For years, it has been an article of faith that Medicare would not pay for services such as skilled nursing or physical therapy unless that care improved a patient’s health status. I cannot tell you how many times I’ve heard doctors, nursing homes administrators, and even case workers say Medicare would stop paying once a patient was no longer getting better.
It turns out that guideline—often called the “improvement standard”—never existed. At least not officially. Exactly a year ago, Medicare settled a lawsuit called Jimmo v. Sebelius that clarified the real rule: Medicare will pay for skilled services if they are “reasonable and necessary to prevent or slow further deterioration.” Medicare coverage “cannot be denied based on the absence of potential for improvement or restoration.”
The settlement likely makes skilled care accessible to many more Medicare recipients. A helpful Powerpoint presentation from the agency explains the rules in relatively clear language here.
Two weeks ago, the government updated the Medicare manual—the official guidelines for providers. And it has begun an extensive educational campaign to help them understand the rules. Yet, it is important that consumers know about this new interpretation as well.
What does this mean? Imagine you have a severe stroke. Before Jimmo, most people thought Medicare would pay for physical therapy only as long as that PT was helping you get better. For instance, Medicare would pay if therapy helped increase the number of steps you could walk without assistance. Now, Medicare will pay for PT even if it only helps you maintain your current ability to walk.
Interestingly, Medicare insists that Jimmo did not change its rules in any way. The settlement says, “Nothing in this Settlement Agreement modifies, contracts, or expands the existing eligibility requirements for receiving Medicare coverage.”
And keep in mind other restrictions still apply. For instance, Medicare will only pay for skilled nursing care after a patient has been hospitalized for at least three days. And, at least for now, a patient who is in a hospital for observation but has not been formally admitted does not qualify. Medicare will pay for no more than 100 days of skilled care after a hospitalization. And Medicare will not pay for skilled care if needed services can be provided by the patient herself, her family, or by home health aides.
However, the agreement opens the door for many more Medicare beneficiaries to receive skilled care. It even makes it possible for some people who were denied coverage in the past to appeal. The Center for Medicare Advocacy has some useful information on its Website about how to do that.
How did this misunderstanding go on for so long? I suspect one reason is the way Medicare audits skilled facilities and other providers. If a facility charges Medicare for care that an audit later determines was inappropriate, the provider must reimburse the government for that payment. Of course, it already paid the nurses, therapists, and others for the service and must eat the cost.
So, out of an abundance of caution, providers gradually raised the bar, telling patients that Medicare would not pay for certain services, and either not providing them at all or doing so only if the patient paid out of pocket. Gradually, the “improvement standard” became cast in stone even though no Medicare rule ever required it.
Critics fear the broader standard will add significantly to Medicare costs. But supporters insist that greater access to skilled care in the short term will result in fewer hospitalizations and lower costs in the long run.
Those consequences can’t be ignored. But, for now, Medicare has clarified an important rule that will make skilled care available to many more Medicare beneficiaries.