Princeton Place v. N.M. Human Servs. Dep't

• Decision Date: 15 November 2021
• Docket Number: S-1-SC-36995
• Citation: 503 P.3d 319
• Parties: PRINCETON PLACE, Petitioner-Respondent, v. NEW MEXICO HUMAN SERVICES DEPARTMENT, MEDICAL ASSISTANCE DIVISION, Respondent-Petitioner.
• Court: New Mexico Supreme Court

503 P.3d 319

PRINCETON PLACE, Petitioner-Respondent,

v.NEW MEXICO HUMAN SERVICES DEPARTMENT, MEDICAL ASSISTANCE DIVISION, Respondent-Petitioner.

No. S-1-SC-36995

Supreme Court of New Mexico.

Filing Date: November 15, 2021

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Michelle A Hernandez, Tomas J. Garcia, Deana M. Bennett, Albuquerque, NM, for Petitioner-Respondent

New Mexico Human Services Department, John Robert Emery, Deputy General Counsel, Santa Fe, NM, for Respondent-Petitioner

Lorenz Law, Alice Tomlinson Lorenz, Albuquerque, NM, for Amici Curiae New Mexico Health Care Association, New Mexico Center for Assisted Living

THOMSON, Justice

{1} Federal and New Mexico regulations require the implementation of a preadmission screening and annual resident review program (PASARR)¹ to identify individuals with mental illness or intellectual disability applying to and residing in Medicaid-certified nursing facilities. See 42 C.F.R. § 483.128(a) (2020)² (noting the two levels of preadmission screenings); 8.312.2.18(B) NMAC ³ (specifying purposes of the PASARR screenings). The federal screening requirements were enacted to "ensure that individuals were not being placed in [nursing facilities] unnecessarily or without adequate supports." Medicaid Program; Preadmission Screening and Resident Review, 85 Fed. Reg. 9990, 9990 (Feb. 20, 2020 ). In this case, a young man diagnosed with spina bifida

(Applicant) was screened for admission to the Princeton Place (Princeton) nursing facility pursuant to PASARR. See 8.312.2.7(J) NMAC (defining "[n]ursing facility"). We address whether Princeton's decision not to forward Applicant's Level I screening for a Level II screening despite his spina bifida diagnosis violates the PASARR regulations.

{2} The New Mexico Human Services Department (HSD) initiated a recoupment action against Princeton to recover the Medicaid funds Princeton received during the time it was allegedly out of compliance with PASARR screening regulations pertaining to Applicant. See 42 C.F.R. § 483.122(b) (2020) (providing that nursing facilities are not eligible to receive Medicaid funding for periods when they are out of compliance with PASARR requirements). The district court upheld the agency recoupment action. HSD now challenges the Court of Appeals reversal of the district court, arguing that (1) the Court of Appeals erred in holding that the New Mexico Department of Health (DOH) PASARR Level I screening form is unenforceable because it was not promulgated pursuant to the State Rules Act, NMSA 1978, §§ 14-4-1 to -11 (1967, as amended through 2017), and (2) the Court of Appeals erred in holding that an applicant must have an indication of mental illness in addition to a developmental disability in order to be suspected of having a "related condition" pursuant to 42 C.F.R. § 435.1010 (2020). Princeton Place v. N.M. Hum. Servs. Dep't, Med. Assistance Div. , 2018-NMCA-036, ¶ 35, 419 P.3d 194.

{3} We conclude that Princeton's argument regarding the enforceability of the DOH Level I screening form and instructions was not preserved for appellate review. Nonetheless, we consider the issue a matter of general public interest and proceed to decide that question on the merits. We first hold that the screening form and instructions are interpretive agency guidance that does not require promulgation pursuant to the State Rules Act and that the Court of Appeals erred when it concluded that Princeton "incorrectly" answering the question in the form and failing to refer Applicant for a Level II screening was the basis for the HSD enforcement action. See id. ¶¶ 31-34. Next, we hold that the HSD interpretation of "related condition" under 42 C.F.R. § 435.1010 to include spina bifida

, thus requiring a Level II screening in this case, is not arbitrary and capricious, is supported by substantial evidence, and is otherwise consistent with the law. Accordingly, we reverse.

BACKGROUND

{4} Before delving into the facts of the case, a discussion of the purpose and procedures of the PASARR program is required.

A. PASARR Requirements

{5} The purpose of the PASARR regulations "is to prevent the placement of individuals with [mental illness] or [intellectual disability⁴ ] 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, 57 Fed. Reg. 56450, 56451 (Nov. 30, 1992). To effectuate this purpose, each state receiving federal Medicaid funding must "operate a preadmission screening and annual resident review program" that complies with federal law. 42 C.F.R. § 483.104 (2020). The corresponding regulations, 42 C.F.R. §§ 483.100 - 483.138 (2020), govern a state's responsibility for preadmission screening and annual resident review of individuals with mental illness and intellectual disability as defined by federal law. See 42 C.F.R. § 483.102.

{6} States with approved plans are eligible to receive Federal Financial Participation (FFP) reimbursement for the costs incurred by nursing facilities that provide services to Medicaid-eligible individuals. See 42 U.S.C. § 1396b (2018) ; 42 C.F.R. § 483.122(a). However, "[w]hen a preadmission screening has not been performed prior to admission or an annual review is not performed timely, in accordance with § 483.114(c), but either is performed at a later date, FFP is available only for services furnished after the screening or review has been performed." 42 C.F.R. § 483.122(b). As such, nursing facilities must conduct screenings consistent with PASARR regulations as a precondition to receiving Medicaid reimbursement from the state. See 42 C.F.R. § 483.122.

B. Level I and Level II Screenings

{7} There are two levels of preadmission screenings under the PASARR regulations, an initial screening (Level I) and a more thorough secondary screening (Level II) that can be triggered depending on the results of the initial screening. 42 C.F.R. § 483.128(a). Level I screenings "must identify all individuals who are suspected of having [a mental illness] or [intellectual disability] as defined in § 483.102." 42 C.F.R. § 483.128(a) ; see also 8.312.2.18(B) NMAC (providing that in New Mexico, "[a nursing facility] performs the [L]evel I screen which identifies an eligible recipient or member resident who has a mental illness or an intellectual disability"). Individuals are "considered to have intellectual disability" under 42 C.F.R. § 483.102(b)(3) if their condition is "described in the American Association on Intellectual Disability's Manual on Classification in Intellectual Disability" or they are found to have a "related condition " defined as follows:

Persons with related conditions means individuals who have a severe, chronic disability that meets all of the following conditions:

(a) It is attributable to—

(1) Cerebral palsy

or epilepsy ; or

(2) Any other condition, other than mental illness, found to be closely related to Intellectual Disability because this condition results in impairment of general intellectual functioning or adaptive behavior similar to that of mentally retarded persons, and requires treatment or services similar to those required for these persons.

(b) It is manifested before the person reaches age 22.

(c) It is likely to continue indefinitely.

(d) It results in substantial functional limitations in three or more of the following areas of major life activity:

(1) Self-care.

(2) Understanding and use of language.

(3) Learning.

(4) Mobility.

(5) Self-direction.

(6) Capacity for independent living.

42 C.F.R. § 435.1010.

{8} In order to assist nursing facilities with Level I screenings, the DOH provides a screening form and instructions that reflect PASARR regulatory requirements. At issue here is Question D-5 of the screening form in use at the time of Applicant's screening, which asks, "Is there any indication [in Applicant] of developmental disability⁵ (a severe, chronic disability that manifested before age 22)?" The instructions accompanying the form provide the following guidance for answering Question D-5: "Any 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." (Emphasis added.) A "yes" answer to Question D-5 requires a Level II screening. See 8.312.2.18(B) NMAC ("When an eligible recipient or member resident is identified, the [nursing facility] refers him or her to the DOH [developmental disabilities support division] for a PAS[A]RR level II evaluation.").

{9} The function of a Level II screening is to evaluate and determine whether nursing facility services and specialized services are needed. See 42 C.F.R. § 483.128(a) ; 8.312.2.18(B) NMAC. According to federal and New Mexico regulations, this is a decision that must be made by the state mental health and intellectual disability authority. See 42 C.F.R. § 483.106(d) ; 8.312.2.18(B) NMAC. The regulations also make clear that a state mental health authority may not delegate its responsibility for evaluations and determinations to nursing facilities. 42. C.F.R. § 483.106(e)(iii). In determining the placement of applicants, "the evaluator must prioritize the physical and mental needs of the individual being evaluated, taking into account the severity of each condition." 42 C.F.R. § 483.132(b). In making this determination, the evaluator must rely on medical data, including "(1) Evaluation of physical status (for example, diagnoses, date of onset, medical history, and prognosis); (2) Evaluation of mental status (for example, diagnoses, date of onset, medical history, likelihood that the individual may be a danger to himself/herself or others); and (3) Functional assessment (activities of daily living)." 42 C.F.R. § 483.132(c). The Level II screening...