CMS Settles Class Action Reversing Nursing Home Improvement Standard

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October 23, 2012

It is being reported that the Center for Medicare Advocacy, Inc. has settled its class action lawsuit with the Center for Medicare and Medicaid Services regarding the “improvement standard” that CMS has historically required in order to continue Medicare reimbursement for patients in nursing homes. The “improvement standard” resulted in Medicare coverage being denied in cases where a patient’s condition was found to be stable, chronic, not improving, or for “maintenance only.” The proposed settlement agreement will require CMS to revise relevant portions of its Medicare Benefit Policy Manual to clarify coverage standards for skilled nursing facilities, home health, and outpatient therapy benefits when a patient does not have restoration or improvement potential but still needs the services that are provided by those types of providers. CMS is also required to clarify similar coverage standards that are applicable to inpatient rehabilitation facilities.
The settlement agreement provides for input by legal counsel representing the class as to the development of new manual provisions to ensure conformance with the settlement.
The class action suit alleged that Medicare routinely denied coverage based on the improvement standard. The settlement will require CMS to clarify that the improvement standard will no longer be applied to deny coverage. The individuals that were most affected by this barrier include people living with a range of conditions including multiple sclerosis, Alzheimer’s disease, ALS (Lou Gehrig’s disease), spinal cord injuries, diabetes, Parkinson’s disease, hypertension, arthritis, heart disease, and stroke. Many of these individuals who were not showing progress but still required care, and the institutions that serve them, will now be able to obtain reimbursement for services that they require. If you have questions regarding the above, please contact John Fisher, CHC, CCEP, the author of this article, or any of the attorneys on the Health Care Focus Team of Ruder Ware.

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