42 CFR §483.110

1. (a)Basic rule. The State in which the individual is a State resident (or would be a State resident at the time he or she becomes eligible for Medicaid), as defined in § 435.403 of this chapter, must pay for the PASARR and make the required determinations, in accordance with § 431.52(b).
2. (b)Agreements. A State may include arrangements for PASARR in its provider agreements with out-of-State facilities or reciprocal interstate agreements.