Medicare Part B “Improvement Standard” Law Suit
On January 24, 2013, the federal District Court approved the proposed settlement agreement in
Jimmo v. Sebelius first entered into on October 16, 2012, finding the Settlement Agreement to be
“fair, adequate, and reasonable.”
Notably, the Court did not modify the terms of the proposed settlement agreement, and dismissed
the action with prejudice. This case centers on the “Improvement Standard” in Medicare that
requires that an individual show improvement in his or her condition or functional status in order
to qualify for Medicare coverage of therapy services. The plaintiff in this case alleged that this
standard wrongfully denies Medicare coverage to patients suffering from chronic conditions and
who are in need of skilled nursing facility (SNF) care and home health (HH) care, as well as
outpatient therapy (OPT).
In the Settlement Agreement, CMS is committed to revising the relevant portions of Chapters 7,
8, and 15 of the Medicare Benefit Policy Manual, within 1 year of the Court’s approval of the
Settlement Agreement, to "clarify" the coverage standards to include SNF, HH, and OPT
benefits when a patient has no restoration or improvement potential, needs those skilled
services. The manual is also be revised to clarify the coverage standards to include services
performed in an inpatient rehabilitation facility (“IRF”).
Additionally, CMS is required to engage in a nationwide educational campaign to communicate
the clarified coverage standards. In light of the Court’s “so ordering” the Settlement Agreement,
CMS must now finalize and issue the revised manual provisions and carry out the educational
campaign by January 23, 2014.
The Settlement Agreement also provides for a process for “rereview”
of the denial of certain
claims of class members (defined to include certain Medicare beneficiaries who received a denial
of coverage, which became final and nonappealable
on or after January 18, 2011). By February
4, 2013, CMS is required to inform the plaintiffs’ lead counsel of the process of rereview,
including to whom class members should identify themselves to obtain rereview.
Notably, no “provider or supplier of Medicare services or Medicaid State Agency is permitted to receive rereview
. . . on behalf of or by assignment from a class member.”
To the extent that providers have taken a “wait and see” approach based on how CMS revises the
manual, there does not appear to be anything in the final Settlement Agreement to warrant
reconsideration, as the Court’s approval did not effect an immediate change in CMS policy or
practice. Otherwise, as previously discussed, to the extent that providers’ internal billing policies
have explicitly required an actual improvement as a condition to billing Medicare, they can
revise their policies to strike that requirement and perhaps provide inservice
training as necessary, but otherwise it is advisable to await further guidance from CMS or the Medicare
Administrative Contractor.
For additional LeadingAge NY analysis, please click here.
Contact: Patrick Cucinelli, pcucinelli@leadingageny.org, 5188678827.
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