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Assuring Post-Acute Care Treatment for Medicare Beneficiaries

October 31st, 2012

A federal judge in Vermont may soon act to approve a proposed settlement in a national class action suit, Jimmo v. Sebelius. In the case, the plaintiffs argue that Medicare contractors and administrative officials have been denying nursing and therapy services for patients who were not expected to show long-term improvements in their medical conditions. Patients with chronic conditions like multiple sclerosis, Parkinson’s disease, paralysis, cerebral palsy, skilled nursing visits for insulin injections for diabetics, and Alzheimer’s were denied Medicare and Medicare Advantage benefits under this so-called “Improvement Standard,” the lawsuit alleged.

The “Improvement Standard” refers to a standard that Plaintiffs have alleged, but that Defendant denies, exists under which Medicare coverage of skilled services is denied on the basis that a Medicare beneficiary is not improving, without regard to an individualized assessment of the beneficiary’s medical condition and the reasonableness and necessity of the treatment, care or services in question.

The agreed-upon changes would alter the Medicare manual to say that eligibility for skilled-nursing, home healthcare and outpatient physical therapy services coverage “does not turn on the presence or absence of beneficiary’s potential for improvement from the therapy, but rather on the beneficiary’s need for skilled care,” the settlement says. The proposed settlement would result in changes from the Centers for Medicare and Medicaid Services to its subregulatory guidance contained in the Medicare Benefits Policy Manual to clarify that therapy services in home health, skilled nursing facilities, and outpatient physical therapy are covered so long as the patient is eligible for the services regardless of their clinical prospects for improvement.

The impact of the settlement could be far reaching. Most importantly, the changes will prove helpful to chronically ill patients that are currently unable to access Medicare post-acute care services. Providers will still have to document that the services provided are “reasonable and necessary” for the diagnosis or treatment of a medical condition. They will also have to justify why skilled care is required. The focus on the skills needed to provide care rather the need for improvement will expand the number of Medicare beneficiaries eligible for post-acute care services.

The Settlement’s Potential Impacts

The overall impact on federal expenditures is unknown. On the one hand, financing post-acute care for stroke, Alzheimer and other patients could increase Medicare spending. Other channels of spending could decline to the extent that some of these services were funded for dual eligibles through the Medicaid program.

Palliative-care models. The decision could also have more important and far reaching implications for the expansion of evidence-based palliative care models. Evidence is mounting that coordinated palliative care — an interdisciplinary specialty that works to improve quality of life for patients with advanced illness — can enhance patient and family wellbeing and potentially save money. Hospital based palliative care programs have expanded rapidly since 2000. The number of palliative care teams in hospitals has tripled since 2000, to 63 percent today. The pending settlement could provide further incentives for more rapid diffusion of such models.

Pointing the way toward further changes. The settlement also raises a more fundamental question about the future of Medicare. Post-acute care spending overall could be reduced if the program adopted more bundled payment reforms and moved away from a siloed fee-for-service payment system. A move toward bundled payments would provide strong incentives to develop more innovative and effective approaches for post-acute care.

While the proposed settlement would expand coverage to additional patients, Medicare still restricts the use of home health and care coordinating services to a limited set of Medicare patients. Today, only homebound Medicare patients are eligible to receive home health care benefits — about 10 percent of all patients. However, virtually all spending in the Medicare program is associated with chronically ill patients, homebound and non-homebound.

Non-homebound patients with multiple chronic health care conditions in the traditional fee-for-service Medicare program would be the only patients not eligible for any care coordination services. Indeed patients with hypertension, diabetes, hyperlipidemia, hypertension, asthma, pulmonary disease, back problems, and depression are common patient profiles in the Medicare program. Yet, unless they are homebound, they are not eligible for any type of home health or care coordination services.

Including evidence-based care coordination services into the traditional fee-for-service program has great promise for reducing costs and improving health care outcomes. Indeed, transitional care programs have been shown in randomized trials to reduce hospital readmissions by 50 percent in Medicare populations, saving an average of $5,000 per patient. Adding other care coordination functions to manage non-homebound patients with multiple chronic conditions — such as comprehensive medication therapy management, health coaching, and the use of health teams — would add to these savings. These are services commonly found in Medicare Advantage plans, particularly the Special Needs Plans, but not in traditional Medicare.

The Jimmo v. Sebelius proposed settlement points us in the right direction, but even broader reforms need to be integrated into the Medicare program. Increasing access to skilled services based on patient need not expected outcome is certainly a move in the right direction. However, an even larger challenge facing the program is providing evidence-based prevention and care coordination programs for the 90 percent of Medicare patients that are not homebound. These interventions, based on data from  randomized trials, show great promise for reducing costs in the program and improving quality, two key goals for the next stage of health care reform.

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1 Trackback for “Assuring Post-Acute Care Treatment for Medicare Beneficiaries”

  1. An Important Change to Post-Acute Planning That Affects Hospital Providers (Us) - The Doctor Weighs In | The Doctor Weighs In
    November 5th, 2012 at 9:19 am

3 Responses to “Assuring Post-Acute Care Treatment for Medicare Beneficiaries”

  1. Ken Thorpe Says:

    Brad, the settlement agreement requires CMS to clarify its policies related to “maintenance therapy” provided by home health agencies, skilled nursing facilities, and outpatient therapy providers. The policy is not at all dependent on homebound status, which is still an eligibility requirement for home health services (but not for SNF or OPT services). In other words, in order to receive Medicare home health services of any type, the patient must be homebound as an initial threshold. Eligibility for SNF or OPT services is not determined by homebound status.

    Here are a couple of excerpts from the proposed settlement agreement at pp. 8-9 that support my statement:


    Manual Revisions

    1. The agency will revise the relevant portions of Chapters 7, 8, and 15 of the Medicare Benefit Policy Manual (MBPM) to clarify the coverage standards for the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) benefits when a patient has no restoration or improvement potential but when that patient needs skilled SNF, HH, or OPT services (SNF, HH, OPT “maintenance coverage standard”). The agency will also revise the relevant portions of Chapter 1, Section 110 of the MBPM to clarify the coverage standards for services performed in an inpatient rehabilitation facility (IRF).

    2. The manual revisions to be made pursuant to this Settlement Agreement will clarify the SNF, HH, and OPT maintenance coverage standards and IRF coverage standard only as set forth below in Sections IX.6 through IX.8. Existing Medicare eligibility requirements for coverage remain in effect. Nothing in this Settlement Agreement modifies, contracts, or expands the existing eligibility requirements for receiving Medicare coverage, including such requirements found in:

    a. Posthospital SNF Care, as set forth in 42 C.F.R. Part 409, Subparts C and D, and related subregulatory guidance;

    b. Home Health Services, as set forth in 42 C.F.R. Part 409, Subpart E, 42 C.F.R. Part 410, Subpart C, and related subregulatory guidance;

    c. Outpatient Therapy Services, as set forth in 42 C.F.R. Part 410, Subpart B, and related subregulatory guidance; and

    d. Inpatient Rehabilitation Facility services, as set forth in 42 C.F.R. Part 412, Subpart P, and related subregulatory guidance. (Proposed settlement document at p. 10-11)

  2. vincemor Says:

    Having watched Medicare’s post-acute benefit grow over the last quarter century to amount to almost 20% of total fee for service spending, the implications of the Jimmo vs. Sibelius settlement could be profound, affecting beneficiaries discharged to Skilled Nursing Facilities, Independent Rehabilitation Facilities and to home to receive home health agency care and/or outpatient therapy. As Dr. Flansbaum suggests, this could change the tone of discharges from the hospital, perhaps directing patients to get therapy, whether in an inpatient or outpatient setting, who might not otherwise have qualified. If the past is any predictor of provider and consumer response to this change, more patients discharged from hospital will receive services and they will receive them longer. Unfortunately, there is precious little evidence to suggest that this increase will improve the health and functioning of the population since some patients will clearly benefit from more care while others may not. There is little doubt that skilled care, from weight bearing exercise to simple ambulation training, to maintain the functioning of patients with multiple chronic illnesses can be beneficial. On the other hand, we have lots of experience suggesting that reimbursement drives even professionals’ definitions of what patients need, to the point that dying patients receive rehabilitation rather than hospice care because the reimbursement rate is higher.

    In addition to restricting access, the “rehabilitation potential” interpretation of Medicare skilled care eligibility has been used to maintain the myth that post-acute care and long term care are easily distinguished. However, each acute event and hospitalization reduces patients’ resiliency, but the recovery process is ill understood, particularly for the very old. While extra and more skilled rehabilitation can certainly help some, we still don’t know who will benefit, nor even how to measure that benefit!

    It is imperative that CMS, as well as the advocates for Medicare beneficiaries, carefully examine the consequences of the eligibility rule changes. It is highly likely that costs will increase in myriad ways and that the various segments of the post-acute provider community will seek to expand to meet increased “demand”. However, we understand the benefits and adverse outcomes patients experience since we must be able to determine that the changes have been “worth it”.

  3. Bradley Flansbaum Says:

    Can you clarify as this has been an issue with folks I have spoken with, including CMS. You mention:

    “Medicare Benefits Policy Manual to clarify that therapy services in home health, skilled nursing facilities, and outpatient physical therapy are covered”

    Do SNF’s qualify, as this is not homebound care. Any guidance would be of assistance, as this has implications for folks leaving hospitals.

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