CMS & Advocates Reach Proposed Settlement Agreement to Eliminate “Improvement Standard”

Dec 10, 2012

Medicare Will Cover Skilled Nursing & Therapies Needed to Maintain a Beneficiary’s Condition

December 10, 2012

 What is the issue?

A class-action lawsuit filed in early 2011 on behalf of Medicare beneficiaries (Jimmo v. Sebelius) challenged the common practice of denying Medicare coverage of (1) skilled nursing and (2) occupational therapy, physical therapy, and speech-language pathology services to beneficiaries whose conditions were not improving. Although such an “improvement standard” was never included within Medicare law and regulation, it has been widely applied in practice.

In October 2012, CMS and advocates reached an agreement to eliminate the improvement standard. Though the settlement agreement applies to services provided in skilled nursing facilities, outpatient therapy settings, and home health agencies, it also includes limited changes to inpatient rehabilitation hospitals/units.

A proposed settlement agreement in the Jimmo v. Sebelius case was preliminarily approved by a federal judge in November. Plaintiffs hope the judge will issue permanent approval of the settlement in late January or shortly thereafter. If approved, CMS will revise Medicare manuals to make clear that skilled nursing and therapy may be covered if such services are needed “to maintain the patient’s current condition or to prevent or slow further deterioration” (Proposed Settlement Agreement, p. 13). Thereafter, CMS will launch an educational campaign to inform Medicare providers, contractors, and adjudicators of the changes.

When will these changes take effect?

According to the Center for Medicare Advocacy, one of the plaintiffs in the lawsuit, “The Settlement Agreement standards for Medicare coverage of skilled maintenance services apply now” (Center for Medicare Advocacy, Frequently Asked Questions). For example, the Center notes that the court decision is retroactive to the date the case was filed; thus, beneficiaries who have been denied services based on the “improvement standard” may be able to have their claims re-reviewed. Moreover, beneficiaries currently seeking skilled nursing or therapy services should not be denied if such services are needed to maintain (or prevent or slow deterioration in) a beneficiary’s condition.

How does this settlement agreement affect Medicare beneficiaries and the Medicare system?

The settlement agreement has tremendous implications for individuals with disabilities or chronic conditions. Increased access to skilled maintenance services may enable Medicare beneficiaries to remain in their residence of choice for longer periods of time or even indefinitely. Though some experts predict the ruling will result in significant cost increases to Medicare, others anticipate savings as a result of hospitalizations and nursing home placements are delayed or prevented.

How does this decision affect social workers?

The term therapy in the Jimmo v. Sebelius case does not refer to psychotherapy; therefore, the proposed settlement agreement will not affect clinical social workers who provide psychotherapy. In settings in which medical social work services are part of skilled nursing and therapy services, however, client access to social work services may improve as a result of the Jimmo decision. Specific outcomes will vary by employer.

Moreover, social workers will play an integral role in advocating for beneficiaries to receive the services to which they are entitled:

  • Educating beneficiaries and colleagues about eligibility for skilled nursing and therapy services
  • Helping beneficiaries review claim denials and file appeals
  • Connecting beneficiaries who need additional information or advocacy with resources

How can social workers and Medicare beneficiaries access additional information on this topic?

The Center for Medicare Advocacy Web site includes a great deal of information regarding the settlement agreement. Furthermore, the Center welcomes inquiries from beneficiaries and advocates who experience problems in applying the settlement agreement.


Chris Herman, MSW, LICSW

NASW Senior Practice Associate


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