HHS Agrees to End Practice of Denying Medicare Coverage for Skilled Care & Related Home Health & Therapy Due to Lack of Patient Improvement

Edith Masterman, a Plaintiff in Lawsuit Seeking end to Medicare practice of denying Skilled Care & Home Care and Therapy benefits to Chronically Ill for patient's inability to improveThe U.S. Department of Health and Human Services (HHS) has entered into a proposed settlement of a lawsuit in which HHS agreed to revise portions of the Medicare Benefit Policy Manual to stop the long-standing practice of denying Medicare Skilled Care and related home health and therapy benefits on the basis of a lack of improvement of the patient.

The proposed Settlement Agreement, filed October 16, 2012 in a lawsuit pending in the U.S. District Court in Vermont, may result in a significant increase in future Medicare benefits to cover “Skilled Care” (delivered by a nurse or doctor) along with related home health and therapy services for Medicare patients who suffer from chronic conditions.

The proposed Settlement Agreement must be approved by the Court before it would go into affect. According to reporting by the New York Times, the parties have indicated that Court approval is expected.

According to the Center for Medicare Advocacy, which is plaintiffs’ counsel in the pending lawsuit, “Nearly half (46%) of all Medicare beneficiaries have three or more chronic conditions, the majority of which need therapeutic care.”

However, patients with chronic conditions (such as paralysis, Multiple Sclerosis, Alzheimer’s Disease, Parkinson’s Disease, or Lou Gehrig’s disease) often are unable to demonstrate that they would improve as a result of Skilled Care and related home health care and therapy services, even though they may need these services in order to avoid deterioration of their conditions and further hospitalizations. Therefore, because they cannot demonstrate improvement, up to now they frequently have been denied Medicare coverage of such care under the so-called “Improvement Standard” that has long been applied by Medicare providers and suppliers.

Terms of the Settlement

The proposed Settlement Agreement was reached between the government and plaintiffs’ counsel in a lawsuit that had been filed in January, 2011 by the nonprofit Center for Medicare Advocacy (CMA).

In the lawsuit, CMA acts as legal counsel for a group of chronically ill patients who claim that they were denied Medicare benefits for needed Skilled Care and related therapy and home health care because they were unable to demonstrate improvement due to their chronic conditions.

In the litigation, plaintiffs challenged the practice of denying coverage on the basis of failure of the patient to improve, arguing that the “Improvement Standard” is not specifically permitted under the Medicare Statute and therefore violates the law. In settling the proposed lawsuit, the government did not admit that the practice violates the law, but voluntarily agreed to change it as provided in the proposed Settlement Agreement.

If the Settlement Agreement is approved by the Court, HHS has agreed that the Centers for Medicare and Medicaid Services (CMS) will issue revisions to portions of the Medicare Benefit Policy Manual to make clear that in the future claims for Skilled Nursing Facility (SNF), Home Health (HH), Outpatient Therapy (OPT) or Inpatient Rehabilitation Facility (IRF) benefits shall no longer be denied on the basis of a failure or inability of the patient to improve, provided that (i) the patient does have a medically established need for “Skilled Care” as part of such requested care, and (ii) all other existing Medicare standards and requirements for coverage by such benefits are met.

The changes would apply going forward for all people on Medicare who are 65 and older, as well as for those of any age with disabilities who qualify for Medicare. The changes would apply both to the traditional Medicare program and to private Medicare Advantage plans.

If the Court approves the Settlement Agreement, HHS also agreed that as part of the proposed settlement, it would conduct a specified educational campaign to educate Medicare providers and suppliers about the revised standard, with oversight of the campaign by plaintiffs’ counsel in the lawsuit. This process would be finished within a year after the Court’s approval of the Settlement Agreement.

As part of the proposed settlement, anyone who has received a Final Denial of a Medicare Claim for any of the services listed above at any time after January 18, 2011 (the date on which the lawsuit was filed), on the sole basis of failure or inability to meet the so-called “Improvement Standard,” could opt in to a class of plaintiffs that would be certified by the Court. This would mean they could file a claim within a stated period of time to have their Medicare Claim re-examined and paid if they meet the new standard.

More information about the proposed Settlement Agreement is available on the website of the Center for Medicare Advocacy (CMA), counsel to the plaintiffs in the pending lawsuit.


As referenced above, the plaintiffs in the lawsuit allege that the long-standing practice of Medicare providers and suppliers of denying such claims on the basis of failure to meet the so-called “Improvement Standard” is illegal and in violation of the Medicare Statute.

As described by the Center for Medicare Advocacy (CMA), “the “Improvement Standard” is shorthand for Medicare coverage denials issued on the grounds that the individual’s condition is stable, chronic, not improving, or that the services involved are for “maintenance only.”

“The use of an Improvement Standard is not supported by Medicare law. Under the law and related regulations it is not necessary to improve in order to get coverage,” CMA alleges.

“The Improvement Standard’s application unfairly targets paralyzed individuals, including veterans, people with Multiple Sclerosis, Alzheimer’s Disease, Parkinson’s Disease, and ALS, who need the care they are being denied,” CMA further alleges.

Judith A. Stein, Director of the Center for Medicare Advocacy, told the New York Times that “As the population ages and people live longer with chronic and long-term conditions, the government’s insistence on evidence of medical improvement threatened an ever-increasing number of older and disabled people.”

“In many cases, she said, the denial of coverage led to a denial of care because most people cannot afford to pay for these services on their own,” according to the Times.

Mrs. Edith Masterman, one of the individual plaintiffs in the case is quoted by CMA as saying, “Following a hospital stay and three months in a rehabilitation facility in early 2010, I was released to home care. Although my doctors state that I need physical therapy, the home health agency denied me this care because, as they say, my wound is chronic and will never heal and therefore these services are not covered by Medicare.”

A video of Ms. Masterman in her home, describing her situation, is posted on the website of the Center for Medicare Advocacy (CMA):

According to reporting by the New York Times, “The lead plaintiff, Glenda R. Jimmo, 76, of Bristol, Vt., has been blind since childhood. Her right leg was amputated below the knee because of blood circulation problems related to diabetes, and she is in a wheelchair. She received visits from nurses and home health aides who provided wound care and other treatment, but Medicare denied coverage for those services, saying her condition was unlikely to improve.”

“Another plaintiff, Rosalie J. Berkowitz, 81, of Stamford, Conn., has multiple sclerosis, but Medicare denied coverage for home health visits and physical therapy, on the ground that her condition was not improving,” the Times reported.

Dr. Nicholas LaRocca of the National Multiple Sclerosis Society, which joined in the lawsuit brought by the Center for Medicare Advocacy (CMA), is quoted on CMA’s site as saying, “We must terminate the misapplication of policy which is preventing people with MS and other chronic illnesses from receiving medically necessary care to help avert physical and cognitive deterioration or maintain optimal functioning.”

“This deterioration often leads to more intense, more expensive services, hospitalization or nursing care,” he added.

The plaintiffs in the case include, in addition to the individual plaintiffs and the National Multiple Sclerosis Society, the Parkinson’s Action Network, Paralyzed Veterans of America and the National Committee to Preserve Social Security and Medicare, an advocacy group.

Position of HHS and CMS; Implications for Medicare Costs

According to the New York Times, lawyers for the government declined to comment on the Settlement Agreement, because the litigation remains pending.

HHS, however, had already eased certain restrictions on Medicare coverage of home health and therapy benefits at the time the lawsuit was filed. In a release announcing the lawsuit, Gill Deford, an attorney with the Center for Medicare Advocacy (CMA) said, “While we thank CMS for their recent clarification of Medicare coverage for home health services – including physical therapy, occupational therapy and speech-language pathology services – the clarification does not undo conflicting policies and practices. We must move forward to ensure people do not suffer needlessly.”

As described above, the Settlement Agreement, if approved by the Court, will clarify how those already denied the applicable Medicare benefits on or after January 18, 2011 (the date the lawsuit was filed), on the basis of failure or inability to improve, may be able to apply for re-review and possible payment of their claims under the revised standard.

According to the New York Times, “Neither [Judith A. Stein, the director of the Center for Medicare Advocacy] nor Medicare officials could say how much the settlement might cost the government, but the price of expanding such coverage could be substantial.”

“While the settlement is likely to generate additional costs for the government, it might save some money too. For example, physical therapy and home health care might allow some people to avoid more expensive care in hospitals and nursing homes,” the New York Times reports.

The likelihood that these changes in Medicare policy will actually save the government money — by eliminating the significantly more expensive Medicare costs of repeat hospitalizations of the chronically ill that may be avoided with the provision of the covered in-home or therapy services — is also mentioned in several comments posted by nurses and other healthcare professionals following the New York Times article about the settlement.

More Information

Additional information about the proposed Settlement Agreement is available on the website of the Center for Medicare Advocacy (CMA), counsel for the plaintiffs in the lawsuit.

Those denied Claims for Medicare Skilled Care and related Home Health and therapy benefits on or after January 18, 2011, on the basis of a lack of improvement of the patient, can obtain more information about how the proposed Settlement Agreement may affect them by contacting the Center for Medicare Advocacy (CMA).

Self-Help Packets” to Request Your Own Redetermination of denied Medicare Claims are provided on the CMA website.

For information about Medicare coverage of home health care services, see Medicare and Home Health Care, the official U.S. government U.S. government booklet about Medicare home health care benefits for people with Original Medicare. It provides information about who is eligible, what services are covered, how to find and compare home health agencies, and your Medicare rights.

CMA also provides an Issue Brief on “Introduction to Medicare Home Health Coverage and Appeals” (PDF – current as of August, 2009), summarizing the key criteria to qualify for Medicare coverage of Home Health Care services.

More information about Medicare coverage and other financial and legal issues facing seniors and family caregivers, see the HelpingYouCare® resource pages on Legal and Financial Issues for Seniors & Caregivers, including:


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