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Clarification of Therapy Coverage Under New Manual Updates Stemming from the Jimmo v. Sebelius Settlement.

on Monday, 10 February 2014 in Health Law Alert: Erin E. Busch, Editor

The Centers for Medicare and Medicaid (CMS) issued Transmittal #R175BP which became effective January 7, 2014, updating the Benefit Policy Manual sections governing skilled nursing facilities (SNF), inpatient rehabilitation facilities( IRF), home health (HH) agencies and outpatient therapy (OPT) benefit coverage requirements.


The settlement agreement in the Jimmo v. Sebelius case required CMS to take steps to assure that the so-called “improvement standard” is not used to deny or limit coverage of skilled nursing and skilled therapy services to patients without rehabilitation potential. Coverage decisions are to be made based on the beneficiary’s need for skilled care. As a practical matter, this means that therapy to either prevent or lessen deterioration of the beneficiary’s condition will not be denied strictly on the basis of the beneficiary’s improvement potential as along as the need for skilled care is documented. Previously, before the settlement and manual revisions, Medicare contractors applied a rule of thumb that required documentation of potential for improvement in order to support billing for skilled services.


CMS notes that nothing in the settlement agreement modifies, contracts, or expands existing eligibility requirements for Medicare coverage. The manual changes do, however, represent a significant change in what has come to be understood as the usual practice in claims determinations by Medicare contractors. The clarified manual sections apply to SNFs, IRFs, HH agencies, providers and suppliers of OPT including critical access hospitals, hospitals, rehabilitation agencies, physicians, certain non-physicians, and therapists in private practice who submit claims to Medicare contactors under Parts A and B as well as Medicare Advantage for physical therapy, occupational therapy and speech-language pathology services.


The revised manual sections now include this provision regarding determination of coverage:


“Coverage of skilled nursing care or therapy to perform a maintenance program does not turn on the presence or absence of a patient’s potential for improvement from the nursing care or therapy, but rather on the patient’s need for skilled care. Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, to prevent or slow further deterioration of the patient’s condition. “


See, for example, Chapter 7, Section 20.1.2 re: Home Health Coverage. The revised manual sections also include a section on “Maintenance Therapy” and additional guidance in appropriate documentation to aid in making correct coverage determinations. (See Chapter 8, Section re: guidelines for SNF coverage.)


Providers are well-advised to familiarize themselves with the additional documentation guidelines pertinent to the clarified manual sections. The confirmed availability of coverage for maintenance skilled care and therapy does not mean that it will be considered medically necessary unless the documentation shows that non-skilled services would not be equally effective.


Julie A. Knutson


Sidebar: The Jimmo Settlement


On January 24, 2012, the U.S. District Court for the District of Vermont approved a settlement agreement in the case of Jimmo v. Sebelius, in which the plaintiffs alleged that Medicare contractors were inappropriately applying an informal or rule-of- thumb “Improvement Standard” when making claims determinations for Medicare coverage of skilled care, home health and outpatient therapy benefits in conflict with existing Medicare policy. The settlement agreement required CMS to take a number of specific actions including issuing clarifications to existing program guidance (Manuals) and new educational materials regarding therapy coverage.


CMS acknowledges that Medicare policy has historically provided for coverage in cases where no improvement could be expected but skilled care would slow deterioration or maintain a maximum level of functioning for the beneficiary. The SNF regulations at 42 CFR § 409.32(c) set out the level of care criteria for coverage recognizing that the ” . . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.”


CMS’s revised educational materials include a MedLearn article (MM8458) and updated 1-800-MEDICARE scripts. CMS is also conducting national conference calls with providers, suppliers, Medicare contractors, administrative law judges, medical reviewers and CMS staff.



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