For the last four years, CMS has operated under a settlement agreement that required it to abandon what was known as the “improvement standard” when providing therapy services under the skilled nursing and home health benefits.
Use of the “improvement standard” meant that Medicare Administrative Contractors, Medicare Advantage Plans and adjudicators were denying Medicare coverage because a patient was unlikely to improve or in retrospect failed to improve even when the patient needed skilled care to prevent or slow deterioration.
Under the January 2013 settlement agreement, CMS agreed to employ a “maintenance standard.” Under the maintenance standard, skilled nursing services are covered when necessary to maintain the patient’s current condition or prevent or slow further deterioration.
The shift from the improvement standard to the maintenance standard was expected to be positive for Home Health Agencies and Skilled Nursing Facilities as patients with debilitating diseases like Alzheimer’s Parkinson’s,’ ALS and MS gained coverage for therapy services. However, the implementation of the settlement agreement has not gone well.
In March 2016, the plaintiffs went back to court. Pointing to evidence that Medicare – especially Medicare Advantage plans like those sponsored by Humana – had denied coverage because they still applied the “improvement standard.” CMS’s response was, in some many words, “well, we told everybody. Not our fault they didn’t listen.”
The court agreed to a certain extent with CMS but nonetheless ordered corrective action. When both parties were unable to agree on a corrective action plan, the court imposed one last week. The main features of the plan are an explicit disavowal of the improvement standard, increased education of Medicare Administrative Contractors and Medicare Advantage Organizations, and an updated webpage dedicated to the settlement agreement that includes a summary statement of Medicare policy.
If the settlement agreement get implemented properly this time, most of the benefits are likely to accrue primarily to home health agencies and outpatient therapy providers. Dual eligible beneficiaries in nursing facilities may also benefit from the policy shift. There are approximately 5.2 million people over 65 suffering from Alzheimer’s and about 400,000 people suffering from MS, some portion of which are over 65, who will be eligible for therapy services under the maintenance standard.
