Mental Health Services for Medicaid Beneficiaries: Getting Appropriate Long-Term Care

May 27, 2004

Federal rules: PASARR

The preadmission screening and annual resident review program (PASARR) is a requirement of all state Medicaid plans that ensures nursing facilities or other institutions determine and provide the care deemed necessary.

The State PASARR program must require:

A)  preadmission screening of all individuals with mental illness (MI) or mental retardation (MR) who are applying to a Medicaid nursing facility for the first time.
B)  annual review (at least) of all residents with MI or MR in a nursing facility.

What Are the Requirements to Screen for Individuals with Mental Illness or Mental Retardation for Nursing Facility, Community-Based, or Specialized Services?

1. The state mental health authority determines if the level of services provided by a nursing facility is appropriate for an individual with MI (the state mental retardation authority makes this determination for an individual with MR) due to his or her mental or physical condition and if a community, inpatient setting is needed.  If the individual with MI does require nursing facility services, this agency must also determine if specialized services are required.
2. The evaluator must prioritize the physical and mental needs of the individual, taking into account the severity of each condition. The information relied on to make a determination if nursing facility level of services is needed must include:

a) evaluation of physical status (e.g. diagnoses, date of onset, medical history, and prognosis);
b) evaluation of mental status (e.g. diagnoses, date of onset, medical history, likelihood that the individual may be a danger to him/herself or others); and
c) functional assessment (activities of daily living)

The evaluator also assesses whether the individual’s needs could be met in a community setting instead, and whether any inpatient care is needed. Placement of an individual with MI or MR in a nursing facility is only appropriate if his/her needs meet the minimum standards for admission and his/her needs for treatment do not exceed the level of nursing facility services or specialized services that the individual is admitted.¹ If inpatient care is needed but a nursing facility is not the appropriate setting to meet the needs, an individual may be admitted into another setting such as an Intermediate Care Facility for Mental Retardation (ICF/MR) including community-based facilities), an Institute for Mental Disease (IMD) that provides services to individuals 65 or older, or a psychiatric hospital to meet his/her needs.²

When is a Preadmission Screening or Annual Review Required? (42 CFR § 483.106b)

A) New Admission: An individual admitted to any nursing facility for the first time is subject to preadmission screening (with the exception of some hospital discharges).
B) Exempted hospital discharge: Any individual who: 1) is admitted to any nursing facility directly from a hospital after receiving acute inpatient care at the hospital; 2) requires nursing facility care for the condition for which he or she received in the hospital; and 3) attending physician certifies that the individual is likely to require less than 30 days of nursing facility services is not subject to either a preadmission screening or an annual review to be admitted.³
C) Readmission: An individual who is readmitted to a nursing facility from a hospital to which he or she was transferred to receive care is only subject to annual resident review.
D) Interfacility Transfers: An individual transferred from one nursing facility to another nursing facility, with or without an intervening hospital stay, is only subject to an annual resident review. Also, the transferring nursing facility is responsible for ensuring that copies of the resident’s most recent PASARR and resident assessment reports accompany the transferring resident.

What are the Federal Rules About Specialized Treatment? (42 CFR § 483.120)

If the state mental health or mental retardation authority determines that a resident or applicant for admission requires both nursing facility level services and specialized services the nursing facility may admit the individual and the state must provide/arrange for the provision of the specialized services needed while he/she resides in the nursing facility.
An interdisciplinary team of physicians and mental health professionals ensure that individuals with severe mental illness receive supervised therapeutic treatment directed toward:

A) reducing the resident’s behavioral symptoms that required institutionalization,
B) improving the level of independent functioning, and
C) achieving a functioning level that allows a reduction in mental health services below the level of specialized services as soon as possible.

How Michigan Meets PASARR Requirements

Nursing homes are sometimes reluctant to accept patients who have behavioral problems in addition to their physical needs for nursing home care. The State of Michigan has made strides in assuring appropriate treatment for such residents:

• Following passage of the federal Omnibus Reconciliation Act of 1987 (OBRA 87), Michigan established a system, the Level II comprehensive assessment, where county-based Community Mental Health Agencies took responsibility for preadmission screening of nursing home residents. When that screening identified needs for specialized services, the Community Mental Health Agencies also went into the nursing homes to provide mental health care. At that time, Medicaid paid for clinical mental health services on a fee-for-service basis, including therapy, testing, and nursing home monitoring.
• In more recent years, Michigan began providing prepaid inpatient hospitalization (PIHP) under a Medicaid waiver. While the community mental health agencies are still involved, they now provide their services under a capitated arrangement.  In a few counties, nursing homes contract instead with private behavioral health service providers for treatment.
• Michigan provides a very comprehensive Level II assessment, which allows the patient to receive treatment without the individual providing the treatment having to do a second assessment. Through the one assessment, Michigan obtains enough information both to identify people needing specialized mental health services and to determine how to begin treating the patient.
• The substantial presence of community mental health providers has made nursing homes much more willing to accept patients with behavioral health disorders. Prior to OBRA 87, Michigan had six specialized nursing homes for people with mental retardation and one for people with mental illness. The latter facility had a mix of patients with dementia and with mental illness, and unfortunately, all were treated as though they would not get better. Michigan therefore changed the admission criteria so that regular nursing homes accepted the dementia patients, and the specialized facility required a diagnosis of mental illness. This improved treatment. Over the years, as mental health care became more available in regular nursing homes and in the community, the need for a specialized facility has declines and only 15 people remain in it. People are generally happier to be getting care in their local communities.

Some strategies used in other states for ensuring appropriate care are as follows:

• For people whose primary diagnosis is not physical, consider whether they would be more appropriately cared for in the community instead of in a nursing home.
• In Minnesota, case managers can get six months of reimbursement to help people transition out of nursing homes and into community services. However, appropriate housing is still in short supply.

In some places, nursing homes send unwanted patients to the emergency room for psychiatric problems, and then refuse to take them back. Consumer health assistance programs should be aware of federal and state laws about readmission and discharge:

• Under Section 1919 (c)(2)(D) of the Social Security Act, states must specify in their state plan whether they have a rule about how long a nursing facility must hold a bed open for a patient who is hospitalized. The nursing facility must provide written notice to the nursing home resident and family member or legal representative of the state’s policy about bed-holds before the resident is transferred to a hospital.
• If the resident stays in the hospital longer than the period that the nursing facility must hold the bed open, once he or she again requires the services of the nursing facility, the facility must readmit the resident as soon as a bed becomes available in a semiprivate room.
• Section 1919(c)(2)(A) of the Social Security Act explains when a nursing facility is allowed to discharge a resident, how much advance notice is required, and what must be documented in the medical record. Residents who disagree with a planned discharge can Basically, a resident can only be discharged if: discharge or transfer is necessary to the resident’s welfare, the resident no longer needs to be in a nursing facility because his or her health improves, the resident endangers the health or safety of other residents, the nursing facility’s bill is not paid, or the facility closes.
• Violations of residents’ rights should be reported to the state Long Term Care Ombudsman and/or the Protection and Advocacy program and to the licensing agency.

The information for this fact sheet came from the May 27, 2004 Health Assistance Partnership (HAP) conference call.  The speakers included David Verseput from the Michigan Department of Community Health, Oscar Morgan and Erica deFur Malik from the National Mental Health Association, and Mary Armstrong, from the Health Care Reform Tracking Project at the University of South Florida. 

¹ Note 1: The determination of nursing facility services outlined above also must be conducted at the patients Annual Review and must be in accordance with the guidelines set forth in 42 CFR §438.130.
² Note 2: The state mental health and mental retardation authorities may subcontract their evaluation and determination functions to another entity in accordance with the guidelines set forth in 42 CFR § 438.106e.
³ Note 3: If an individual who enters a nursing facility as an exempted hospital discharge is later found to require more than 30 days of nursing facility care, the state mental health or mental retardation authority must conduct an annual resident review within 40 calendar days of admission.