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Case eradicates Medicare's unwritten rule on nursing care

Health Care
Rochester Business Journal
November 16, 2012

The Department of Health and Human Services has just entered into a very significant proposed settlement in a federal class-action lawsuit challenging Medicare's unwritten rule that it will not cover nursing home or home health services if the patient is no longer improving and needs only maintenance therapy.
In a nursing home, for example, Medicare will provide coverage only if the patient requires daily physical, occupational or speech therapy or otherwise requires daily services from a registered nurse. In almost all cases, the coverage hinges on receiving one of those therapies.
As a practical matter, once the therapist concludes that the patient has reached his or her maximum rehabilitation potential, the facility notifies the patient that Medicare will no longer cover the bill, even though the patient might require the same level of therapy to keep from regressing. So while the Medicare benefit for nursing home care covers up to the first 20 days in full and up to 80 additional days with a co-payment, as a practical matter few people get more than 20 days of Medicare coverage for nursing home care, if that.
The problem has long been that while Medicare has claimed it does not apply a standard requiring that the patient be improving for coverage to continue, its manuals and decisions of administrative law judges have set forth a standard requiring improvement.
Under the proposed settlement, the Medicare Benefit Policy Manual will be revised to "clarify" that skilled therapy services are covered when an individualized assessment of the patient's clinical condition demonstrates that the specialized judgment, knowledge and skills of a qualified therapist are necessary for a safe and effective maintenance program. Such a maintenance program is one that either maintains the patient's current condition or prevents or slows further deterioration. The same standard will be applied to coverage when the services of a registered nurse-or, in some cases, a licensed practical nurse-are required.
The Medicare program will be required to conduct a nationwide educational campaign about this with its contractors and adjudicators, as well as with providers of the services in question. This would include, for example, Medicare Advantage organizations such as Excellus and MVP, which contract with Medicare to cover its beneficiaries through products like Blue Choice Medicare or MVP Gold. The customer service scripts on the Medicare 800 number also will be revised.
To monitor whether this policy is being followed, the Medicare program has also agreed to random sampling of claims reviewed by its contractors, as well as claims of individuals brought to its attention by the plaintiffs' attorneys.
The case will be certified as a class action on behalf of anyone receiving skilled nursing or therapy services in a nursing facility, home health or outpatient setting who received a denial of Medicare based on a lack of improvement potential. It includes not just those currently affected or who will be affected in the future, but also anyone in that situation for whom the denial of Medicare became final and non-appealable on or after Jan. 18, 2011, almost two years ago. Medicare will be required to develop a process for individuals in the class to identify themselves in order to be eligible for a new review.
The agreement contains the usual legal boilerplate that the defendant does not admit that there was any wrongdoing in the first place, but one has to believe that if the Medicare policy had not contained an unwritten improvement standard, the government would not have agreed to a massive campaign to educate everyone in the Medicare claims and appeals system, as well as affected providers, that this is not the correct standard.
For Medicare in particular, the dollar amount at stake when a claim is denied makes it very difficult for the beneficiary to hire an attorney to fight the system. Fortunately, in this case a public interest law center specializing in Medicare was able to bring the necessary resources to bear successfully, with the assistance of the local legal aid agency and a large private law firm. While it is sad that the Medicare system needs judicial intervention to cause it to comply with the law, at least on this issue it should be doing so in the future.
Rene Reixach is an attorney with Woods Oviatt Gilman LLP, where he concentrates his practice on health law. He formerly was executive director of the Finger Lakes Health Systems Agency.11/16/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email

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