Medicare Coverage of Skilled Therapy and Nursing Care

The standard for Medicare coverage of skilled nursing and skilled therapy services in the skilled nursing facility, home health, and outpatient therapy settings has in recent years been the subject of much controversy and confusion. Many people think that Medicare beneficiaries are eligible for coverage for physical and occupational therapy and other skilled care only if their health is improving. This is wrong.

In reality Medicare also covers skilled services to prevent further deterioration or preserve current capabilities.
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This article discusses the myth of the improvement standard clarifies the real eligibility standard.X

The ‘Improvement Standard’ Myth

There is a commonly held misconception that Medicare beneficiaries are eligible for coverage for physical and occupational therapy and other skilled care only if their health is improving. It has been the standard practice of some providers and contractors to apply this Improvement Standard as a rule on which Medicare coverage is conditioned, in disregard of statutory and regulatory provisions. Many beneficiaries are incorrectly told that their treatment is no longer covered because their condition has stopped improving, or because they have plateaued.

The Improvement Standard has even been applied at the lower levels of the review process for those who appeal denial of coverage. This has the twofold effect of denying coverage to beneficiaries who are entitled to it and discouraging them from seeking review because the Improvement Standard, as stated, appears to be impossible to overcome.

The Real Standard – Maintenance Coverage

The general standard for coverage under Medicare is the medical necessity requirement, which states that “no payment may be made… for any expenses incurred for items or services which… are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Improvement is not a condition of coverage.

The regulation on skilled nursing facility coverage says explicitly 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.” The home health regulations incorporate this language by reference.
The regulations add that “the determination of whether skilled nursing care is reasonable and necessary must be based solely upon the beneficiary’s unique condition and individual needs, without regard to whether the illness or injury is acute, chronic, terminal, or expected to last a long time.”

Recent Developments

In the case of Jimmo v. Sebelius, the Center for Medicare Advocacy (CMA) alleged that Medicare claims involving skilled care were being inappropriately denied by contractors based on the Improvement Standard. The Centers for Medicare & Medicaid Services (CMS) denied having established such a standard. Because the parties settled the lawsuit in 2013, the Court never ruled on the validity of the plaintiffs’ allegations.
In the settlement agreement, the parties clarified the existing standard for coverage, and provided that “skilled nursing services would be covered where such skilled nursing services are necessary to maintain the patient’s current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided.”The agreement further required the Secretary of Health and Human Services to make certain revisions to the Medicare Beneficiary Policy Manual to reflect the Maintenance Coverage Standard, and to engage in a nationwide educational campaign through CMS, using “written materials and interactive forums with providers and contractors to communicate the [skilled nursing facility (“SNF”)], home health, and [outpatient therapy services (“OPT”)] maintenance coverage standards and the [inpatient rehabilitation facility] coverage standards.”

In February of 2017 the case returned to court, where the judge ruled on an alleged violation of the settlement agreement.

Neighborhood INTEGRITY Coverage of Skilled Therapy and Nursing Care

Neighborhood INTEGRITY, sometimes called the Medicare-Medicaid Plan (MMP), is a plan under which eligible individuals receive all their covered benefits in Medicare and Medicaid plus additional services through a single integrated plan.Under RI EOHHS regulations, Neighborhood is required to “provide the full range of Covered Services. If either Medicare or Rhode Island Medicaid provides more expansive services than the other program does for a particular condition, type of illness, or diagnosis, [Neighborhood] must provide the most expansive set of services required by either program. [Neighborhood] may not limit or deny services to Enrollees based on Medicare or Rhode Island Medicaid providing a more limited range of services than the other program.”

This means that INTEGRITY’s standard for covering these services must be at least as good as Medicare’s standard.

Useful Links

Statute Containing Medicare Medical Necessity Requirement – 42 U.S. Code § 1395y

Regulation on Criteria for Skilled Service Coverage – 42 C.F.R. § 409.32

Regulation on Skilled Service Requirements – 42 C.F.R. § 409.44

Jimmo v. Sebelius Complaint – Link

CMA Jimmo Implementation Page – Link

CMS Presentation on Jimmo Settlement Agreement – Link

CMS Jimmo Settlement Agreement Fact Sheet – Link

EOHHS Regulation on INTEGRITY Coverage – 2.4.1.5