(a) For purposes of this section, the terms “mentally ill” and “specialized services” shall be as defined in Subsections (e)(7)(G)(i) and (iii) of Section 1919 of the Social Security Act and federal regulations.

(b) No nursing facility shall admit any person, irrespective of source of payment, who has not undergone a preadmission screening process by which the Department of Mental Health and Addiction Services determines, based upon an independent physical and mental evaluation performed by or under the auspices of the Department of Social Services, whether the person is mentally ill and, if so, whether such person requires the level of services provided by a nursing facility and, if such person is mentally ill and does require such level of services, whether the person requires specialized services. A person who is determined to be mentally ill and not to require nursing facility level services shall not be admitted to a nursing facility. In order to implement the preadmission review requirements of this section and to identify applicants for admission who may be mentally ill and subject to the requirements of this section, nursing facilities may not admit any person, irrespective of source of payment, unless an identification screen developed, or in the case of out-of-state residents approved, by the Department of Social Services has been completed and filed in accordance with federal law. The Commissioner of Social Services may require a nursing facility to notify, within one business day, the Department of Social Services of the admission of a person who is mentally ill and meets the admission requirements of this subsection.

(c) No payment from any source shall be due to any nursing facility that admits a resident in violation of the preadmission screening requirements of this section.

(d) A nursing facility shall notify the Department of Mental Health and Addiction Services when a resident who is mentally ill undergoes a significant change in condition or when a resident who has not previously been diagnosed as mentally ill undergoes a change in condition which may require specialized services. Upon such notifications, the Department of Mental Health and Addiction Services, under the auspices of the Department of Social Services, shall perform an evaluation to determine whether the resident requires the level of services provided by a nursing facility or requires specialized services for mental illness.

(e) The Department of Mental Health and Addiction Services, in consultation with the Department of Social Services, may no less than annually review, within available appropriations, the status of each resident in a nursing facility who is mentally ill to determine whether the resident requires (1) the level of services provided by a nursing facility, or (2) specialized services for mental illness. Nursing facilities shall grant to the Department of Mental Health and Addiction Services and the Department of Social Services access to nursing facility residents and their medical records for the purposes of this section.

(f) In the case of a mentally ill resident who is determined under subsection (b), (d) or (e) of this section not to require the level of services provided by a nursing facility but to require specialized services for mental illness and who has continuously resided in a nursing facility for at least thirty months before the date of the determination, the resident may elect to remain in the facility or to receive services covered by Medicaid in an alternative appropriate institutional or noninstitutional setting in accordance with the alternative disposition plan submitted by the Department of Social Services to the Secretary of the United States Department of Health and Human Services, and consistent with the Department of Mental Health and Addiction Services requirements for the provision of specialized services.

(g) In the case of a mentally ill resident who is determined under subsection (b), (d) or (e) of this section not to require the level of services provided by a nursing facility but to require specialized services for mental illness and who has not continuously resided in a nursing facility for at least thirty months before the date of the determination, the nursing facility in consultation with the Department of Mental Health and Addiction Services shall arrange for the safe and orderly discharge of the resident from the facility. If the department determines that the provision of specialized services requires an alternate residential placement, the discharge and transfer of the resident shall be made in accordance with the alternative disposition plan submitted by the Department of Social Services and approved by the Secretary of the United States Department of Health and Human Services, except if an alternate residential placement is not available, the resident shall not be transferred.

(h) In the case of a resident who is determined under subsection (b), (d) or (e) of this section not to require the level of services provided by a nursing facility and not to require specialized services, the nursing facility shall arrange for the safe and orderly discharge of the resident from the facility.

(i) Any person seeking admittance to a nursing facility or any resident of a nursing facility who is adversely affected by a determination of the Department of Mental Health and Addiction Services under this section may appeal such determination to the Department of Social Services within fifteen days of the receipt of the notice of a determination by the Department of Mental Health and Addiction Services. If an appeal is taken to the Department of Social Services the determination of the Department of Mental Health and Addiction Services shall be stayed pending determination by the Department of Social Services.