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Screening for Mental Illness in Nursing Facility Applicants:
Understanding Federal Requirements
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 Medicaid-certified 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 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.
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.
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