The Nursing Home Reform Act was passed as part of the Omnibus Budget Reconciliation Act of 1987 (OBRA-87), and amended by Public Laws 100-203 and 101-508, creating the Preadmission Screening and Resident Review (PASRR) program.

The state mental health authority, DMH, is responsible for ensuring that an evaluation of an individual's need for mental health services and placement in a nursing facility occurs when the individual has, or is suspected of having, a mental disability. Through an interagency agreement with the state Department of Health Care Services (DHCS), DMH contracts for an independent psychosocial, psychiatric and physical evaluation of persons admitted to nursing facilities.

When the comprehensive field evaluation identifies an individual in need of specialized services, PASRR facilitates the transfer to an acute psychiatric facility. When the need for mental health services or another type of placement is identified, DMH informs the individual evaluated, the nursing home administrator, the treating physician, and the DHCS field office in charge of Long Term Care (LTC) Treatment Authorization Requests (TARS). DMH sends copies to the facility Administrator, for distribution to the Conservator (if one has been appointed by the court) and the County Mental Health Plan.