(a) The commissioner shall develop level of care criteria for new nursing facility admissions that ensure that the most intensive level of long-term care services is provided to persons with the highest level of need. The bureau of TennCare shall define the state's medical eligibility criteria for all long-term care services, including nursing facility and home- and community-based waiver services and adopt such standards by rule pursuant to the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. In circumstances under which such standards are initially adopted as emergency rules, the bureau of TennCare shall make the proposed emergency rules available through public notice or a posting on the TennCare website, and shall provide for a public hearing prior to the emergency rule's adoption and implementation. Any changes made to the emergency rules after the public hearing shall be posted on the TennCare website. The bureau of TennCare shall develop the preadmission evaluation (PAE) assessment tool, and shall make the determination of medical eligibility for long-term care services.

(b) Nursing facility residents who meet continued stay criteria and who remain financially eligible for medicaid shall continue to be eligible to receive nursing facility services or cost-effective home and community-based waiver services, and shall not be required to meet new nursing facility level-of-care criteria.

(c) Current enrollees in the statewide home and community-based services waiver program for persons who are elderly or adults with physical disabilities, or both, who meet continued stay criteria and remain financially eligible for medicaid shall continue to be eligible to receive cost-effective home and community-based waiver services and shall not be required to meet new nursing facility level-of-care criteria except for admission to a nursing facility.

(d) The commissioner shall develop and seek approval of a waiver application or amendment to a waiver application that allows persons who meet a lesser level of care, i.e., who do not meet new nursing facility level-of-care criteria, but are at risk of institutional care, to qualify for a more moderate package of medicaid-reimbursed home and community-based waiver services up to a specified enrollment cap.