Imagine your mom has a stroke. Once she is stabilized, she is sent to a skilled nursing facility for rehab. Then she goes home and gets some home health care and additional physical therapy. Medicare may pay, but for how long?

For many years, that was decided by the “improvement standard.” In other words, as long as this care helped mom become more mobile or improve her speech, Medicare would pay at least some of the cost (up to a maximum of 100 days per spell of illness).  But once she stopped getting better, Medicare would stop paying.

To the surprise of many, the improvement standard was an urban myth. It existed in no law or regulation.

A woman named  Glenda Jimmo sued the Centers for Medicare and Medicaid Services (CMS) over this issue, and almost four years ago the federal agency that runs Medicare settled her lawsuit a federal court. It agreed to pay for skilled nursing and rehab services that “are necessary to maintain the patient’s current condition or prevent or slow further deterioration.”  In other words, the nursing facility or home health agency didn’t have to show she was getting better in order to get paid. Medicare would cover mom’s rehab as long as it kept her from getting worse. That’s a huge difference. Here is a good summary of what the decision means.

But despite the settlement and an effort by CMS to explain the new standard to both providers and the outside auditors the agency hires to review Medicare claims, there continues to be widespread confusion about the rule. Auditors still sometimes demand that nursing homes or home health agencies reimburse Medicare for improper payments even though the providers met the agreed-upon maintenance standard. Overly-cautious providers, fearing that they’ll get hit with a huge retroactive Medicare bill, are reluctant to provide the extra nursing or therapy care. The result: A few patients pay for this care out of pocket, often at a cost of tens thousands of dollars. Most simply do not get the care they need.

Last week, Chief Judge Christina Reiss of US District Court in Vermont, who is overseeing the settlement, gave CMS two months to come up with a better plan to educate providers and auditors about the maintenance standard. She agreed with lawyers for the private Center for Medicare Advocacy and other groups that CMS has not done enough to clear up widespread confusion about the standard.

The Center for Medicare Advocacy says that “tens of thousands” of Medicare beneficiaries continue to miss out on rehab and skilled care that could help them stay stable. No-one knows how much proper implementation of Jimmo would cost Medicare, and figuring potential costs gets complicated. On one hand, Medicare will inevitably pay much more for those skilled nursing and therapy costs. However, keeping a patient stable at home could also reduce the risk of future hospitalizations–which Medicare would also pay for.

Adding to the confusion, the Jimmo rule further blurs the line between the kind of traditional medical treatment Medicare pays for and more custodial long-term care, which Medicare does not provide. Even with the 100-day limit, maintaining a patient’s stability begins to feel more like long-term care than medical treatment.

To further complicate the rapidly-evolving world of Medicare post-acute care, there is the ongoing uncertainty over what’s known as the three-day rule.

Medicare won’t pay for any skilled nursing or rehab unless a beneficiary has been hospitalized for at least three days. But in recent years, the agency has been pushing hospitals hard to keep patients in what’s known as observation status rather than formally admitting them. If a beneficiary spends three days in an observation unit without being formally admitted, she won’t be eligible for any Medicare skilled nursing benefit. Thus, the broader Jimmo rules won’t apply.

Sorting all this out–making sure Medicare beneficiaries get the care they deserve, paying providers for legitimate services while preventing fraud, controlling Medicare costs, and helping everyone understand all this—is not easy. And it is yet another example of just how complicated traditional fee-for-service Medicare has become.