Medicare Rule Changes For Nursing Homes

In a major change in Medicare policy, the Obama administration has
provisionally agreed to end Medicare’s longstanding practice of
requiring that beneficiaries with chronic conditions and disabilities
show a likelihood of improvement in order to receive coverage of skilled
care and therapy services. The policy shift will affect beneficiaries
with conditions like multiple sclerosis, Alzheimer’s disease,
Parkinson’s disease, ALS (Lou Gehrig’s disease), diabetes, hypertension,
arthritis, heart disease, and stroke.

For decades, home health agencies and nursing homes that contract
with Medicare have routinely terminated the Medicare coverage of a
beneficiary who has stopped improving, even though nothing in the
Medicare statute or its regulations says improvement is required for
continued skilled care.  Advocates charged
that Medicare contractors have instead used a "covert rule of thumb"
known as the “Improvement Standard" to illegally deny coverage to such
patients. Once beneficiaries failed to show progress, contractors
claimed they could deliver only custodial care, which Medicare does not

In January 2011, the Center for Medicare Advocacy and Vermont Legal Aid filed a class action lawsuitJimmo v. Sebelius, against the Obama administration in federal court, aimed at ending the government’s use of the improvement standard.  After the court refused the government’s request to dismiss the case, and the administration lost in similar individual cases in Pennsylvania and Vermont, it decided to settle. 

As part of the proposed settlement, which the judge still must
formally approve, Medicare will revise its manual to make clear that
Medicare coverage of skilled nursing and therapy services “does not turn
on the presence or absence of an individual’s potential for
improvement” but rather depends on whether or not the beneficiary needs
skilled care, even if it would simply maintain the beneficiary's current
condition or slow further deterioration.

In addition, under the settlement more than 10,000 Medicare beneficiaries who received
a final non-appealable denial of Medicare coverage after January 18,
2011 (the date the lawsuit was filed) up to the end of the educational
campaign are entitled to a re-review of their claim denial.  

“The Jimmo settlement provides hope for thousands of
older and disabled people with chronic and long-term conditions who will
now have a fair opportunity to get access to Medicare and necessary
health care,” Judith Stein, Executive Director of the Center for
Medicare Advocacy, told ElderLawAnswers. 

In an article about the accord, the New York Times
notes that Medicare’s coverage of skilled care for beneficiaries with
chronic conditions “could also provide relief for families and
caregivers who often find themselves stretched financially and
personally by the need to provide care.”

Although the Times quotes a trustee of the Medicare program
that the change will cost Medicare more money, it could also save some
money because physical therapy and home health care may help keep
beneficiaries out of more expensive institutions like nursing homes and

See also "More Detail on the Proposed 'Improvement Standard' Settlement"

For more on the lawsuit from the Center for Medicare Advocacy, including a copy of the proposed settlement, click here.

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