The decades-long practice of automatically denying Medicare benefits when a patient’s condition has stabilized will end if the agreement signed by the parties in Jimmo v. Sebelius1 is accepted by Judge Christina Reiss, chief judge of the U.S. District Court for Vermont. This decision would fundamentally alter Medicare coverage of nursing home care, home health care and outpatient therapy by eliminating a restrictive interpretation of coverage.

Improvement Standard

Medicare pays for reasonable and necessary medical care. It has virtually been an article of Medicare faith that once a patient is no longer improving, coverage ceases. This was accepted by almost all of the professionals in the field, despite the fact that there was no statutory or regulatory provision to support it. Patients would be denied coverage based upon chart notes such as “chronic,” “requires maintenance therapy,” “medically stable” or “plateaued.” This became known as the “improvement standard.” It led to rule of thumb denials instead of individualized clinical assessments of coverage.

The de facto rule was that skilled services were covered as long as the patient was making measurable and demonstrable improvement. As soon as improvement could not be quantified, Medicare coverage ended, even if the patient had a skilled medical need to maintain their current condition or to prevent deterioration.

An example of the effect of the “improvement standard” is the named plaintiff, Glenda Jimmo. She was 71 years old, suffered from diabetes, was legally blind and had a below-the-knee amputation. Her physician prescribed home health aide services. Her Medicare claim was rejected with the comment that her “condition was stable with no acute changes.” The next level of review concluded that the “likelihood of a change in the patient’s condition requiring skilled nursing services was not supported in the documentation.” The administrative law judge concluded that “the Beneficiary was stable…” Her final administrative review before the Medicare Appeals Council found that “…neither her condition nor her plan of care changed significantly during the period at issue.”

The Litigation

Challenges to the “improvement standard” have a long and successful litigation pedigree going back as far as 19872 and as recently as 2010.3 Despite the many favorable decisions, the policy did not change. This was due to the fact that the district court decisions were not appealed by Medicare and were not binding nationwide.

Plaintiffs in Jimmo filed a nationwide class action suit against the Secretary of the U.S. Department of Health and Human Services (DHHS) challenging the “improvement standard.” Plaintiffs argued that it was a rigid and inaccurate test and that they were entitled to individualized medical assessments of their condition. The complaint in Jimmo alleged that the improvement standard had no basis in statute or regulation but was a “covert rule of thumb that operates as an additional and illegal condition of coverage.” Plaintiffs alleged that the “improvement standard” was created by contractors who process claims on behalf of Medicare and that the Secretary of the DHHS was aware of it and did not end it. The defendant responded with a motion to dismiss that was denied for the most part. The court in its order on the government’s motion to dismiss characterized the complaint as “…an allegation that the Secretary has adopted an unlawful and clandestine standard to determine whether Medicare beneficiaries are entitled to coverage.” A proposed settlement has been submitted to the court for approval.

The settlement would affect Medicare coverage for nursing homes, home care and outpatient therapy. It would permit continuing coverage for patients who required skilled care to maintain their medical condition or to prevent deterioration. Those most likely to benefit from the agreement are those with chronic illnesses such as Parkinson’s disease, multiple sclerosis, amyotrophic lateral sclerosis and post-stroke.

Manual to Be Revised

Medicare has agreed to rewrite the policy manual (Medicare Benefits Policy Manual) that its contractors rely upon, to make it clear that coverage decisions are to be individualized and not subject to the “improvement standard.” For example, the manual will contain a provision that under the nursing home and home health care programs, “Skilled nursing services would be covered where such skilled nursing services are necessary to maintain the patient’s current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided.” The need for skilled services will be covered when an individualized medical assessment demonstrates that the specialized judgment, knowledge and skills of a registered nurse or licensed practical nurse are necessary.

Educational Campaign

Such a change in an ingrained and long-standing practice would be accomplished through an educational component of the settlement agreement. Medicare would communicate the changes with providers and contractors. The effort would also include those making decisions on Medicare claims such as administrative law judges and the Medicare Appeals Council.

Review of Denied Claims

Those for whom a review will be available are those who received a denial that became final and non-appealable after Jan. 18, 2011. There must not have been a separate and independent basis for the denial other than the application of the “improvement standard.”

Conclusion

The most accurate description of the care that will be covered if the agreement is accepted is “skilled maintenance.” It would not be an extension of benefits but a restoration of benefits that should have been available. At the same time it is important to point out that it does not expand Medicare eligibility rules. For example, a home care beneficiary must still be confined to home, under the care of a physician, in need of skilled services, and under the care of a physician. Durational limitations are not changed. Medicare continues to offer a maximum of 100 days of skilled nursing coverage in a benefit period and the agreement would not increase that time period. The Medicare distinction between skilled and custodial remains in place. Patients who require no skilled care do not benefit from this agreement.

Daniel G. Fish is a principal in Daniel G. Fish, LLC.

Endnotes:

1. Jimmo v. Sebelius, No. 5:11-cv-17 (D. VT. filed Jan. 18, 2011).

2. Fox v. Bowen, 656 F.Supp. 1236 (D. Conn. 1987).

3. Papciak v. Sebelius, 742 F.Supp.2d 765 (W.D Pa 2010).