1.  Roshunda Drummond-Dye, JD American Physical Therapy Association

2. Glenda Jimmo, et. al vs. Kathleen Sebelius Case was filed on January 18, 2011 Proposed settlement agreement filed in federal District Court on October 16, 2012 Preliminary Order to Approve Settlement filed November 20, 2012 (Contingent upon fairness hearing) Fairness hearing held January 24, 2013 and final approval was given on that date

3.  Brought on behalf of four individuals from Vermont, Connecticut, Rhode Island, and Maine and five organizations  Contractors interpretation: "Improvement Standard" provider must show a “material improvement” in patient’s condition over a determined period in order to establish medical necessity  Upheld right of patients to continue to receive reasonable and necessary care to maintain condition or prevent or slow decline  Determinant factor is not whether the Medicare beneficiary will improve  Decision covers nursing and therapy services provided under both inpatient and outpatient settings  Mandates a review of all denials subsequent to original filing date

4.  Basis of medical necessity under the Medicare program  Social Security Act §1862(1) states in part, “payment may not be made under [Medicare] part A or part B 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.”

5. Services must be: o Safe, effective, not experimental o Appropriate in duration and frequency; o Furnished in accordance with accepted standards of medical practice for the condition; o In an appropriate setting o Ordered and furnished by qualified personnel o Appropriate to meet the need, but does not exceed the need o Potential for improvement in response to therapy

6.  Local Coverage Determinations – issued by Medicare Administrative Contractors, Carriers and Fiscal Intermediaries o 90 % of Medicare coverage o Specific coverage requirements for your local area o Cannot conflict with national Medicare regulations o Examples: outpatient physical therapy services  National Coverage Determinations –issued by CMS on a national basis o 10 % of Medicare coverage o Examples: cardiac and pulmonary rehabilitation and urinary incontinence

7.  Medicare statute does not mandate a showing of improvement to determine medical necessity  Statutory criteria for treatment of an illness or injury applies regardless of where covered service is provided  Includes: outpatient, home health, skilled nursing facility, inpatient rehabilitation facility

8.  42 CFR § 409.32 Criteria for skilled services and the need for skilled services (SNFs)  (a) (c) 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.

9.  42 CFR §409.44(b)(3)(iii) Skilled Services Requirement (Home Health)  “(iii) There must be an expectation that the beneficiary's condition will improve materially in a reasonable (and generally predictable) period of time based on the physician's assessment of the beneficiary's restoration potential and unique medical condition, or the services must be necessary to establish a safe and effective maintenance program required in connection with a specific disease, or the skills of a therapist must be necessary to perform a safe and effective maintenance program.

10.  42 CFR §409.44(b)(3)(iii) Skilled Services Requirement (Home Health)  If the services are for the establishment of a maintenance program, they may include the design of the program, the instruction of the beneficiary, family, or home health aides, and the necessary infrequent reevaluations of the beneficiary and the program to the degree that the specialized knowledge and judgment of a physical therapist, speech-language pathologist, or occupational therapist is required.”

11.  Medicare Home Health Prospective Payment System Calendar Year 2011 final rule  Clarifies that therapy coverage criteria has always been based on the inherent complexity of the service which the patient 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 required in connection with the patient's specific illness or injury. When the clinical condition of the patient is such that the complexity of the therapy services required to maintain function involve the use of complex and sophisticated therapy procedures…by the therapist… or the clinical condition of the patient is such that the complexity of the therapy services required to maintain function must be delivered by the therapist

12.  Injunctive provisions – o Revise relevant portions of Medicare Benefits Policy Manual (MPBM, Pub. 100-02, Ch. 1, 7, 8 and 15) o Clarify coverage standards for SNF, HH, IRF and OPT benefits o Set forth “maintenance coverage standard” o Does not expand current coverage benefit or eligibility criteria o Rescind any current conflicting language from manuals o Plaintiffs counsel will have 21 days to review manual revisions (1 st draft) submit written comments o Comments will be taken into consideration and subsequent 14 day review and comment period before finalized

13.  Target Audience: Medicare Administrative Contractors (MACs), Medicare Advantage (MA) Organizations, Qualified Independent Contactors (QICs), Recovery Audit Contractors (RACs), Administrative Law Judges (ALJs), Medicare Appeals Council, Providers and Suppliers  Medium: Written materials, MLN articles, Medicare customer service, national calls, open door forums, PPT posted to CMS website

14.  Claims review through established protocol of sampling of QIC claims  Bi- annual meeting with plaintiffs counsel on claims review findings  Expedited review and resolution of errors and denials

15. Effect on coverage of services under the state Medicaid programs? Effect on future outcomes reporting under value-based purchasing and the Physician Quality Reporting System? Effect on rebasing and other efforts to “curb” utilization of therapy services under the Medicare home health and SNF benefit? Effect on reporting of functional limitations under new outpatient therapy rules and current functional reassessment requirements under home health?

16. Contact Information: Roshunda Drummond-Dye, JD American Physical Therapy Association Director, Regulatory Affairs (703) 706-8547 roshundadrummond-dye@apta.org