Origins and Goals of the Jimmo Settlement
On Jan. 24, 2013, the Center for Medicare Advocacy, Vermont Legal Aid and Jenner & Block, LLP announced a landmark settlement of long-standing Medicare policy issues. The Jimmo Settlement Agreement resolves national class action litigation about Medicare coverage policies for skilled nursing care and therapy services. In 2010 , a federal judge certified a nationwide class of Medicare beneficiaries and Providers affected by Medicare’s improper use of the "improvement standard" in determining when rehabilitation services and skilled care can be covered under Medicare. The effect of the Settlement will be that individuals confronted with the ruling will have their Medicare coverage reinstated and it may open the door for previously denied claims to be approved as well. This applies to home health, skilled nursing home care and outpatient rehabilitation services from physical therapy, occupational therapy and/or speech therapy. While CMS argues that it never established a formal improvement standard, the Settlement will ensure that a de facto standard cannot be used to deny coverage.
Central Terms of the Jimmo Settlement
Over the past four years, Medicare beneficiaries and providers alike have vocally expressed their frustration with several problematic Medicare coverage, eligibility and billing policies. In response to that frustration, Centers for Medicare & Medicaid Services (CMS) has now taken steps to re-visit decades-old Medicare coverage guidelines. However, the results of that re-evaluation are not yet clear, as we await new coverage determinations from CMS.
In January 2013, three providers and seven national, state and local organizations joined together to bring a class action lawsuit against CMS, claiming that the agency unlawfully denied Medicare coverage to patients who may fail to meet an unspecified "improvement standard" in their treatment plans. This "improvement standard" requires that patients demonstrate improvements (or objective indications of functional improvement related to their treatment). In Dec. 7, 2012, Judge Mazzant of the United States District Court for the District of Vermont granted the class certification under Rule 23(b)(2) of the Federal Rules of Civil Procedure. Under the terms of that class certification, members must represent Medicare beneficiaries whose skilled nursing facility or skilled home health claims were denied on the basis of the "improvement standard" from Jan. 18, 2011, to the present. The terms of this class certification also prohibit CMS from relying on any "improvement standard" in payment decisions for covered skilled nursing facility and/or skilled home health services that occur on or after Jan. 18, 2013.
Subsequently, CMS entered into an agreement with the plaintiffs on Nov. 4, 2013. The Jimmo Settlement Agreement, which has been ratified by the District Court for the District of Vermont, clarifies the applicability of Medicare’s Manual provisions on coverage of skilled nursing facility and home health services. In addition, the agreement addresses the meaning of the so-called "improvement standard" for skilled nursing facility and home health care.
The Jimmo Settlement Agreement is wide-ranging, but focuses specifically on the prospects for a patient’s "maintenance therapy" at home and in a skilled nursing facility. Previously, coverage of such therapy only was available to patients that could demonstrate improvement in their medical condition. That practice is contrary to the Medicare Claims Processing Manual (section 40.1), which includes the following explanatory note:
…even if there is no demonstrated clinical improvement in the patient’s condition, coverage of skilled services may be appropriate, if it is needed to maintain the patient’s current condition, prevent or slow further deterioration, and if the services are skilled and of a type generally accepted (and in some cases, required) as necessary for the safe and effective medical care of the patient. Coverage may also be appropriate where a skilled service must be furnished on an intermittent basis (e.g., skilled tube feedings or suctioning), even though improvement is not anticipated.
Under the Jimmo Settlement Agreement, CMS now will provide guidance to Medicare contractors and Medicare beneficiaries through revised versions of the Medicare Benefit Policy Manual (sections 30.1.1.A and 30.1.1.B) and the Medicare Claims Processing Manual (section 30.1.1.A and 30.1.1.B). These revisions to the Medicare Benefit Policy Manual and the Medicare Claims Processing Manual will make clear that Medicare coverage is available for skilled services provided to maintain a patient’s current condition or prevent or slow deterioration of the patient’s condition. Changes to the Medicare Benefit Policy Manual and the Medicare Claims Processing Manual are expected to be published in the Federal Register by Jan. 20, 2014.
Beyond these clarifications to the Medicare Benefit Policy Manual and the Medicare Claims Processing Manual, for the next five years, CMS will engage in outreach and education regarding Medicare’s skilled coverage standards in the context of maintenance therapy, including to physicians and other practitioners who are involved in planning and providing coverage for maintenance therapy. Furthermore, the parties will address any disputes related to CMS’ actions (or inaction) under the Jimmo Settlement Agreement in the United States District Court for the District of Vermont and/or the Eastern District of Pennsylvania.
Effects on Medicare Beneficiaries
The agreement clarifies longstanding standards for Medicare coverage to avoid misinterpretation of the requirements – specifically a requirement that a beneficiary is improving their condition at any given time in order to be eligible for Medicare coverage. The settlement reaches across traditional care lines and applies to services for individuals with chronic conditions and disabilities. The agreement clarifies that a beneficiary may qualify for skilled nursing or therapy services in two areas: The settlement expands coverage of skilled care for individuals with chronic but stable conditions. For beneficiaries with chronic conditions and stable impairments, skilled services are covered for maintenance of the patient’s condition if, as the jury found, the skilled service is needed to maintain the individual’s condition and to prevent further deterioration of the individual’s health, even if that individual will not improve or the condition will only improve temporarily.
Litigation Challenges and Clarifications After the Settlement
In the years following the settlement, there have been a number of legal challenges and clarifications, largely by parties emphasizing certain less clear aspects of the settlement agreement, often using the same tactics that led to the settlement agreement in the first place. For example, the settlement agreement set forth that the case would not have any precedential or precedential value for CMS, but the state Medicaid program may see fit to adopt the ruling because of its informational value. However, the Center for Medicare Advocacy has seen fit to trumpet Jimmo and highlight its relevance to state Medicaid programs in its newsletter, and subsequently litigated on behalf of beneficiaries in Ohio’s state Medicaid system. Similarly, the Center for Medicare Advocacy, Feinberg’s counsel in the Jimmo case, used the settlement agreement to threaten California Medi-Cal providers who challenge claims’ application of Jimmo, even though the court in Jimmo emphasized that "state Medicaid programs do not have the same obligations as those imposed under the Medicare Part A specific settlement." 43 Fed. Cl. at 513. The Center for Medicare Advocacy’s letter demanded that providers cease contesting such claims, as well as advising mediation coordinators that "adverse determinations" automatically entitled beneficiaries "to a mandatory continuation of benefits for the duration of the plan of care." The Center for Medicare Advocacy also asserted that through the settlement agreement, "the CMS moratorium on transfer of liability provisions was ‘repealed’ going forward," a contention the federal district court for the District of Vermont disagreed with. There, the court limited cost shifting to those services provided only while the beneficiary’s appeal of a denial of coverage is pending, and later in time than the appealed coverage determination , reasoning that cost shifting should not apply to services provided during the entire pendency of the appeal that are unrelated to the appealed cover decision. 47 F.Supp.3d at 249. Additionally, the settlement agreement indicated that the administrative contractors would have to devise a process for reviewing Medicare claims under the new standard, and a number of beneficiaries and providers alleged they faced difficulties in obtaining an RNL or being denied or "tentatively" granted reimbursement because the claims review process had been poorly implemented. After the settlement, in Arons v. United States Department of HHSG, the American Hospital Association noted that while the settlement reached had held that Part A payment may not be conditioned on a "meaningful improvement" of a beneficiary, the court also held that providers must still comply with Medicare’s documentation requirements regarding medically necessary treatment and services. 2014 WL 268632 (D.D.C.). The Center for Medicare & Medicaid Services responded by advising the American Hospital Association to file claims under the revised criteria mandating coverage for skilled care that is reasonable and necessary, as well as the former criteria requiring coverage based on improvement. Finally, the settlement agreement emphasized that it did not automatically preclude Medicare coverage of a skilled nursing facility stay during the pendency of a coverage determination, an aspect of the agreement that has since become confusing to settlement beneficiaries. For instance, when questioned about whether beneficiaries who contribute to a workplace retirement account could qualify for Medicare even if they are still employed, the Center for Medicare Advocacy remarked that except in instances involving a court-approved class action or settlement agreement where "coverage is ordered for the entire class," case-by-case adjudication remains appropriate.
Implementation and Compliance Issues: What Healthcare Providers Should Know
This is how healthcare providers must document the Medicare eligibility and coverage of their patients under the Jimmo Agreement.
Compliance Requirements for Healthcare Providers and Suppliers
The Jimmo Agreement has important implications for healthcare providers and suppliers. Depending on the type of provider or supplier, compliance requirements may include:
Documenting Conditions and Compliance Issues
One of the primary concerns healthcare providers will need to address going forward in order to comply with The Jimmo Agreement is documenting patient care, and how such care relates to Medicare coverage. Because Medicare eligibility under the Jimmo Agreement depends on whether the beneficiary is improving or maintaining a prior level of function with the skilled services the patient is receiving, providers will need to document in their medical records what the patient’s functioning was prior to receiving skilled services, as well as how the patient’s condition was changing over time — and the services that were being provided at the time of those changes — in order to demonstrate compliance with the new standard of Medicare coverage. Healthcare providers will need to show that the skilled services the patient is receiving are necessary in order to maintain the patient at a stable level of functioning or to prevent or slow overall functional decline — not just to help the patient improve. It is also important that providers use the appropriate language in their patient records, according to the Jimmo Agreement, so that the prescribed services can be "reasonably interpreted" as necessary not only for improvement of the patient’s condition, but also for maintenance of the patient’s current level of functioning.
Claims Audits
In addition to implementing the requirements outlined above, healthcare providers should be prepared for any Medicare claims audits. CMS indicates that it will review audits of previously denied claims based on whether the denials were based on a lack of documentation of improvement. That said, no claim will be denied for failing to establish improvement where the beneficiary’s condition is stable, deteriorating slowly, or the beneficiary is preventing slow deterioration "where the supplier is providing the required reasonable and necessary skilled services for safety and effectiveness." CMS has been tasked with communicating the new standard of coverage nationwide to all healthcare providers and suppliers – including intermediaries, carriers, Medicare Administrative Contractors, Recovery Audit Contractors, and qualified independent contractors – via training materials that are publicly available.
Other Steps Healthcare Providers Can Take
Healthcare providers can also take several other steps in order to be prepared for possible audits in light of the Jimmo Agreement, including: In addition to the steps above, providers should ensure that any litigation concerning claims denials based on the prior improvement standard be stayed. The Jimmo Agreement orders a stay in all such cases that are not pending on appeal to an administrative law judge. Healthcare providers will have an opportunity to submit a claim for reasonable attorneys’ fees when the government "concedes that a lawsuit brought by a Medicare beneficiary challenging such a denial is the result of the misapplication of an invalidated standard." Such accommodations are provided over a two year period after the settlement date (Jan. 24, 2013).
Future Consequences of the Settlement and Ongoing Developments
While the Jimmo Settlement Agreement is not immediately precedential for non-Medicare Act cases involving issues of the meaning of the "improvement standard," it could lay the groundwork for subsequent challenges of a similar nature to other courts. With the national trend toward addressing Medicare Act issues on a broader scale, including the development of precedent precedent in the area of case law, the common sense definitions built into the Settlement Agreement may help other courts beyond the Medicare Act context understand that the way these issues have been poorly defined in the past can affect patient care and the standard of care for various medical professionals. It is in these daily applications on the ground where the reach of the Settlement Agreement is most likely to have an impact . Also, the Settlement Agreement relies on the use of "indicators" of improvement and the role of those indicators in the Medicare Act system as well as in rehabilitation standards generally; the idea that a dividing line can be drawn between functional status and progress, and the willingness of many rehab professionals to adopt these rehabilitation standards in their own practice of medicine on a daily basis, could be a potent influence on future healthcare policy in general. These cross-decisions will only further build quality care in nursing homes and long-term care facilities throughout the country, as well as provide patients with more information to affect the quality of their care in those settings.
It should also be noted that the Settlement Agreement contains a 5-year reporting requirement. The Court will have the opportunity to better assess whether the major institutional providers such as Medicare are in fact utilizing the stipulations of the Settlement Agreement and the changes in the underlying laws in their day-to-day applications and down to the level of an individual case. It will be through these applications and the perspectives of patients seeking to utilize their rights under the Settlement, as well as monitoring by the CMS.