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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.

A federal judge has approved the settlement to end Medicare’s longstanding practice of requiring beneficiaries to show a likelihood of improvement in order to receive coverage of skilled care and therapy services.  (See “Medicare to End Practice of Requiring Patients to Show Progress to Receive Nursing Coverage” and “More Details on the Proposed ‘Improvement Standard’ Settlement.”)

The Center for Medicare Advocacy, along with its co-counsel Vermont Legal Aid announced that the settlement in the case, Jimmo v. Sebelius, was approved on January 24, 2013, during a scheduled fairness hearing, “marking a critical step forward for thousands of beneficiaries nationwide,” according to the Center.

With only one written comment received, and no class members appearing at the fairness hearing to question the settlement, Chief Judge Christina Reiss of the United States District Court for the District of Vermont granted the motion to approve the Settlement Agreement on the record, while retaining jurisdiction to enforce the agreement in the future, as requested by the parties.

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 cover.

In January 2011, the Center and Vermont Legal Aid filed a class action lawsuit, 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.

Now that the settlement has been approved, the Centers for Medicare and Medicaid Services (CMS) will revise its Medicare Benefit Policy Manual and numerous other policies, guidelines and instructions 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, CMS must develop and implement a nationwide education campaign for all who make Medicare determinations to ensure that beneficiaries with chronic conditions are not denied coverage for critical services because their underlying conditions will not improve.

Noting that it is hearing from beneficiaries who are still being denied Medicare coverage based on an Improvement Standard, the Center stressed that “coverage should be available now for people who need skilled maintenance care and meet any other qualifying Medicare criteria. This is the law of the land – agreed to by the federal government and approved by the federal judge.  We encourage people to appeal should they be denied Medicare for skilled maintenance nursing or therapy because they are not improving.”