Proposed lawsuit settlement will alter home health Medicare reimbursement rules

The U.S. Department of Health and Human Services last week filed a proposed settlement in the class-action lawsuit, Jimmo vs. Sebelius, which challenged the long-standing “improvement standard”, which the lawsuit contends illegally denies Medicare benefits for a range of skilled nursing and home health services.

The lawsuit was filed in district court in Burlington, Vermont in January 2011 by the Center for Medicare Advocacy and Vermont Legal Aid on behalf of four residents of Vermont, Maine, Rhode Island and Connecticut and five health organizations: the National Multiple Sclerosis Society; the Parkinson's Action Network; the Paralyzed Veterans of America; the National Committee to Preserve Social Security and Medicare; and the American Academy of Physical Medicine and Rehabilitation.

The proposed settlement would allow thousands of Medicare beneficiaries with disabilities or chronic conditions to qualify for Medicare benefits for physical, speech and occupational therapy, and skilled nursing services that the program wouldn’t pay for previously.

“The problem is that Medicare, and indeed most private insurance in general, often requires people to demonstrate that they can improve in order to get coverage,” said Judith Stein, executive director of the Center for Medicare Advocacy in a video detailing the issue.

That meant that many people with chronic medical conditions such as multiple sclerosis, Parkinson’s disease, stroke, paralysis and a host of other medical conditions could not get reimbursement for things such as home health care, since their condition was not expected to improve.

If the proposed settlement is accepted by the court, the Centers for Medicare & Medicaid Services will re-write portions of its Medicare Benefit Policy Manual and will include rules to “maintain the patient's current condition or prevent or slow further deterioration” for skilled nursing and home health services. It would also certify a class in the lawsuit that has grown to more than 10,000 people nationwide, whose skilled nursing or home health services claims were denied by Medicare prior to Jan. 18, 2011, the filing date for the lawsuit.

The changes would apply to all people over the age of 65 who have both traditional Medicare coverage or are covered under a private Medicare Advantage plan. It would also cover those under 65 who qualify for the program due to a disability.

Lynn Gerber, MD, director of the Center for Study of Chronic Illness and Disability at George Mason University in Virginia, in a New York Times report called the settlement “a landmark decision for Medicare recipients with chronic illness and especially those with disability.”

“Disability frequently accompanies many chronic conditions,” Gerber continued, “and we often have no cures, so people are likely to experience progressive disability. Rehabilitation, physical and occupational therapy and skilled care are incredibly important in maintaining a person’s functional ability, performance and quality of life.”

No estimates are yet available on how much additional money the change in policy will cost Medicare, as it could potentially provide coverage for millions of people.