Five years have elapsed since the Medicare beneficiary group, Center for Medicare Advocacy, filed a lawsuit against CMS to end use of what was known as the “improvement standard” for approving occupational, speech and physical therapy claims. Despite a settlement three years ago, the issue remains unresolved. The Center has argued, with the help of organizations that advocate for Alzheimer’s, Multiple Sclerosis and Parkinson's patients that CMS’s settlement agreement remains on paper alone. Last week the U.S. District Court agreed and ordered CMS to develop a corrective action plan within 45 days that addresses their breach of the 2013 settlement agreement.
Full implementation of the desired alternative to the improvement standard – the maintenance standard –is a positive for post-acute providers like SNFs and HHAs and negative for Medicare Advantage Plans.
The crux of the CMA’s complaint is that CMS through its contractors, the Medicare Administrative Contractors (MACs) and Medicare Advantage Plans, have for years relied on the improvement standard for approving home health and SNF claims. Specifically, CMS policy dictated that the patient must benefit from the therapy such that their condition improves. That standard, of course, would rule out therapy for Medicare beneficiaries suffering from Alzheimer’s, Parkinson’s, Multiple Sclerosis and other chronic and debiliating diseases who, although they would benefit, are not likely to improve due to the nature of their illness.
In the settlement agreement, CMS agreed to apply a maintenance standard. A maintenance standard would permit a home health agency to provide complex physical, occupational and speech therapy to patients to maintain function or slow deterioration. To their credit, CMS does describe a maintenance standard in their provider education materials. As is so often the case, when complex government programs must be executed by people three or four steps removed from central decision making, execution has been flawed.
As required by the settlement agreement, a series of tests were run to analyze SNF and HHA claims for compliance with the maintenance standard. In the first report 95 percent of claims applied the standard appropriately. In the second report, 53 percent of claims sampled applied the standard incorrectly and had to be returned to the contractor. In a third report, the percentage of incorrect claims had dropped to 38 percent. We should note that the sample size of these claims numbered just 100.
Based on the affidavits that accompanied CMA’s complaint requesting enforcement of the settlement agreement, CMS appears to have three barriers to successful implementation of the maintenance standard:
- Adherence by Medicare Advantage organizations
- Training and education of MAC personnel
- The less than vigorous efforts by CMS
Several of the affidavits were submitted by people whose Medicare coverage was through a MAO. Either the beneficiary named the MAO – Humana and Healthnet, for example - or referred to them as a Medicare Advantage Organization or Plan. We have heard fairly consistently from providers that Medicare Advantage organizations tend to be very difficult to work with from both the care delivery and reimbursement perspectives. Several providers we know refuse to join MA networks.
We have tended to attribute the MAO’s action to a general skepticism about home health care which has a reputation for fraud, waste and abuse. The CMA’s filing, however, suggests that MA plans are also not staying on top of changes to benefit policy. There is little incentive for them to do so as increased home health and SNF utilization is not in the interests of their plans. Of course, the cases represented in CMA’s filing may be isolated and not represent larger trends.
Complaints about Medicare Administrative Contractors transcend reimbursement divisions in Medicare reimbursement. From IRFs to Clinical Labs to HHAs, providers routinely express concerns that the MACs inconsistently apply Medicare benefit policy and are not sufficiently staffed. While some of that might just be the usual chafing under the yoke of government, we have found some of the MACs prepayment determinations to be a bit unbelievable - as in the case of 100 percent improper claims determinations for HLS’s IRFs a couple of years ago. More recently home health agencies have expressed concern that the MACs will be unable to handle the volume of claims subject to the new pre-claim review in certain fraud-prone states.
MACs, many of whom have held their contracts since the inception of Medicare in the 1960s, have a strong influence on HHAs who are disproportionately reliant on Medicare payments. One or two claims denials for violating the improvement standard would be enough for an HHA to refuse admission to an Alzheimer’s, or Parkinson’s patient even in the presence of a doctor’s order. Providers, under these circumstances, are best served to wait until the MAC is sufficiently aligned with CMS on Medicare Benefit Policy before admitting patients for whom payment may be denied.
For good reason, the maintenance standard has gotten hung up on contractor interpretation and understanding. The court found that CMS failed to fully explain to contractors what the maintenance standard was and how it should be applied. Contractors and especially MACs, have a difficulty relying on nuanced interpretation of policy often preferring the “check the box” approach to compliance. Absent an explicit directive, contractors will adhere to the status quo.
CMS has 45 days to submit a corrective action plan to the court. If their change in policy actually reaches implementation this time - and we think it will - it should be a positive for HHAs and SNFs due to increases utilization by heretofore ineligible beneficiaries. The change is likely a negative for Medicare Advantage organizations.
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