categorical deterservices are not needed aremergency, and respite camade by the State mental hauthority as to whether NF cialized services are neede

Policy Report 42Table 1. PASRR Program Requirements (continued) Element Description Title XIX CFR 
Level II evaluation of data concern

preadmission Determinations may be (1) screening nations, in accordance wit(continued) that take into account that 

of severity of illness, or neeclearly indicate that admisNF is normally needed, or tcialized services is not norIndividualized determinatio

sive individualized evaluati

Exemptions to Exempted hospital discharge—Individuals 1919(e)(7)(A)(iii) “Exception For Certain Hospital 42 CFR 483.106(b)(2)—“(2) Epreadmission admitted directly from a hospital for acute Discharges.—The preadmission screening discharge. (i) An exempted screening inpatient care are exempted from program under clause (i) shall not apply to the means an individual (A) Whrequirements preadmission screening if they require admission to a nursing facility of an individual directly from a hospital afte

NF services for the condition for which they —(I) who is admitted to the facility directly patient care at the hospitawere hospitalized, and if their attending from a hospital after receiving acute inpatient services for the condition fphysician certifies before admission care at the hospital, (II) who requires nursing received care in the hospitato the facility that the likely NF stay is less facility services for the condition for which the ing physician has certified than 30 days. If such individuals are later individual received care in the hospital, and facility that the individual is found to require more than 30 days of NF (III) whose attending physician has certified, than 30 days nursing facilitcare, the SMHA must conduct a review before admission to the facility, that the individual who enters an Nwithin 40 days of admission. individual is likely to require less than 30 days discharge is later found to r

of nursing facility services.” of NF care, the State menta

retardation authority must dent review within 40 calen

Patients being readmitted to a NF or being 42 CFR 483.106(b)(3)—“Reatransferred from another NF facility are not is a readmission if he or shrequired to have a preadmission screening facility from a hospital to wsince they are not considered new transferred for the purpose admissions. However, they are subject to Readmissions are subject tresident review requirements. review rather than preadm

42 CFR 483.106(b)(4)—”Inte(i) An interfacility transfer ois transferred from one NF without an intervening hos

Screening for Mental Illness in Nursing Facility Applicants 43

Table 1. PASRR Program Requirements (continued)

Element Description Title XIX CFR 
Exemptions to transfers are subject to an

preadmission rather than preadmission sscreening requirements (continued)Level II All NF residents with MI must undergo 1919(e)(7)(B)—Requires resident reviews of 42 CFR 483.114—“For each resident review evaluation and determinations of (1) whether MI and MR residents in nursing homes. who has mental illness, the 

NF services are required and (2) whether 1919(b)(3)(E)—“A nursing facility shall notify authority must determine...

specialized services are needed the State mental health authority... promptly the resident’s physical and 

after a significant change in the physical or resident requires (1) The le

NFs must promptly report changes in a mental condition of a resident who is mentally by (i) An NF; (ii) An inpatieresident’s physical or mental condition ill.” individuals under age 21...to the SMHA, which must then promptly mental diseases providing conduct a review and determinations. 1919(e)(7)(B)(iii)—Requires SMHA to conduct individuals age 65 or older; 

a resident review promptly after an NF services for mental illness.

Congress repealed the Federal requirement notifies the authority of significant change for annual resident reviews in 1996, but did in an MI or MR resident’s physical ornot.change the required elements of those mental condition.reviews. No regulations or SMM transmittals from CMS have been issued to The statute is silent on the frequency withreflect the 1996 changes. CMS provided which reviews must occur. But NFs areguidance to States through letters and required to notify SMHAs of significant memorandums from regional offices. changes in the physical or mental functioning 

of MI or MR residents. And a review and determination must be conducted promptly bySMHAs after notification of a change in apresident’s physical or mental condition.

Minimum evaluation Regulations specify the evaluation criteria 1919(f)(8)(A)—Instructs the Secretary to 42 CFR 483.132—The evalucriteria for the need and minimum data requirements to evaluate develop minimum criteria for PASRR (1) whether an individual’s for NF-level care the need for NF services and NF level determinations. in an appropriate communi

of care. the individual’s total needs 

inpatient setting; (3) if inpatdesired, whether the NF is (4) if inpatient care needed priate, whether an ICF/MR, hospital would be appropriprioritize the physical and m

Policy Report 44Table 1. PASRR Program Requirements (continued) Element Description Title XIX CFR 
Minimum evaluation individual, taking into acco

criteria for the need condition. The following dafor NF-level care collected from the evaluati(continued) (diagnoses, date of onset, m

prognosis), mental status (onset, medical history, likemay be a danger to himselffunctional status (activities 42CFR 483.128(f)—The two the need for NF level of caare interrelated and must bhensive analysis of all data

No personnel qualifications 

Minimum criteria Regulations specify the criteria, minimum 1919(f)(8)(A)—Instructs the Secretary to 42 CFR 483.134—Evaluation for screening of data, and personnel requirements for develop minimum criteria for PASRR specialized services for Mpersons with MI to evaluating the need for specialized determinations. following data: comprehendetermine need for services. (including complete medicspecialized services body systems, and neurolo

and sensory function, gait, cranial nerves, and abnormhensive drug history, psychcomprehensive psychiatric psychiatric history, intellecfunction and orientation, atbehaviors, affect, suicidal oparanoia, degree of reality hallucinations); functional of daily living to determine functional assessments of and nutritional status; self-medical treatment and medand assessment of individumoney, dress appropriatelyPersonnel requirements—examination are not perfor

Screening for Mental Illness in Nursing Facility Applicants 45

Table 1. PASRR Program Requirements (continued)

Element Description Title XIX CFR 
Minimum criteria a physician must review an

for screening of examination. The State mapersons with MI to health professionals qualifdetermine need for parts of the evaluation.specialized services(continued) A qualified mental health p

designated by the State, mdiagnosis of MI and determ

specialized services are ne

Definition: Regulations define specialized services that 1919(e)(7)(G)—“The term ‘specialized’ 42 CFR 483.120(a)(1)—SpecSpecialized services must be provided to MI and MR residents services has the meaning given such term by those specified by the State

of NFs when necessary. the Secretary in regulations.” with NF services, result in t

aggressive implementation of care that is (1) developeby a physician in conjuncticiplinary team of qualified (2) prescribes specific therthe treatment of persons eepisode of severe MI that nby trained mental health pedirected toward diagnosing resident’s behavioral sympinstitutionalization, improviindependent functioning, aing level that permits reducmental health services to b

level of services at the ear

Requirement to Specialized services must be provided or 1919(e)(7)(C)(i)(IV)—Long term NF residents 42 CFR 483.120(b)—“The Stprovide or arrange arranged for all MI residents in NFs who not requiring NF services but requiring arrange for the provision ofor specialized are determined by the SMHA to need such specialized services may choose to stay in accordance with this suservices specialized services. in the NF or be discharged to an alternative with MI or MR whose need

setting. “Regardless of the resident’s choice, continuous supervision, tre

In addition, specialized services must be [the State must] provide for (or arrange qualified mental health or mprovided or arranged for all MI individuals for the provision of) such specialized personnel is necessary, as needing such specialized services who services.” ing provided in 483.130 or 4resided in NFs but do not need NF services 

Policy Report 46Table 1. PASRR Program Requirements (continued) Element Description Title XIX CFR 
Requirement to and were discharged or chose to leave 1919(e)(7)(C)(ii)(III)—Other residents not 42 CFR 483.130(m)(1)—In th

provide or arrange because of PASRR. requiring NF services but requiring with MI who require NF sefor specialized specialized services must be discharged admission to an NF and for services The provision of specialized services is a and the State must “provide for (or arrange appropriate, ”if specialized (continued) required element of State Medicaid plans’ for the provision of) such specialized the State is responsible for 

PASRR program. State Medicaid services.” the provision of the speciaagencies are responsible for administering and supervising State Medicaid plans. Thus, 42 CFR 483.130(m)(4)—In thState Medicaid agencies bear overall MI residents in NFs who do responsibility for meeting PASRR but require specialized servobligations to provide or arrange for remain in the NF, “wherevespecialized services. However, the State to reside, the State must meMedicaid agency is not required to provide services needs.”services directly and may delegate requiredactivities unless specifically prohibited by 42 CFR 483.130(m)(5)—Shostatute. NFs who do not need NF se

specialized services “must appropriate setting where tspecialized services.”42 CFR 483.130(n)—“If a deto admit or allow to remain who requires specialized sdetermination must be supthat the specialized serviceand will be provided or arra

while the individual resides 

Timeliness of Preadmission screening determinations 1919(b)(3)(F)—Requires PASRR determination 42 CFR 483.112(c)—“...a prpreadmission must be made within an annual average before admission. determination must be madscreenings 7 to 9 working days after patients are annual average of 7 to 9 wo

identified as suspected of having an MI of the individual with MI or and referred to the SMHA. The Secretary performs the Level I identifmay grant exceptions to this standard. 

42 CFR 483.122(b)—“FFP fo

There is no timeliness standard for identifica- When a preadmission scretion and referral of NF applicants with performed prior to admissiosuspected MI. is not performed timely, in a

Sec. 483.114(c), but either i

Screening for Mental Illness in Nursing Facility Applicants 47

Table 1. PASRR Program Requirements (continued)

Element Description Title XIX CFR 
Timeliness of date, FFP is available only f

preadmission after the screening or reviescreenings subject to the provisions of (continued) section.”Individualized Individualized determinations of the need for 1919(f)(8)(A)—Instructs the Secretary to 42 CFR 483.130(b)(2)—“Detdeterminations NF services and the need for specialized develop minimum criteria for PASRR individualized determinatio

services must meet the minimum evaluation determinations (see above) extensive individualized evcriteria specified in regulations (see above). Sec. 483.132, Sec. 483.134, 

case of an individual havin

Regulations specify content of evaluation Secs. 483.134 and 483.136).reports for individualized determinations.

42 CFR 483.128(i)—“For ind

All positive determinations of the need for determinations, findings mspecialized services must be made through of a written evaluative repoindividualized evaluations. the name and professional 

performed the evaluation(seach portion of the evaluat(2) Provides a summary of history, including the positivstrengths and weaknesses of the evaluated individual; recommended, identifies thare required to meet the evneeds, including services r(i)(5) of this section; (4) If snot recommended, identifieretardation or mental healta lesser intensity than specrequired to meet the evalu(5) If specialized services aidentifies the specific menthealth services required to individual’s needs; and (6) the report’s conclusions.”42 CFR 483.130(g)—“The Stmental retardation authorit

Policy Report 48Table 1. PASRR Program Requirements (continued) Element Description Title XIX CFR 
Individualized categorical determinations 

determinations services are needed. Such (continued) be based on a more extens

evaluation under Sec. 483.1determine the exact nature 

services that are needed.”

Categorical SMHAs may establish categories to make 1919(f)(8)(A)—Instructs 42 CFR 483.130(b)(1)—“Detdeterminations advance group determinations that NF the Secretary to develop (1) Advance group determi

services are needed. Categories must be minimum criteria for PASRR with this section, by categoapproved by CMS and included in the State determinations (see above). that certain diagnoses, leveplan. or need for a particular ser

that admission to or reside

Time limits may be established for NF service needed, or that the provisioneed. Time limits are required for provisional services is not normally neand respite care admissions. Residents who will exceed time limits must have a 42 CFR 483.130(c)—“Advancresident review. by category developed by t

or mental retardation autho

SMHAs may also make categorical applicable to individuals by determinations on whether specialized treat- following Level I review onment is not needed only in the provisional, individual appear to be curemergency, and respite categories and when are sufficient to allow the ea person has both MR and dementia. When determine that the individuspecialized services are needed, individualized established by the State auevaluations are required. 483.132(c)). Sources of exis

individual that could form t

Categorical determinations of NF need do not categorical determination beliminate the requirement for the SMHA to would be hospital records, determine the individual’s need for election of hospice status, specialized services. mental health centers or co

retardation or development

Regulations specify content of evaluationreports for categorical determinations. 42 CFR 483.130(e)—“The St

limits for categorical determservices are needed and in (d)(4), (5) and (6) of this seclimit which is appropriate fopending further assessmen

Screening for Mental Illness in Nursing Facility Applicants 49

Table 1. PASRR Program Requirements (continued)

Element Description Title XIX CFR 
Categorical situations and respite care. 

determinations determined to need a longe(continued) limit allows, the individual m

annual resident review befostay may be permitted and of NF care beyond the State42 CFR 483.128(j)—“For catdeterminations, findings muform of an abbreviated writwhich (1) Identifies the namtitle of the person applying determination and the data application was made; (2) Edetermination(s) that has (hif only one of the two requirbe made categorically, descfurther screening which is to the extent possible, basedata, NF services, including or specialized psychiatric rthat may be needed; and (4

for the report’s conclusions

Placement options Regulations specify 6 possible options for 1919(e)(7)(C) 42 CFR 483.130(m)—The opt

individuals with MI or MR, as determined as follows:under PASRR.

“(1) Can be admitted to an Nadmission to an NF who harequires the level of serviceregardless of whether specneeded, may be admitted to is appropriate, as determinespecialized services are alsresponsible for providing or provision of the specialized (2) Cannot be admitted to aadmission to an NF who ha

Table 1. PASRR Program Requirements (continued)

Policy Report 50 Element Description Title XIX CFR 
Placement options does not require the level o

(continued) a NF, regardless of whethe

are also needed, is inapproand must not be admitted. (3) Can be considered apprplacement in an NF. Any NMR who requires the level by an NF, regardless of the stay or the need for speciacontinue to reside in the Nappropriate, as determined (4) May choose to remain ithe placement would otherAny NF resident with MI or require the level of servicebut does require specializehas continuously resided in 30 consecutive months befdetermination may choose in the facility or to receive an alternative appropriate tional setting. Wherever threside, the State must meeservices needs. The notice concerning how, when, anplacement options availablfully explained to the reside(5) Cannot be considered acontinued placement in an discharged (short-term resresident with MI or MR whthe level of services providrequire specialized service

Table 1. PASRR Program Requirements (continued)

Screening for Mental Illness in Nursing Facility Applicants 51

Element Description Title XIX CFR 
Placement Options in an NF for less than 30 co

(continued) be discharged in accordan

to an appropriate setting wprovide specialized servicenotice must provide informand by whom the resident discharge arrangements arights under both PASRR aprovisions. (6) Cannot be considered acontinued placement in an discharged (short or long-tAny NF resident with MI or require the level of serviceNF and does not require spregardless of his or her lendischarged in accordance The determination notice mon how, when, and by whobe advised of discharge arhis or her appeal rights und

discharge provisions.”

Adaptation to Evaluations and notices must be adapted 1919(c) 42 CFR 128(b)culture, language, to the cultural background, language, ethnic origin ethnic origin, and means of communication

used by the individual being evaluated. 

Participation by Evaluations must involve the individual, his 1919(c) 42 CFR 483.128(c)individual and family or her legal representatives, and the 

individual’s family if family members are available and their participation is agreed to by the individual.

Record retention The State PASRR system must maintain 1919(e)(7)(C)(iv) 42 CFR 483.130(o)

records of evaluations and determinations, regardless of whether they are performed categorically or individually.

Policy Report 52Table 1. PASRR Program Requirements (continued) Element Description Title XIX CFR 
Tracking system The State PASRR system must establish and 1919(e)(7)(F) 42 CFR 483.130(p)

maintain a tracking system for all individuals with MI or MR in NFs to ensure that appeals 

and future reviews are performed.

Appeals Each State must provide a system of 1919(e)(7)(F) 42 CFR 483.204

appeals for individuals adversely affected by any PASRR preadmission screening or resident review determination.

FFP for PASRR States receive 75% FFP under administrative 1903(a)(20)(C) — Provides 42 CFR 433.15(b)(9) — Provactivities costs for PASRR activities. 75% FFP for PASRR activities. PASRR activities. 

To prevent duplicative payment, FFP is not 42 CFR 483.124 — “FFP is navailable for specialized services specialized services furnisfurnished to NF residents as NF services. as NF services.”

Enforcement CMS may deny FFP if the State Medicaid 1902(a), 1904 42 CFR 430.35

plan fails to meet federal requirements or the or the State does not comply in practice with Federal requirements. 

Notes: NF = nursing facility; MI = serious mental illness; MR = mental retardation; FFP = Federal financial participation, ICF = intermediate ca

IMD = institution for mental disease; PASRR = preadmission screening and resident review; OBRA = Omnibus Budget Reconciliation ASMM = State Medicaid Manual; CMS = Centers for Medicare and Medicaid Services; SMHA = State Mental Health Authority; N/A = 

Screening for Mental Illness in Nursing Facility Applicants 53

Table 1. PASRR Program Requirements (continued)

Element Description Title XIX CFR 
AL

AK ◆

AR ◆

AZ ◆

CA ◆

CO ◆

CT ◆

FL ◆

GA ◆

HI ◆

IL ◆

IN ◆

KS ◆

LA ◆

MA

MD ◆

MI ◆

MN ◆

MO

MS ◆

ND ◆

NH ◆

NM ◆

OH ◆

OK ◆

RI ◆

TN ◆

TX ◆

UT ◆

VA ◆

VT ◆

WA ◆

WI ◆

WY ◆

TOTAL 22 9

1 This table includes Mississippi, raising the total number of States to 34 although only 33 States responded.

Presumably, Mississippi represents an error in transcription.

Data Source: Bazelon Center, 1996.

54 Policy Report

Federal Minimum Standard under PASRR Broader Definitions than Federal 

State Statute and Regulations Minimum Standard

Table 2. Criteria for Serious Mental Illness (SMI) (of 31 States Responding)1
AL ◆

AK ◆

AR ◆

AZ ◆

CA ◆

CO ◆

CT ◆

FL ◆

GA ◆

HI ◆

IL ◆

IN ◆

KS ◆

LA ◆

MA ◆

MD

MI ◆

MN ◆

MO ◆

ND ◆

NH ◆

NM ◆

OH ◆

OK ◆

RI

TN ◆

TX ◆

UT ◆

VA ◆

VT ◆

WA ◆

WI ◆

WY ◆

TOTAL 2 14 4 2 2 2 5

Data Source: Bazelon Center, 1996.

Screening for Mental Illness in Nursing Facility Applicants 55

Mix of Individual

State Agency/ Nursing Private

Private Private Treating Nursing Facilities Health Care 

State State Agency Providers Agency Physician Facility and Hospital Providers

Table 3. Level I Screen: Responsibility for Conducting Review 

(of 31 States Responding)
Table 4. Criteria for Identifying Individuals Who Do Not Meet the PASRR

Definition of Mental Illness Because of Dementia to Whom PASRR Does

Not Apply (of 28 States Responding)

56 Policy Report

AL

AK

AR

AZ ◆

CA

CO

CT

FL

GA

HI ◆

IL

IN

KS ◆

LA ◆

MA ◆

MD ◆

MI

MN

MO

ND

NH ◆

NM ◆

OH

OK

RI

TN

TX ◆

UT

VA

VT ◆

WA ◆

WI ◆

WY

TOTAL 191 5 4

1 The Bazelon Center study reported a total of 19 States that use DSM-IIIR diagnostic criteria, but included the

names of only 3 States.

Data Source: Bazelon Center, 1996. 

State DSM-IIIR Diagnostic Criteria Internal Policy Documents Unspecified Criteria
AL ◆

AK ◆

AR ◆

AZ ◆

CA ◆

CO ◆

CT ◆

FL ◆

GA ◆

HI

IL ◆

IN

KS

LA ◆

MA

MD ◆

MI ◆

MN

MO ◆

ND ◆

NH ◆

NM ◆

OH ◆

OK

RI ◆

TN ◆

TX ◆

UT ◆

VA ◆

VT ◆

WA

WI ◆

WY ◆

TOTAL 17 7 2

Data Source: Bazelon Center, 1996. 

Screening for Mental Illness in Nursing Facility Applicants 57

State’s Own Nursing Facility Definition of Need Criteria Equivalent to 

State Admission Criteria in Federal Regulations Federal Regulations

Table 5. Criteria for Determining Need for Nursing Facility Care

(of 26 States Responding)
AL ◆

AK ◆

AR ◆

AZ ◆

CA ◆

CO ◆

CT ◆

FL ◆

GA ◆

HI ◆

IL ◆

IN ◆

KS ◆

LA ◆

MA ◆

MD ◆

MI ◆

MN ◆

MO ◆

ND ◆

NH ◆

NM ◆

OH ◆

OK ◆

RI ◆

TN ◆

TX ◆

UT ◆

VA ◆

VT ◆

WA ◆

WI ◆

WY ◆

TOTAL 30 3

1 The Bazelon Center report includes the names of only 3 States that define the need for specialized services

as extending beyond 24-hour inpatient care. The remaining 30 States that responded use 24-hour inpatient care

as their criteria. The 30 States checked presumably represent these remaining 30 States; we assume that the

Bazelon Center did not receive a response from Mississippi.

Data Source: Bazelon Center, 1996.

58 Policy Report

Broad Spectrum of Rehabilitative Services 

Aimed at Developing Skills Necessary 

State 24-Hour Inpatient Psychiatric Care1 to Live in the Community

Table 6. States’ Criteria for Determining the Need for Specialized Services

(of 33 States Responding)
AL ◆

AK ◆

AR ◆

AZ ◆

CA ◆

CO ◆

CT ◆

FL ◆

GA ◆

HI ◆

IL ◆

IN ◆

KS ◆

LA ◆

MA ◆

MD ◆

MI ◆ ◆

MN2

MO

ND ◆

NH ◆

NM ◆ ◆

OH ◆

OK ◆

RI ◆

TN ◆

TX ◆

UT ◆

VA ◆

VT ◆

WA ◆

WI ◆

WY ◆

TOTAL 17 5 1 8 2

1 The Bazelon Center study indicates that 33 States responded to the survey. This table shows responses from only

32 States (31 in the table and one in the footnote). The study does not list a response for Missouri. 2 Minnesota uses a combination of mental health professionals, including community mental health and independent

mental health providers and promotes client involvement in the choice of assessor whenever possible.

Data Source: Bazelon Center, 1996.

Screening for Mental Illness in Nursing Facility Applicants 59

Community Mix of Health

Independent Mental Health Professionals

Independent Psychiatric Agencies or and

State Private Entity State Agency Contractor Organizations Agency Staff

Table 7. Level II Screen: Responsibility for Conducting Review 

(of 33 States Responding)1


DHHS Publication Number SMA 01-3543

Substance Abuse and Mental

Health Services Administration

Printed 2002