CENTER FOR MEDICARE ADVOCACY, INC. Pennsylvania Association of Elder Law Attorneys A TALE OF TWO LAWSUITS: Jimmo v. Sebelius (Medicare Coverage for Maintenance Care) and Bagnall v. Sebelius (Observation vs. Inpatient Hospital Status) Margaret Murphy Feb. 23, 2013 www.medicareadvocacy.org www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. PRESENTATION Jimmo v. Sebelius Update Practical Implications for Skilled Nursing Facilities (SNFs), Home Health and Outpatient Therapies Questions & Answers Bagnall v. Sebelius Update Observation Status – What to do? www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Jimmo vs. Sebelius, Civil No. 5:11-CV-17 (D. VT. 1/18/2011) Federal judge approved Settlement and certified nationwide Class at Fairness Hearing on 1/24/ 2013 Federal Class Action filed 1/18/2011to eliminate Improvement Standard Settlement Agreement reached with govt attys on 10/16/2012 Plaintiffs: 5 individuals and 6 organizations Alzheimer’s Association National MS Society National Committee to Preserve Social Security & Medicare Paralyzed Veterans of America Parkinson’s Action Network United Cerebral Palsy www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Jimmo vs. Sebelius, Civil No. 5:11-CV-17 (D. VT. 1/18/2011) (Cont’d) CMS statement about Jimmo on January 28, 2013: “We are working to implement the terms of the settlement and ensure that beneficiaries have access to the full range of services that they are entitled to under the law. The settlement will clarify existing policy that claims should not be denied solely based on a rule-of-thumb determination that a beneficiary's condition is not improving." From CMS spokesman Brian Cook in an email message to Congressional Quarterly www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Jimmo vs. Sebelius, Civil No. 5:11-CV-17 (D. VT. 1/18/2011) (Cont’d) U.S. Dept. of Health and Human Services (HHS): “Under this settlement, Medicare policy will be clarified to ensure that claims from providers are reimbursed consistently and appropriately and not denied solely based on a rule-of-thumb determination that a beneficiary’s condition is not improving.” By Fabien Levy, spokesman for the U. S. Dept. of Health and Human Services (quote from The New York Times at: http://newoldage.blogs.nytimes.com/2013/02/04/therapy-plateau-no-longer-ends-coverage/) www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

What Jimmo Settlement Means: No Denials Based On Improvement Standard Coverage does not turn on the presence or absence of potential for improvement but rather on the need for skilled care Services can be skilled and covered when: Services are needed to maintain, prevent, or slow deterioration So long as the beneficiary requires skilled care for services to be safe and effective Jimmo Settlement, §IX.6 and §IX.7 www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

What Jimmo Settlement Means: Revision of CMS Manuals See CMA website for Jimmo Settlement info: http://www.medicareadvocacy.org/hidden/highlight-improvement-standard CMS to revise Medicare policy manuals, guidelines, and instructions for SNF, HH & Outpatient (OPT) Therapies (PT, ST, OT) “Clarify” skilled maintenance therapies and nursing are covered by Medicare Eliminate conflicting CMS policies www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

What Jimmo Settlement Means: CMS Educational Campaign Within 1 year of Order: All policy revisions completed, CMS Educational Campaign completed Explain Settlement and new policies to: Providers, Medicare Contractors, Medicare Adjudicators, Patients, Caregivers CMS Website, National Calls, Open Door Forums, written materials & trainings Policy revisions and Ed. Campaign: Review/Input from Ctr Medicare Advocacy & Vt Legal Aid www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

What Jimmo Settlement Means: Accountability and Reviews CMS to review random samples of QIC decisions & address errors raised in reviews Meet regularly with Plaintiffs’ counsel to correct errors in individual cases Individuals only may request “Re-review” of Medicare’s decisions final after 1/18/2011 For denials based on Improvement Standard Not required to exhaust all levels of appeal (denial on MSN sufficient) Court retains jurisdiction www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Jimmo Clarifies Proper Standard Is skilled professional needed to ensure nursing or therapy is safe and effective? Is a qualified nurse or therapist needed to provide or supervise the care? Regardless of whether the skilled care is to improve, maintain, or slow deterioration. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

FAQs re Jimmo Settlement Can Jimmo help now? Yes! Jimmo clarifies the current law. Use the Settlement Agreement & CMA’s self-help packets. See our website: medicareadvocacy.org Is Jimmo limited to certain diagnoses, diseases, conditions? No! Jimmo applies to anyone who needs skilled care. What types of services are covered? Skilled nursing or skilled therapies. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

FAQs re Jimmo Settlement cont’d To which care settings does Jimmo apply? Skilled Nursing Facility, Home Health, Outpatient Therapy. If a person needs skilled nursing and/or therapy in these settings, Jimmo applies. Examples of skilled nursing: Wound care; observation & assessment of lung congestion Examples of skilled therapy: Therapy for an ALS patient with breathing difficulty; ROM therapy for a person with MS and contractures www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

NO USE OF “RULES OF THUMB” Should not be used to deny coverage including: Lack of Restoration Potential 42 CFR §409.32(c); 42 CFR §409.44(b) - Nursing 42 CFR §409.44(c)(2)(iii)(B) and (C) - Maintenance Therapy See also comments in 75 Federal Register 70395 Condition is chronic, terminal, or expected to last long time 42 CFR §409.44(b)(3)(iii) www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

EXAMPLES OF “RULES OF THUMB” Individual or condition is “stable” or “chronic” Condition will not improve Lack of “restoration potential” Care is needed for long period of time Unless a legal limit exists: SNF 100 days; Outpatient PT/ST and OT annual $1,900 limit (exceptions to “caps”); Home Health – no duration of time limits www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

INDIVIDUAL ASSESSMENT REQUIRED Do not assume Medicare is unavailable based on: “Rules of Thumb” Particular diagnosis Lack of restoration potential Treatment norms Base decision on individual’s unique condition & needs “The unique clinical condition of a patient may require the specialized skills of a qualified therapist to perform a safe and effective maintenance program….” 42 CFR §409.44(c)(2)(iii)(C) www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. Jimmo vs. Sebelius Effects of Jimmo Settlement in Various Care Settings Next Steps … www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

SKILLED NURSING FACILITY Still need to Meet SNF Coverage Criteria 3 Day prior hospital stay (sometimes waived by Medicare Advantage Plans) Daily skilled care required to qualify for Medicare coverage: 5 days/week therapy (PT, OT, ST) or 7 days/week nursing or nursing and therapy combined So – What is considered skilled? www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. WHAT IS SKILLED CARE? … so inherently complex that it can be safely and effectively performed only by, or under the supervision of, professional or technical personnel. 42 CFR § 409.32(a) www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

HOME HEALTH COVERAGE 42 USC §1395x(m) Services must be ordered by a physician Under a written plan of care Beneficiary must be “confined to home” (homebound) – does not mean bedbound! Beneficiary must require skilled services No duration of time limitation No Co-Payments www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. HOME HEALTH COVERAGE 42 CFR § 409.40 et seq Skilled care requirement: Intermittent skilled nursing services As little as 1 x / 60 days (recurring) or daily for predictable period of time or Skilled PT or ST services and, in some circumstances, OT services www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. HOME HEALTH (Cont.) Added Benefit of Skilled Services Medicare Coverage of Other Home Health Services: If Medicare covers Skilled Nursing or PT, ST, or continuing OT, then Coverage also available for “dependent services” Home health aides Social worker, supplies www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

OUTPATIENT THERAPIES MEDICARE PART B Yearly dollar payment cap, indexed annually ($1,900 / year 2013) PT and ST services ($1,900 combined) Separate annual cap for OT services ($1,900 OT alone) Can seek “Exception” to caps Caps now apply to therapy services received in hospital outpatient department www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

MEDICARE PART C (Medicare Advantage Plans (MA Plans)) Private Medicare plans Provisions for delivery systems, not coverage Coverage criteria required to be the same as those in original Medicare Actual coverage of services not the same in practice (but should be…) May offer more coverage than original Medicare, but not less www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

What to Do if Medicare Coverage Denied After Jimmo? Use Jimmo Settlement and CMA self-help packets to educate provider & continue services Dr. is best ally to order care & keep services in place If denied Medicare coverage: Appeal, Appeal, Appeal Expedited Appeal – See instructions in Notice provided If denied at first level, appeal again for Reconsideration Strict time limits, but just a phone call from patient or caregiver Medical provider will forward medical records for review Standard Appeal – continue & request ALJ hearing www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. SUMMARY Restoration potential is not the deciding factor Medicare should not be denied at any care level because the beneficiary has a chronic condition or needs services to maintain his/her condition “Individualized assessments” are required Rules of thumb should not be used to determine access to coverage or care www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. Questions? www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. OBSERVATION STATUS Observation status: when a hospital stay is not a hospital stay Beneficiary is in a hospital bed, receiving medical and nursing care, tests, treatments, drugs, food, supplies, etc., BUT is said to be outpatient in “Observation Status,” not inpatient. www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. OBSERVATION STATUS Medicare Manuals say observation should not exceed 24 - 48 hours. Increasingly, Medicare beneficiaries’ entire stay in an acute care hospital is called observation. Many cases nationwide of multiple days and weeks in the hospital, all in “Observation.” www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. OBSERVATION STATUS Between 2006 – 2008, use of Observation Status increased 22.4%. Billing for periods on Observation greater than 48 hours increased 70.3%. www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

WHY DO HOSPITALS USE OBSERVATION STATUS? Most common reason offered by hospitals is Recovery Audit Contractor (RAC) program, http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/recovery-audit-program/index.html?redirect=/RAC, a program (among many) to address fraud and abuse, which uses proprietary system InterQual Other reviewers of inpatient care also use InterQual: Medicare Administrative Contractors, Quality Improvement Organizations Many hospitals also use InterQual standards www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

PROBLEMS FOR BENEFICIARIES WITH USE OF INTERQUAL Diagnosis-based InterQual system does not consider patients’ multiple chronic conditions and co-morbidities No individualized determination Decision made on paperwork submitted by hospital, not examination of patient What should be a screening tool becomes the sole determinant www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

NEGATIVE EFFECTS OF OBSERVATION STATUS Generally must have 3-day prior inpatient hospital stay to qualify for Medicare skilled nursing facility coverage. www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. OBSERVATION STATUS Time spent in observation status or in the emergency room prior to (or instead of) an inpatient admission does not count toward the 3-day qualifying inpatient stay needed to qualify for SNF care. Medicare Benefit Policy Manual, CMS Pub. No. 100-02, Ch. 8, §20.1. Landers v. Leavitt, 545 F.3d 98 (2nd Cir. 2008), cert. denied, 129 S.Ct. 2878 (2009). www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. OBSERVATION STATUS Even if admitted as an inpatient by a patient’s attending physician, the hospital’s utilization review committee may retroactively reverse the admission determination to outpatient observation status. Condition Code 44, Transmittal 299 (Sep. 2004), now at Medicare Claims Processing Manual, CMS Pub. No. 100-04, Ch. 1, §50.3, http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c01.pdf (scroll down to §50.3 at pages 153-157). www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. OBSERVATION STATUS Consequences for beneficiaries : No appeal rights; No Part A coverage for hospital stay; Patient responsible for Part B cost-sharing during hospital stay; No coverage for prescription drugs during hospital stay; No Part A coverage for SNF stay; Some beneficiaries who cannot afford SNF care go home, foregoing needed therapy; If no Part B, pay “retail price” for hospital care. www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. OBSERVATION STATUS Consequences for health care system: Quality of care concerns, especially with “observation units;” Distorted statistics re: hospital admissions and readmissions; Poor medical outcomes from not receiving rehabilitation after hospitalization; Shifting costs from Medicare to beneficiaries and Medicaid (the states). www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. BILLS IN CONGRESS Past couple of years, bills proposed to count all time in hospital towards 3-day stay New proposal to count all time in hospital as inpatient if stay exceeds 24 hours Hard to pass anything in Congress at this time, particularly if any cost associated www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

BAGNALL V. SEBELIUS No. 3:11-cv-1703 (D.Conn., filed Nov. 3, 2011) 12 beneficiary plaintiffs from Connecticut, Texas, Massachusetts, California, Delaware, and Minnesota. All spent at least three days in a hospital, but stay was considered observation status Increased hospital costs and deprived them of coverage for subsequent SNF care www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. BAGNALL v. SEBELIUS Filed as a nationwide class action Seeks to include any Medicare beneficiary who on or after Jan. 1, 2009 had any portion of a stay in a hospital treated as observation status DOJ file Motion to Dismiss Briefed for more than a year Case re-assigned to new judge and hearing set for 4/19/2013 www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. BAGNALL v. SEBELIUS Main focus of case is to require Medicare to recognize that beneficiaries in a hospital should be covered under Part A, not Part B www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. BAGNALL v. SEBELIUS Alleges that Medicare statute, regulations, Admin. Procedures Act are violated Seeks injunctive and declaratory relief to end policy of observation status Seeks to require Medicare to re-evaluate claims of all class members to determine if their hospital stays should be reclassified as covered under Part A www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. BAGNALL v. SEBELIUS Second focus of case is the lack of notice and appeal rights Seeks to require Medicare to allow beneficiaries to challenge coverage under Part B when it should be under Part A Claims that statute, regulations, and due process require a notice and appeal procedure because beneficiaries have been improperly classified www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

How to Appeal Observation Status See our website for self help packets for observation status appeals: http://www.medicareadvocacy.org/2013/02/12/self-help-packet-for-medicare-observation-status/ Appeal both the hospital stay and the SNF stay. When Medicare Summary Notice received for hospital bill, circle the hospital stay and file appeal within 120 days (see instructions on MSN). Have SNF submit bill to Medicare (within a year). When denied on MSN, circle SNF stay and file appeal. Continue appeals up to Admin. Law Judge; ALJ best chance to win. www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

Copyright © Center for Medicare Advocacy, Inc. Questions? www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.

CENTER FOR MEDICARE ADVOCACY Questions? CT: (860) 456 - 7790 DC: (202) 293 - 5760 _____________ www.medicareadvocacy.org webinar@medicareadvocacy.org www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc.