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Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

PREADMISSION SCREENING AND 


RESIDENT REVIEW FOR 


YOUNGER NURSING FACILITY 


RESIDENTS WITH MENTAL 


RETARDATION


Daniel R. Levinson


Inspector General 


January 2007


OEI-07-05-00230

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Office of Inspector General 
 http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 

as amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors 

in carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations. These assessments help reduce waste, 

abuse, and mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on 

significant issues. Specifically, these evaluations focus on preventing fraud, waste, or 

abuse and promoting economy, efficiency, and effectiveness in departmental programs. 

To promote impact, the reports also present practical recommendations for improving 

program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 

and of unjust enrichment by providers. The investigative efforts of OI lead to criminal 

convictions, administrative sanctions, or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support in OIG’s internal operations. OCIG imposes program exclusions and civil 

monetary penalties on health care providers and litigates those actions within HHS. 

OCIG also represents OIG in the global settlement of cases arising under the Civil False 

Claims Act, develops and monitors corporate integrity agreements, develops compliance 

program guidances, renders advisory opinions on OIG sanctions to the health care 

community, and issues fraud alerts and other industry guidance. 
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Δ EXECUTIVE SUMMAR Y 

OBJECTIVES 

1. To examine the extent to which Preadmission Screening and 

Resident Review (PASRR) requirements were addressed for 

Medicaid nursing facility residents aged 22 to 64 with mental 

retardation within selected States and selected nursing facilities. 

2. To assess Federal and State oversight of the PASRR process. 

BACKGROUND 

The Omnibus Budget Reconciliation Act of 1987 (OBRA 87) mandated 

preadmission screening for individuals suspected of having serious 

mental illness and mental retardation to ensure that: (1) nursing 

facilities admit only individuals needing nursing facility care, (2) these 

individuals’ needs for specialized services are determined, and (3) these 

individuals obtain the services identified through the preadmission 

screening. The PASRR is the primary mechanism used to meet these 

objectives. This report focuses exclusively on the PASRR as it relates to 

individuals with mental retardation. We concurrently conducted a 

separate review of the PASRR as it relates to individuals with serious 

mental illness. 

All individuals who apply to or reside in Medicaid nursing facilities are 

required to receive a Level I PASRR screen to identify suspected mental 

retardation. Those suspected of having mental retardation must receive 

a Level II PASRR evaluation to confirm that they have mental 

retardation, to determine whether they require nursing facility services, 

and to determine whether they require specialized services. 

To assess the PASRR, we reviewed nursing facility resident case files 

and randomly selected Level II PASRR evaluations from each selected 

State. We conducted structured interviews with the Centers for 

Medicare & Medicaid Services (CMS) staff, State officials, and 

administrators and staff from nursing facilities. We conducted our 

review in 5 States and 20 nursing facilities, resulting in a review of 

101 resident case files and 121 Level II evaluations. 

FINDINGS 

While Level I screens were present in 88 percent of selected 

resident case files, one-fourth of these were completed late. Federal 

regulations require the State’s PASRR program to identify all individuals 

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EXE CUTIVE S U MMAR Y 

who are suspected of having mental retardation; this is termed a Level I 

screen. We found evidence of Level I screens in 89 of the 101 resident 

case files (88 percent). Of these 89 case files, 22 were not completed prior 

to or on the date of admission. These 22 Level I screens took place an 

average of 40 days after the resident was admitted to the nursing facility. 

Fifty-two percent of selected resident case files contained neither a 

Level II evaluation nor a Level II determination. If mental retardation 

is suspected, the individual is referred for a Level II PASRR evaluation. 

In one selected State, none of the 24 case files from selected nursing 

facilities contained Level II evaluations. Of the 18 Level II evaluations 

that were in the case files reviewed in the other 4 States, 7 were not 

completed prior to or on the date of admission. These seven Level II 

evaluations were completed an average of 23 days after the resident had 

been admitted to the nursing facility. States must determine whether 

an individual with mental retardation requires a nursing facility level of 

services and whether specialized services are needed. Of the 101 

selected case files, 56 lacked documented evidence of the Level II 

determination. 

Twenty-two percent of sampled Level II evaluations did not contain 

evidence that the evaluator assessed whether the individual’s total 

needs could be met in a community setting. In the remainder of the 

cases, evaluators documented their assessments of the individual’s 

medical needs, mental status, and independent living skills to 

substantiate the most appropriate setting for the individual. 

CMS and the survey and certification agencies in the five States that 

we reviewed conducted limited oversight. Only 2 of the 10 CMS 

regional offices have conducted onsite PASRR reviews in the past 

3 years. One of the five selected States failed to track and maintain 

Level II evaluations as required. Survey and certification agencies in 

the five selected States conducted limited oversight of the PASRR 

processes in nursing facilities. 

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EXE CUTIVE S U MMAR Y

RECOMMENDATIONS 

The OBRA 87 mandated preadmission screening to ensure that 

individuals with mental retardation are not inappropriately placed in 

Medicaid nursing facilities. The PASRR is the primary mechanism used 

to ensure that individuals with mental retardation require the level of 

services provided by a nursing facility and to determine whether the 

individual requires specialized services. As such, it is essential that all 

State PASRR systems work effectively. 

We based our findings on selected case files and a random sample of 

Level II evaluations from five selected States. As such, we do not 

project our results. However, our findings identify deficiencies that 

should be addressed to ensure that individuals with mental retardation 

are appropriately placed and receive necessary mental retardation 

services. 

We recommend that CMS hold State Medicaid agencies accountable for 

ensuring compliance with Federal requirements. Specifically, we 

recommend that: 

o every nursing facility applicant receive a Level I screen prior to 

nursing facility admission, and 

o all individuals with suspected mental retardation receive a Level II 

evaluation and determination prior to nursing facility admission 

and that all Level II PASRR documentation is shared with the 

admitting nursing facility. 

We also recommend that CMS hold States accountable for considering 

community placements during the Level II PASRR process. Finally, we 

recommend that CMS revise survey and certification requirements to 

ensure that State surveyors sample residents with mental retardation 

and review the PASRR documentation for timely completion. 

AGENCY COMMENTS 

CMS concurred with all of our recommendations to ensure that States 

implement an effective and timely Level I and Level II process. CMS’s 

comments did not warrant any revisions to the results of our review or 

to our recommendations. 

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Δ T ABLE OF CONTENTS 

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

INTR O D U C T I O N ............................................ 1

FINDI NGS .................................................. 9

While Level I screens were present in 88 percent of selected 

resident case files, one-fourth of these were completed late ...... 9

Fifty-two percent of selected resident case files contained neither 

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

Level II evaluations did not contain evidence of total needs 

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

CMS and the survey and certification agencies in the five States 

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

RECOM M E NDATI O NS ..................................... 14

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

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

A: Examples of State Practices Other Than PASRR That May 

 Address Placement and Provision of Services ............. 16

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

C: Agency Comments ................................... 18

ACKN O W LEDGMENTS ..................................... 22
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Δ INTRODU C TION 

OBJECTIVES 

1. To examine the extent to which Preadmission Screening and 

Resident Review (PASRR) requirements were addressed for 

Medicaid nursing facility residents aged 22 to 64 with mental 

retardation within selected States and selected nursing facilities. 

2. To assess Federal and State oversight of the PASRR process. 

BACKGROUND 

The Omnibus Budget Reconciliation Act of 1987 (OBRA 87) mandated 

preadmission screening for individuals suspected of having mental 

illness and mental retardation or related conditions1 to ensure that: 

(1) nursing facilities admit only individuals needing nursing facility 

care, (2) these individuals’ needs for specialized services are determined, 

and (3) these individuals obtain the services identified through the 

preadmission screening. The PASRR is the primary mechanism used to 

meet these objectives. 

In the 1960s, a number of class action lawsuits revealed poor conditions 

and treatment of patients with mental retardation in large public 

institutions. During the 1970s, legal challenges sought to improve the 

conditions at these facilities and to eliminate unnecessary 

institutionalization of people with mental retardation capable of living 

in the community.2 

In addition, in 1999, the Supreme Court held in Olmstead v. L.C. 

(Olmstead) that “the treatment, services, and habilitation for a person 

with developmental disabilities . . . should be provided in the setting 

that is least restrictive of the person’s personal liberty.”3 Olmstead held 

that States are required to provide community-based treatment for 

persons with mental disabilities when the State’s treatment 

professionals determine that such placement is appropriate, the affected 

persons do not oppose such treatment, and the placement can be 

1 Related conditions are defined by 42 CFR § 435.1009; cerebral palsy and epilepsy are 

examples of related conditions. Hereinafter, references to mental retardation include both 

mental retardation and related conditions. 

2 DeWayne Davis et al. “Deinstitutionalization of Persons with Developmental 

Disabilities: A Technical Assistance Report for Legislators.” Available online at 

http://www.ncsl.org/programs/health/Forum/pub6683.htm. Accessed March 7, 2006. 

3 Olmstead v. L.C. 527 U.S. 581 (1999), 138 F.3d 893, affirmed in part, vacated in part, 

and remanded. 

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INTROD UCT ION

reasonably accommodated, taking into account the resources available 

to the State and the needs of others with mental disabilities. 

In response to Olmstead, the Secretary of the Department of Health and 

Human Services issued guidance to States in the form of a letter to 

State Medicaid Directors. The letter states that “no one should have to 

live in an institution or a nursing facility if they can live in the 

community with the right support.”4 In addition, the President’s New 

Freedom Initiative, begun in 2001, aims to remove barriers to 

community living for persons with disabilities.5 

The Office of Inspector General (OIG) and the Substance Abuse and 

Mental Health Services Administration have conducted studies on 

States’ implementation of the PASRR for persons with mental illness.6 

Both agencies found a lack of compliance with Federal regulations 

related to the PASRR. To date, no study has been conducted specific to 

the PASRR for persons with mental retardation. 

Preadmission Screening and Resident Review 

Federal law requires that a nursing facility may not admit an applicant 

who is mentally retarded unless the State Mental Retardation 

Authority (SMRA) or its delegate has determined prior to admission 

that the individual requires the level of services provided by a nursing 

facility and, if the individual requires that level of services, whether the 

individual requires specialized services for mental retardation.7 As a 

condition of the Centers for Medicare & Medicaid Services’ (CMS) 

approval of a Medicaid State plan, the State must operate a 

preadmission screening program that complies with Federal 

regulations.8 The intent of the PASRR is to ensure that individuals 

with mental retardation are appropriately screened, thoroughly 

evaluated, and placed in nursing facilities when appropriate, and that 

they receive all necessary services. 

4 State Medicaid Director Letter, January 14, 2000. 

5 Department of Health and Human Services, “The New Freedom Initiative.” Available 

online at http://www.hhs.gov/newfreedom/init.html. Accessed May 15, 2006. 

6 2001 OIG report, “Younger Nursing Facility Residents With Mental Illness: 

Preadmission Screening and Resident Review (PASRR) Implementation and Oversight” 

(OEI-05-99-00700); and U.S. Department of Health and Human Services, Substance Abuse 

and Mental Health Services Administration, “PASRR Screening for Mental Illness in 

Nursing Facility Applicants and Residents” (2005). 

7 42 U.S.C. § 1396r(b)(3)(F)(ii). SMRAs are generally responsible for the planning, policy 

development, and resource allocation of services for persons with mental retardation. 

8 42 CFR § 483.104. 

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INTROD UCT ION 

Level I Screens. All individuals who apply to or reside in a 

Medicaid-certified nursing facility, regardless of payer, are required to 

receive a Level I PASRR screen to identify possible mental retardation.9 

These screens typically consist of preprinted forms unique to each State 

and generally record demographic information and diagnoses. Level I 

screens are completed by hospital discharge planners and nursing 

facility personnel. Individuals suspected of having mental retardation 

must also receive a Level II PASRR evaluation.10 

Level II Evaluations and Determinations. The Level II PASRR objectives 

are to confirm whether the applicant has mental retardation, assess the 

applicant’s need for nursing facility services, and determine whether the 

applicant requires specialized services for mental retardation.11 SMRA 

has responsibility for both the evaluation and the determination 

functions, but may delegate by subcontracting these responsibilities to 

another State agency (e.g., State department on aging).12 

SMRA or the contracted agency makes the final determination on 

whether a person requires nursing facility placement. SMRA may 

verbally convey Level II PASRR determinations to nursing facilities and 

individuals, but must subsequently confirm the determination in 

writing.13 

Determinations made by SMRA as to whether nursing facility level of 

services and specialized services are needed must be based on a Level II 

evaluation. However, SMRA may make determinations for categories of 

persons likely to require nursing facility level of services or for whom 

specialized services are not normally needed (e.g., in cases of terminal 

illness or severe physical illnesses such as coma), which can be based on 

existing sources of data (e.g., hospital or physician’s records) and do not 

require a Level II evaluation.14 

9 42 CFR §§ 483.106 and 483.128(a). 

10 42 CFR § 483.128(a). 

11 Ibid. 

12 42 CFR § 483.106(e). 

13 42 CFR § 483.112(c)(2). 

14 42 CFR § 483.130. 

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INTROD UCT ION 

Assessment of Individual Needs and Appropriate Placement. Federal 

regulations require evaluators to assess whether an individual’s total 

needs can be met in a community setting or only on an inpatient basis 

(e.g., nursing facility, intermediate care facility for the mentally 

retarded, or waiver program).15 Level II determination notices must 

include the placement options that are available given the results of the 

evaluator’s assessment.16 If an individual’s needs can be met in the 

community, then nursing facility services are not needed. 

Determining Services for Nursing Facility Residents With Mental Retardation. 

Level II PASRR evaluations must identify whether specialized services 

are necessary. For mental retardation, specialized services are the 

services specified by the State which, when combined with services 

provided by the nursing facility or other service providers, result in a 

continuous active treatment program.17 The purpose of the treatment 

program is to: (1) develop the behaviors necessary for the client to 

function with as much self-determination and independence as possible, 

and (2) prevent or decelerate regression or loss of current optimal 

functional status.18 The State must provide or arrange for the provision 

of specialized services to all nursing facility residents with mental 

retardation requiring continuous supervision, treatment, and training 

by qualified mental retardation professionals as identified in the 

Level II PASRR evaluations.19 

When specialized services are not recommended, Level II PASRR 

evaluations must identify any specific services of lesser intensity that 

are required to meet the individual’s mental retardation needs.20 The 

nursing facility must provide mental retardation services of lesser 

intensity to all residents who need such services.21 Medicaid does not 

separately reimburse these services of lesser intensity; they are 

considered a condition of participation and must be paid by the nursing 

facility or under some other arrangement with the State. 

15 42 CFR § 483.132. 

16 42 CFR § 483.130(l)(3). 

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

18 42 CFR § 483.440(a). 

19 42 CFR § 483.120(b). 

20 42 CFR § 483.128(i)(4). 

21 42 CFR § 483.120(c). 

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INTROD UCT ION

Level II Resident Reviews for Significant Changes in Condition. In addition to 

initial Level II PASRR evaluations and determinations, nursing facility 

residents may receive subsequent Level II PASRR evaluations and 

determinations during their nursing facility stay. Federal law requires 

resident reviews when there is a significant change in a resident’s 

physical or mental condition.22 

Federal and State Oversight of the PASRR 

The State Medicaid agencies and CMS share responsibility for enforcing 

PASRR requirements. State Medicaid agencies must deny Medicaid 

payments for nursing facility services provided to individuals who do 

not have a PASRR determination requiring these services.

23 

CMS contracts with State Medicaid agencies to survey and certify 

nursing facilities to verify compliance with Federal requirements. Each 

nursing facility is subject to a standard, unannounced survey by a 

multidisciplinary team of professionals at least every 15 months.24 For 

these surveys, a sample of resident records is selected for review. If 

sampled nursing facility residents have mental retardation, then 

surveyors must determine whether nursing facility services and 

specialized services were needed.

25 Surveyors cite noncompliance with 

Federal regulations using deficiency tags. 

Concurrent Office of Inspector General Evaluation 

Concurrent with this evaluation, OIG conducted an evaluation on 

“Preadmission Screening and Resident Review for Younger Nursing 

Facility Residents With Serious Mental Illness” (OEI-05-05-00220). 

These studies were produced separately because in many States the 

mental retardation service delivery system is distinct from the mental 

health service delivery system. 

METHODOLOGY 

We reviewed the PASRR process in five States (Connecticut, Missouri, 

Texas, Washington, and West Virginia). We used the 2004 Minimum 

Data Set (MDS) data to array all States from the highest to the lowest 

proportion of Medicaid nursing facility residents who are younger (aged 

22 42 U.S.C. § 1396r(b)(3)(C)(i)(II).

23 42 U.S.C. § 1396r (e)(7)(D). 

24 42 U.S.C. § 1396r(g)(2)(A)(iii). 

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

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INTROD UCT ION 

22 to 64) and identified as having mental retardation.26 From the 

States with a higher proportion of our target population, we purposively 

selected five States to achieve diversity in areas that included 

geographic location and size of State. We chose different States from 

the concurrent OIG evaluation to reduce the burden on States 

participating in our reviews. 

Data Collection 

We collected data from six sources for this inspection: (1) case file 

reviews of selected Medicaid nursing facility residents aged 22 to 

64 with mental retardation; (2) structured interviews with agency 

officials from selected States; (3) structured interviews with 

administrators and staff from selected nursing facilities; (4) structured 

interviews with CMS staff; (5) review of oversight documentation from 

selected State agencies and CMS; and (6) review of randomly selected 

Level II PASRR evaluations from each selected State. 

Case File Reviews of Nursing Facility Residents 

Within each selected State, we used the same 2004 MDS data to select 

four nursing facilities in the vicinity of the State’s capitol city with a 

high prevalence of our target population. We selected 10 current 

residents from each nursing facility meeting our criteria. If 10 or fewer 

residents met our criteria, we selected all residents meeting our criteria. 

We reviewed a total of 101 case files. As shown in Table 1, the number 

of files reviewed in each State ranges from 10 to 32. 

Federal law requires nursing 

facilities to maintain the results 

of any preadmission screening.27 

We sought Level I screens and 

Level II evaluations and 

determinations in each resident’s 

file. We were able to discern the 

difference between Level II 

evaluations and determinations; 

therefore, we analyzed each 

document separately. We asked 

Table 1: Nursing Facility 

Resident Case Files Reviewed In 

Each State 

State Number of Case Files 

Reviewed 

1 32 

2 20 

3 24 

4 15 

5 10 

Total 101 

Source: OIG, 2005. 

26 Our criteria are based on residents with diagnoses of mental retardation or related 

condition (e.g., epilepsy, cerebral palsy), as indicated in items 9 and 10 of Section AB of the 

MDS. Many selected residents also had co-occurring diagnoses of mental illness. Residents 

with such co-occurring diagnoses were included in our review. 

27 42 U.S.C. § 1396r(b)(6)(C). 

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INTROD UCT ION

nursing facility administrators to produce the PASRR documentation 

when it was not found in the resident’s file. We also reviewed residents’ 

files to determine whether Level II PASRR evaluations identified 

specialized mental retardation services to be provided by the State and 

services of lesser intensity to be provided by the nursing facility. We 

then reviewed the resident’s treatment plan to determine whether 

identified specialized services and services of lesser intensity were 

included. We did not verify whether these services were provided, nor 

did we conduct a medical review to determine the necessity of these 

services. 

Structured Interviews and Documentation Review 

In each of our five selected States, we interviewed representatives from 

the State Medicaid agency, SMRA, State survey and certification 

agency, and Level II PASRR evaluators. We asked questions regarding 

the PASRR processes and oversight. We also collected States’ Level I 

PASRR forms, Level II PASRR evaluation forms, PASRR-related 

guidance sent to nursing facilities, and PASRR policy documents. 

At each of the 20 selected nursing facilities, we interviewed the nursing 

facility administrator and other nursing facility staff responsible for the 

PASRR process and the coordination and provision of mental 

retardation services. We asked questions regarding the PASRR 

processes, its oversight, and its use in care planning. 

We interviewed the PASRR staff from CMS headquarters and each 

regional office regarding PASRR oversight. We also collected 

documentation of CMS oversight activities, including draft guidance. 

Review of Level II PASRR Evaluations 

To systematically review Level II evaluations, we requested data on the 

total number of Level II PASRR evaluations conducted in 2004 and the 

resulting placements from each of the five States. We reviewed 

30 randomly selected Level II PASRR evaluations conducted in 

2004 from each of 4 States but received only 1 from the fifth State, for a 

total of 121 Level II evaluations. 

Scope 

Our review of the PASRR is limited to Medicaid nursing facility 

residents aged 22 to 64 with mental retardation in five selected States. 

We purposively selected States and the nursing facilities within those 

States. As such, we do not project our results to the universe of States, 

individual States, nursing facilities, or nursing facility residents. 

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INTROD UCT ION 

Standards 

This study was conducted in accordance with “Quality Standards for 

Inspections” issued by the President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

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Δ FINDINGS

Federal law requires preadmission While Level I screens were present in 88 percent screening of all individuals with 

of selected resident case files, one-fourth of mental retardation or mental illness 

these were completed late who apply to or reside in 

Medicaid-certified nursing facilities 

regardless of the source of payment. 28 This report focuses exclusively 

on the PASRR as it relates to individuals with mental retardation. 

These results are not projectable to the universe of States, individual 

States, nursing facilities, or nursing facility residents. 

Federal regulations require the State’s PASRR program to identify all 

individuals who are suspected of having mental retardation; this is 

termed a Level I screen. 29 We found evidence of Level I screens in 89 of 

the 101 resident case files. Of these 89 case files, 22 were not completed 

prior to or on the date of admission. These 22 Level I screens took place 

an average of 40 days after the resident was admitted to the nursing 

facility. 

If mental retardation is suspected, the individual is referred for a 

Level II PASRR evaluation. 

Eighty-one percent of selected 

resident case files did not contain 

Fifty-two percent of selected resident case files 

contained neither a Level II evaluation nor 

Level II evaluations, and a Level II determination 

55 percent did not contain Level II 

determinations. Only 18 resident case files contained evaluations (7 of 

which were completed late), and 45 resident case files contained 

determinations. 

Level II evaluations were either missing or late 

Federal regulations provide certain circumstances in which SMRA may 

make determinations for categories of persons likely to require nursing 

facility level of services (e.g., in cases of terminal illness or severe 

physical illnesses such as coma) that can be based on existing sources of 

data and do not require a Level II evaluation. 30 In the 101 resident 

case files that we reviewed, 5 contained documentation indicating that 

they met these circumstances and did not require a Level II evaluation. 

28 42 U.S.C. § 1396r(e)(7)(A)(1). 

29 42 CFR § 483.128(a). 

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

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F I NDING S 

Of the remaining 96 resident case files, 78 lacked evidence of a Level II 

evaluation. In 1 selected State, none of the 24 selected case files 

contained Level II evaluations. Administrators of the four selected 

nursing facilities in the State indicated that all they received was a 

form with a signature indicating that the individual met medical 

necessity criteria for nursing facility placement. These forms lacked 

other information, such as cognitive tests, that nursing facility staff 

might use in developing a plan of care for the individual. 

Of the 18 Level II evaluations that were in the resident case files, 

7 were not completed prior to or on the date of admission. These seven 

Level II evaluations were completed an average of 23 days after the 

resident had been admitted to the nursing facility. For another five 

residents, SMRA deemed that a Level II evaluation was not required, 

but the case file lacked documentation justifying that decision. During 

our review of selected resident case files in 20 nursing facilities, we 

collected data on the content required by Federal regulations (e.g., 

summary of medical and social history, whether specialized services are 

recommended). We also sought the treatment plans in resident case 

files to determine whether recommended services were included. 

However, since only 11 resident case files contained timely Level II 

evaluations, a meaningful review of Level II evaluation content was not 

possible. 

Level II determinations were missing 

Of the 101 selected resident case files, 56 lacked documented evidence of 

the Level II determination. SMRA must determine whether an 

individual with mental retardation requires a nursing facility level of 

services and whether specialized services are needed.31 This 

determination may be conveyed to the nursing facility verbally at first, 

but SMRA must confirm the determination in writing.32 Inasmuch as 

Level II determinations typically are based on Level II evaluations, the 

45 selected resident case files containing evidence of a Level II 

determination suggest that more than 18 residents may have received a 

Level II evaluation. However, given the lack of Level II evaluations in 

selected case files, we could not ascertain whether these evaluations 

were simply missing or whether the residents did not require such an 

evaluation. 

31 42 CFR § 483.130(l)(1)-(2). 

32 42 CFR § 483.112(c)(2). 

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F I NDING S 

Twenty-two percent of sampled Level II 

evaluations did not contain evidence that the 

evaluator assessed whether the individual’s 

total needs could be met in a community setting 

The selected resident case files from 

nursing facilities we visited 

contained evidence of only 18 Level 

II evaluations. To allow for a more 

thorough review of Level II 

evaluations, we randomly selected 

Level II evaluations from SMRAs that were completed in 2004 and 

reviewed a total of 121 Level II evaluations from the 5 selected States. 

Federal regulations require evaluators to assess whether an individual’s 

total needs can be met in a community setting or only on an inpatient 

basis.33 If an inpatient setting is determined to be the most 

appropriate, then such settings may include intermediate care facilities 

for the mentally retarded, nursing facilities, or waiver programs. If an 

individual’s needs can be met in the community, then nursing facility 

services are not needed. Twenty-two percent (27 of 121) of sampled 

Level II evaluations did not contain evidence that the evaluator 

assessed whether the individual’s total needs could be met in a 

community setting; instead, these evaluations contained evidence that 

the evaluator assessed solely whether such needs could be met in a 

nursing facility. In the remaining 78 percent (94 of 121) of the sampled 

cases, evaluators documented their assessments of the individual’s 

medical needs, mental status, and independent living skills to 

substantiate the most appropriate setting for the individual. 

During our structured interviews, officials from two States described 

practices other than PASRR that may address placement and provision 

of services for persons with mental retardation. These practices are 

described in Appendix A. 

Limited oversight of preadmission

CMS and the survey and certification agencies screening processes occurred at 

in the five States that we reviewed conducted both the Federal and State levels. 

limited oversight Only one of the five selected 

States reported specific oversight 

practices aimed at ensuring compliance with the PASRR. These 

practices are described in Appendix B. 

33 42 CFR § 483.132. 

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F I NDING S 

Only two CMS regional offices have conducted onsite PASRR reviews in the 

past 3 years 

Staff from 2 of the 10 CMS regional offices conducted onsite State 

reviews of the PASRR during 2002 through 2005. An official from one 

regional office indicated that it was “just getting started” again with the 

PASRR oversight. Beginning in June 2005, staff from this CMS 

regional office identified the PASRR contact persons in each State in its 

region, developed a survey inquiring about States’ PASRR processes, 

outlined State responsibilities in initial telephone calls to States, and 

planned to continue telephone calls with States on a quarterly basis. 

Officials from 7 of the 10 CMS regional offices reported that they have 

not conducted oversight related to the PASRR in the past 3 years. 

One of the five selected States failed to track and maintain Level II 

evaluations as required 

When we requested a list of all Level II PASRR evaluations and 

determinations conducted in 2004, one State responded that it “do[es] 

not currently have a system for tracking when these [PASRR Level II 

evaluations] are requested or completed other than by looking in the 

[individual’s] case file.” As a result, the State agency submitted a list of 

43 individuals admitted to nursing facilities in 2004. For these 

individuals, the State reported that only one Level II evaluation was 

completed in 2004. The State identified 4 deceased individuals for 

whom the PASRR status was unknown, and 12 individuals for whom 

there was no record of a completed Level II evaluation. Therefore, this 

State was not in compliance with Federal regulations for establishing 

and maintaining a tracking system for individuals with mental 

retardation residing in nursing facilities. 34 

Survey and certification agencies in the five selected States conducted 

limited oversight of the PASRR processes in nursing facilities 

Surveyors from four States indicated that they would assess PASRR 

compliance if a person with mental retardation appeared in the sample 

or as part of an extended survey.35 A surveyor from the fifth State 

reported that a complaint or hotline referral would prompt further 

investigation into whether the nursing facility was meeting the overall 

care needs of residents with mental retardation. 

34 42 CFR § 483.130(p). 

35 An extended survey occurs when a facility is found to have furnished substandard 

quality of care during a standard survey. 

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F I NDING S 

If surveyors identified noncompliance with Federal regulations 

concerning the PASRR, a deficiency tag (F285) was cited.36 In 2004, 

surveyors cited 101 instances of F285 in approximately 16,000 nursing 

facilities nationwide. While survey and certification officials from all 

five States indicated that they monitor nursing facility compliance with 

PASRR requirements, one State surveyor concluded, “PASRR is 

underlooked, not overlooked.” 

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

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Δ RECOMME NDA TIONS 

The PASRR process was created to ensure that individuals with mental 

retardation are not inappropriately placed in Medicaid nursing 

facilities. The PASRR is the primary mechanism to ensure that 

individuals with mental retardation are screened, evaluated, and placed 

in nursing facilities when appropriate, and receive identified needed 

services. It is essential that all State PASRR systems work effectively. 

This evaluation of the PASRR found that while 88 percent of selected 

resident case files contained Level I screens, only 8 percent met all 

Level II PASRR requirements. In addition, 22 percent of sampled 

Level II evaluations did not contain evidence that the evaluator 

assessed whether the individual’s total needs could be met in a 

community setting. Finally, CMS and the survey and certification 

agencies in the five States that we reviewed conducted limited oversight 

of the PASRR. 

We based our findings on selected case files and a random sample of 

Level II evaluations from five selected States. As such, we do not 

project our results. However, the findings identify deficiencies that 

should be addressed to ensure that individuals with mental retardation 

are appropriately placed and receive necessary mental retardation 

services. We therefore recommend the following to CMS: 

Hold State Medicaid agencies accountable for ensuring compliance with 

Federal requirements. Specifically, we recommend that: 

o every nursing facility applicant receive a Level I PASRR screen 

prior to nursing facility admission, and 

o all individuals with suspected mental retardation receive a Level II 

evaluation and determination prior to nursing facility admission 

and all Level II PASRR documentation is shared with the admitting 

nursing facility. 

To address the above recommendations, we have several specific 

suggestions for CMS to consider. First, CMS could require that State 

Medicaid agencies provide data to CMS regarding the number of 

completed Level I PASRR screens and the number of expected and 

completed Level II evaluations and determinations, and nursing facility 

confirmation of receipts of the PASRR documentation. Alternatively, as 

part of CMS’s current efforts to modify the MDS, CMS could consider 

adding a data element to indicate whether a Level I PASRR screen and 

Level II evaluation and determination have been completed. Finally, 

we suggest that CMS distribute both its draft State self-assessment 

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R E C O MMENDA T I O N S 

form and its draft regional office assessment form as tools to regularly 

collect information about each State’s PASRR processes. 

Hold States accountable for considering community placements during the 

Level II PASRR process 

Revise survey and certification requirements to ensure that State surveyors: 

o sample residents with mental retardation, and 

o review all PASRR documentation for timely completion. 

AGENCY COMMENTS 

CMS concurred with all of our recommendations. CMS intends to 

remind States of their obligation to implement effective and timely 

Level I and Level II processes, clarifying for States all of the Level II 

elements required by Federal regulation. In addition, CMS intends to 

review State claims, if necessary, to ensure that States recoup Federal 

Financial Participation from nursing facilities for any days claimed 

prior to the completion of all PASRR documentation. CMS intends to 

review the forms and tools used by each State for the PASRR Level II 

evaluation and determination to assess whether they include 

consideration of community placement. To address our final 

recommendation regarding revising survey and certification 

requirements to ensure oversight of PASRR, CMS stated it will ensure 

that a resident requiring a Level II PASRR is included in the resident 

sample during a nursing facility survey. CMS’s comments did not 

warrant any revisions to the results of our review or to our 

recommendations. For the full text of CMS’s comments, see 

Appendix C. 

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Δ APPENDIX ~ A 

Examples of State Practices Other Than PASRR That May Address 

Placement and Provision of Services 

Through our evaluation, we identified a significant level of missing or 

late PASRR documentation. However, during structured interviews 

with officials from five States, respondents described a few examples of 

efforts to address placement and provision of services for individuals 

with mental retardation through processes other than the PASRR. For 

example, State Medicaid agencies define level-of-care criteria for 

nursing facility placement, which can include such things as amount of 

assistance an individual requires with mobility, diet, or personal care. 

We found that this process either preceded or was combined with the 

PASRR Level I screens in the five States. 

Instances in which States employed processes other than the PASRR to 

address placement and/or provision of services for nursing facility 

residents with mental retardation include the following: 

o Officials in Washington used a decision tree when considering 

placement of persons with mental retardation. This process 

considered all other residential settings, such as personal care 

services provided in the home, adult family home services, group 

homes, supported living, and shared living, with nursing facility 

placement as a last resort. 

o Officials in Connecticut described significant involvement by the 

case managers of SMRA in the placement and care planning process 

for nursing facility residents with mental retardation. In that State, 

individuals with mental retardation may be placed in nursing 

facilities for 30 days based on a medical diagnosis. A Department of 

Mental Retardation employee monitors the resident during the 

30-day period and determines whether additional time in the 

nursing facility is needed. The nursing facility staff that we 

interviewed in Connecticut confirmed that case managers are 

involved in quarterly care planning meetings. If a nursing facility 

resident experiences a significant change of condition while in the 

nursing facility, the case manager is contacted and changes to the 

care plan are discussed. Finally, the case manager ensures that the 

nursing facility resident receives any recommended specialized 

services financed by the State. 

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Δ APPENDIX ~ B 

PASRR Oversight Practices in One State 

One selected State implemented two oversight mechanisms aimed at 

ensuring that nursing facilities comply with Federal regulations 

concerning the PASRR. In West Virginia, the Department of Health 

and Human Resources sends a memorandum outlining the PASRR 

process to the nursing facility each time a prospective resident is 

referred for a Level II evaluation. The memorandum delineates the 

steps that the nursing facility must take to arrange for the initial 

Level II evaluation, the circumstances in which a subsequent Level II 

evaluation is required as a result of significant change in the resident’s 

condition, and how the nursing facility should notify the State that a 

Level II evaluation will not be completed after referral. State officials 

indicated that this practice has been helpful in communicating PASRR 

requirements to nursing facility staff, which may experience frequent 

turnover. In addition, West Virginia conducts annual followup on the 

status of Level II evaluations that have been referred, but not 

conducted. If a nursing facility resident never received a Level II 

evaluation, State officials direct the nursing facility to arrange for one. 

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Δ APPENDIX ~ C 

Centers for Medicare & Medicaid Services’ Comments 

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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Δ ACKNOWLEDGMENTS 

This report was prepared under the direction of Brian T. Pattison, 

Regional Inspector General for Evaluation and Inspections in the 

Kansas City regional office, and Gina C. Maree, Deputy Regional 

Inspector General. Other principal Office of Evaluation and Inspections 

staff who contributed include: 

Tricia Fields, Team Leader 

Michael Barrett, Program Analyst 

Scott Horning, Program Analyst 

Amber Meurs, Program Analyst 

Dennis Tharp, Program Analyst 

Sandy Khoury, Program Specialist 

Tricia Davis, Director, Medicare Branch 

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