Class Action Settlement Protects Medicare Patients

In the settlement last week of a nationwide class-action lawsuit against Medicare, the Department of Health and Human Services has agreed to stop their decades long use of the so-called “improvement” standard that required many beneficiaries to show a likelihood of medical or functional improvement before Medicare would pay for skilled nursing and therapy services.

According to the New York Times, under the agreement, which amounts to a significant change in Medicare coverage rules, Medicare will pay for such services if they are needed to “maintain the patient’s current condition or prevent or slow further deterioration,” regardless of whether the patient’s condition is expected to improve.

Medicare beneficiaries are entitled to coverage of home health services when they are homebound and in need of skilled nursing or therapy. The lawsuit challenged the application of an “improvement” standard in determining whether skilled care is needed. This same issue was addressed in another class action settlement in 1989. As a result of that settlement, the Medicare home health benefit was restructured to properly serve the whole Medicare patient population including coverage of the chronically ill and those who required therapy to maintain function or prevent accelerated deterioration. However over time, Medicare contractors that administer the benefit improperly imposed a standard that limited coverage to only those patients who showed improvement in function or their clinical condition.

Although last week’s decision is a boost to the tens of thousands of patients who need rehab services to maintain their ability to perform activities of daily living and avoid hospital and nursing home stays, the settlement will require a massive nationwide effort to overturn contractors’ resistance. CMS said it will conduct an educational campaign to target Medicare contractors, Medicare Advantage plans, administrative law judges and RACs.

“This is great news for home health, especially at this time when our efforts are focused on reducing hospitalizations and motivating patients to manage their chronic conditions,” said Vicki Hoak, PHA CEO.

Bill Dombi of the National Association for Home Care and Hospice (NAHC) said in an interview with CQ Roll Call that the industry won a court fight in the late 1980s to keep Medicare bill payers from using the improvement standard, but said the decision proved difficult to enforce. He speculated that contractors kept using the improvement standard as a way to make it easier to review claims.

“Over the years these myths get established and you can never get to the root cause of it,” he said of contractor use of the standard. Most, but not all, contractors apply the improvement standard to deny home health care claims, he said. Denials are a particular problem “in the physical therapy arena, less so in the skilled nursing side” of homecare.

Dombi said “the jury is still out on the degree of change” that will occur with the new settlement. “Three changes have to come,” he said. “Number one, they have to enforce the standard with either clearer or old print policy statements. It’s in the law under the policy now, and we can all read English, but for some reason somebody’s having a hard time understanding it.”

“Number two is getting the Medicare contractors to properly understand it and apply it.” And number three, “the action is going to have to be there to demonstrate to the providers…that in fact something has changed” and they will be paid, Dombi said.


From the Pennsylvania Home Care Association article