The End of the Medicare "Improvement Standard"

The End of the Medicare “Improvement Standard”

For decades, home-health care agencies and nursing homes have terminated Medicare coverage if patients did not show improvement.  This policy was referred to as the Medicare “Improvement Standard.”  Nothing in the Medicare regulations stated that improvement was required for continuing coverage.  However, the Improvement Standard was regularly applied when making Medicare coverage determinations.  Patient advocacy groups have long argued that the Improvement Standard adopted as a rule of thumb by providers was wrong.  It was wrong even though providers in review organizations believed this standard was a Medicare requirement.

 The Improvement Standard has now been officially rejected by the Centers for Medicare and Medicaid (CMS).  This clarification of Medicare policy has been undertaken by CMS as part of a settlement agreement in a class action lawsuit.  The Vermont class-action lawsuit, Jimmo v. Sebelius resulted in this change.  The plaintiffs in this case argued that denial of their Medicare coverage under the Improvement Standard was wrong.  Under the settlement agreement, CMS agreed to update its program manual to reflect its newly clarified policy.  The program manual now lays out its rejection of the Improvement Standard and emphasizes documentation.  The settlement, which was approved on January 23, 2013, required that CMS complete revisions to its policy manual within one year of the settlement’s approval. 

 CMS has been working with the plaintiff’s counsel to complete these requirements.  Final revisions to the policy manual will soon be published.  CMS stated in a transmittal on December 6, 2013

No ‘Improvement Standard’ is to be applied in determining Medicare coverage for maintenance claims that require skilled care.  Medicare has long recognized that even in situations where no improvement is possible, skilled care may nevertheless be needed to for maintenance purposes (i.e., to prevent or slow a decline in condition).  The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition. Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves. The manual revisions now being issued will serve to reflect and articulate this basic principle more clearly. [Emphasis in original.]

 What will this mean for Medicare beneficiaries? 

As a result of this change, patients who are benefiting from skilled services should continue to receive them.  No showing of significant improvements will be required to still be able to receive skilled services.  If services such as speech or occupational therapy are being provided in order to maintain patients’ current level of functioning or to avoid further deterioration, they will be eligible for coverage under Medicare.  This means that patients will face lower out-of-pocket costs.  Many patients will continue to receive Medicare coverage for long-term care services for much longer than would have been the case.

 It may take some time for providers to adjust to this policy shift.  For this reason, the settlement agreement also requires CMS to complete an educational campaign explaining the revisions to its policy manual.  Education will be directed at Medicare providers and contractors as well as beneficiaries.  Unfortunately, this policy update will not increase the availability of coverage for those who need non-skilled services, such as assistance with activities of daily living (ADLs).  The basic activities of daily living are dressing, bathing, eating and feeding oneself, personal hygiene and grooming, and the ability to walk or transfer oneself from bed to wheelchair. 

 To learn more about the effects of this policy shift or if you have questions about how to finance long-term care for yourself or a loved one, call our office at 888-822-8778.

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