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Princeton Place v. New Mexico Human Services Department

Court of Appeals of New Mexico

March 19, 2018

PRINCETON PLACE, Petitioner-Appellant,

         APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY Sarah M. Singleton, District Judge

          Modrall, Sperling, Roehl, Harris & Sisk, P.A. Michelle A. Hernandez Tomas J. Garcia Albuquerque, NM for Appellant.

          New Mexico Human Services Department Christopher P. Collins, General Counsel John Robert Emery, Deputy General Counsel Santa Fe, NM for Appellee.

          Lorenz Law Alice T. Lorenz Albuquerque, NM for New Mexico Health Care Association/New Mexico Center for Assisted Living.



         {¶1} The district court upheld the decision of the Director of the New Mexico Human Services Department, Medical Assistance Division (HSD/MAD) to recoup Medicaid payments made to Princeton Place (Princeton), a nursing home located in Albuquerque, New Mexico. The claim was that Princeton was not entitled to Medicaid payments for services provided to a resident, J.F., because Princeton did not comply with New Mexico Department of Health (DOH) nursing home preadmission screening regulations before it admitted J.F. On appeal, Princeton contends the administrative record demonstrates that it complied with the applicable preadmission regulations. We agree and reverse.


         A. The Federal and New Mexico Nursing Home Preadmission Screening Statutory and Regulatory Framework

         {¶2} In 1987, Congress passed the Nursing Home Reform Act (NHRA). See Pub. L. No. 100-203, §§ 4201-06, 101 Stat. 1330 (1987) (codified at 42 U.S.C. § 1396r (2012)). The purpose of the NHRA "is to prevent the placement of individuals with [mental illness] or [mental retardation, e.g., intellectual disability][1] in a nursing facility unless their medical needs clearly indicate that they require the level of care provided by a nursing facility." Medicare and Medicaid Programs; Preadmission Screening and Annual Resident Review (PASARR), 57 Fed. Reg. 56, 450, 56, 451 (Nov. 30, 1992). To achieve this purpose, the NHRA requires that each state receiving federal Medicaid funding establish a program to screen all individuals seeking admission to a nursing home for mental illness and intellectual disability prior to admission. 42 U.S.C. § 1396a (a)(28){D)(I) (2012); 42 U.S.C. § 1396r(e)(7) (A)-(B); 42 C.F.R. § 483.104 (2012); 42 C.F.R. § 483.106(a)(1) (2012). This screening is known as the "PASARR" process. See 42 C.F.R. § 483.100 (2012). (3} Medicaid states are eligible to receive Federal Financial Participation (FFP) at a rate of seventy-five percent to reimburse nursing homes for services provided to Medicaid-eligible individuals determined, in accordance with the PASARR process, to need nursing home care. See 42 U.S.C. § 1396b (2012); 42 C.F.R. § 483.122(a) (2012); 57 Fed. Reg. at 56, 451, 56, 481. To qualify for Medicaid reimbursement, a nursing home is required to enter into a Medicaid Provider Participation Agreement (MPPA) with the state, under which the nursing home agrees to follow all state and federal Medicaid statutes and regulations, including PASARR requirements. (4} Pursuant to the federal PASARR regulations, Medicaid states are required to establish a two-level preadmission screening process for nursing home applicants. See 42 C.F.R. § 483.128(a) (2012). At Level I, states "must identify all individuals who are suspected of having" mental illness or intellectual disability as defined by the federal regulations. Id.; see 42 C.F.R. § 483.102(a)-(b) (2012) (defining mental illness and intellectual disability for purposes of PASARR). States may delegate the authority to conduct Level I screens to nursing homes operating under an MPPA. See 57 Fed. Reg. at 56, 460. However, when individuals are identified as suspected of having mental illness or intellectual disability at Level I, they must be referred back to the states' PASARR programs for Level II screening. See 42 C.F.R. § 483.106(e)(1)-(3). At Level II, states are required to evaluate and determine whether nursing home services or other specialized services are actually needed for identified nursing home applicants. 42 C.F.R. § 483.128(a). The Level II evaluations and determinations are thereafter provided to the applicants and admitting nursing homes. 42 C.F.R. § 483.128(i)(1). And where nursing home services are deemed appropriate for a particular applicant, the admitting nursing home may admit the applicant. 42 C.F.R. § 483.116(a) (2012).

         {¶5}In New Mexico, the State's PASARR program is housed within the DOH Developmental Disabilities Division. The State's PASARR program is responsible for ensuring that preadmission screening of all nursing home applicants is completed prior to any applicant's admission to a nursing home. When all PASARR requirements have been satisfied and an applicant has been admitted to a nursing home, HSD/MAD is responsible for processing the nursing home's claims for Medicaid reimbursement. HSD/MAD is also responsible for seeking recoupment of Medicaid funds that have been paid to nursing homes when the PASARR requirements have not been satisfied.

         B. Princeton's Preadmission Screening of J.F. and HSD/MAD's Proposed Medicaid Recoupment Action

         {¶6} In June 2011, J.F. underwent a Level I PASARR screening for admission to Princeton, which at the time was operating under an MPPA with the State of New Mexico. J.F. was born with spina bifida, a congenital condition of the central nervous system that affects the development of the spinal cord and brain. At the time that he applied for admission to Princeton, J.F.'s condition had deteriorated to the point that he required assistance with his activities of daily living including eating, toileting, bathing, dressing, and ambulation.

         {¶7} Princeton's admission coordinator and licensed practical nurse, Vivian Richer, conducted J.F.'s Level I PASARR screen. As part of the screen, Ms. Richer completed a form provided to Princeton by DOH titled "New Mexico PASRR Screening Document"[2] (the PASARR Form). Ms. Richer relied on J.F.'s medical history, physical examination, and past admission orders in conducting her Level I PASARR screen of J.F. and in completing the PASARR Form.

         {¶8} Section A of the PASARR Form titled "Client Data" asks for general personal information about a nursing home applicant, including whether she or he has any physical or mental diagnoses. Ms. Richer stated that under Section A, J.F. suffered from spina bifida, dystonia, and urinary tract infection.

         {¶9}The heading for Section D of the PASARR Form states that "IF ANY ONE of the items to this section is 'Yes, ' the person MUST BE REFERRED TO PASRR." Under Section D are Questions 4 and 5. Question 4 asks "[i]s there any indication of mental retardation?" Finding no indication of mental retardation in J.F.'s medical records, Ms. Richer checked "No" to question 4.

         {¶10}Question 5 asks "[i]s there any indication of developmental disability (a severe, chronic disability that manifested before age 22)?" The instructions on the PASARR Form addressing Question 5 state that "[a]ny severe, chronic disability (except mental illness) that occurred before age 22 may indicate a developmental disability. Examples include: cerebral palsy, spina bifida, quadriplegia before age 22, a seizure disorder that started before age 22 or a severe head injury that occurred before age 22." Concluding that Question 5 was aimed at screening for developmental disability "as it relates to mental retardation, " and finding no indication in J.F.'s medical records of this form of disability, Ms. Richer checked "No" to Question 5.

         (¶11} Ms. Richer additionally found no indication in J.F.' s medical records of mental illness. Based on the lack of indication of either mental illness or mental retardation in his medical records, Ms. Richer did not refer J.F.'s Level I screen to DOH for a Level II evaluation. J.F. was admitted ...

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