Courts Reject "Urban Legend" That Medicare Nursing Coverage Requires Improvement

In welcome news for seniors and the disabled with chronic conditions, two federal courts in the past two months have ruled that Medicare's coverage of skilled care does not require a beneficiary to show improvement. Instead, both courts said that Medicare can pay for skilled care if it is needed simply to preserve a patient's current functioning or prevent further decline.

Home health agencies and nursing homes that contract with Medicare routinely terminate the Medicare coverage of a beneficiary who has stopped improving, adhering to what Medicare advocates have referred to as an "urban legend" that such beneficiaries are receiving "custodial care," which Medicare does not cover. These beneficiaries could include those with chronic conditions and disabilities like multiple sclerosis, Alzheimers disease, ALS, and broken hips.

In terminating coverage, the Medicare contractors are not following the Medicare statute or its regulations, neither of which says improvement is required for continued skilled care. "The improvement standard derives instead from references in some Medicare manual provisions, which have been refined, simplified, and emphasized in contractors' internal guidelines over time" and has become "a part of Medicare culture," according to attorneys at the Center for Medicare Advocacy, which has led the fight to overturn the improvement standard.

The Obama administration has so far been unwilling to correct its guidelines, so beneficiaries denied coverage have had to resort to the courts -- and lately they've been winning. In late September, a federal district court ruled that Medicare should not have stopped payments to a beneficiary in a nursing home simply because she was not improving.

Eighty-one-year-old Wanda Papciak had been admitted to the nursing home for rehabilitative care following hip surgery. Medicare paid for Ms. Papciak's care for about a month, but then determined that she no longer needed skilled care because she was unlikely to improve further. Medicare denied payment for 10 days of services, concluding that during that time Ms, Papciak had not received the skilled care it covers but only "custodial care," which Medicare does not pay for.

Ms. Papciak sued the Obama administration, arguing that Medicare should have considered whether she required skilled nursing care to maintain her current level of functioning.

On September 28, 2010, the U.S. District Court for the Western District of Pennsylvania ruled in favor of Ms. Papciak, concluding that "[t]he restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities." (For the full text of the court's decision, click here.)

The second case involved Sandra Anderson, a 60-year-old woman who had been receiving home health care covered by Medicare following a second stroke. When Medicare cut off her benefits, she also sued.

Ruling that "[a] patient's chronic or stable condition does not provide a basis for automatically denying coverage for skilled services," the U.S. District Court for the District of Vermont sent Ms. Anderson's case back for reconsideration in light of its determination. (For the full text of the court's decision, click here.)

"Beneficiaries are frequently told that Medicare will not cover skilled services if their underlying condition will not improve," a group of 17 House Democrats wrote in a letter to the Obama administration requesting that it change its policies. "For example, as people with multiple sclerosis are often not likely to improve, skilled services such as physical, occupational and speech therapies that are necessary to slow the progression of the disease, or maintain current function, are denied. As a result, these individuals conditions deteriorate --frequently leading to more intense, more expensive services, hospital or nursing home care."

However, because the court opinions apply only to their districts, lawsuits will likely continue until the Obama administration instructs its contractors to follow the law.

For a New York Times article on the two court decisions, click here.

For a Clearinghouse Review article on the improvement standard by attorneys at the Center for Medicare Advocacy, click here.