1. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 1 CENTER FOR MEDICARE ADVOCACY, INC. Access to Medicare Benefits: What’s Been Happening? The Long Term Care Discussion Group Toby S. Edelman, Senior Policy Attorney January 23, 2014 www.medicareadvocacy.org

2. Copyright © Center for Medicare Advocacy, Inc. 2 PRESENTATION  Observation status Description of issue and background Bagnall v. Sebelius H.R.1179, S.569, Improving Access to Medicare Coverage Act of 2013  The Myth of Improvement Background leading to Jimmo Jimmo vs. Sebelius update

3. OBSERVATION STATUS  Patients in observation are in a hospital bed, receiving medical and nursing care, diagnostic tests, treatment, medications, food, but are called outpatients (covered by Part B), not inpatients (covered by Part A).  Consequence: Without 3 day qualifying inpatient hospital stay, Medicare will not pay for subsequent care in SNF. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 3

4. OBSERVATION STATUS  Care in hospital is generally indistinguishable for inpatients and outpatients/observation status patients.  Outpatients are often intermingled with inpatients.  Patients are often not told about their status until discharge. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 4

5. FEDERAL REGULATIONS  2005: CMS asked if observation time should be counted towards meeting qualifying inpatient stay, 70 Fed. Reg. 29,069, at 29,098 (May 19, 2005); CMS said it would continue reviewing the policy, 70 Fed. Reg. 45,025, at 45,050 (Aug. 2005). www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 5

6. FEDERAL REGULATIONS  2012: CMS asked for public comment on possible changes to observation status (such as automatic inpatient status after certain amount of time; requiring prior authorization; etc.), 77 Fed. Reg. 45,061, at 45155 (July 30, 2012); CMS declined to make any changes, 77 Fed. Reg. 68,209, at 68,433 (Nov. 15, 2012). www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 6

7. FEDERAL REGULATIONS  2013: Final rules for inpatient hospital reimbursement, 78 Fed. Reg. 50,495, at 50,906-954, published Aug. 19, 2013, effective Oct. 1, 2013, established time- based definitions of inpatient care. 2-midnight presumption (physician expectation) 2-midnight benchmark (reviewers) www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 7

8. FEDERAL REGULATIONS  Temporary CMS moratorium on enforcement of final rules.  New rules do not change (statutory) 3- midnight rule for inpatient hospital care as a requirement for SNF coverage.  Inpatient status does not begin until physician order for inpatient status. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 8

9. FEDERAL REGULATIONS  Final regulations (78 Fed. Reg. 50,495, at 50,918, Aug. 19, 2013) also authorize hospitals to rebill (from Part A to Part B) within a year of providing care (if Part A claim is denied or on hospitals’ own initiative). Hospital refunds Part A inpatient deductible, rebills patient for Part B co-payments and medications. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 9

10. BAGNALL v. SEBELIUS, No. 3:11-cv- 01703 (D. Conn., filed Nov. 3, 2011)  Nationwide class action, filed on behalf of 7 (later 12) individuals.  Alleged that use of observation status violates the Medicare Act, Administrative Procedures Act, Due Process Clause.  Sought injunctive and declaratory relief; notice and appeal rights.  Court dismissed complaint, Sep. 23, 2013.  Plaintiffs filed notice of appeal. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 10

11. GOVERNMENT POSITION ON OBSERVATION  Mixed. While CMS expresses concern in rules about impact of observation on beneficiaries, Department of Justice pursues False Claims Act litigation against hospitals for inpatient status (e.g., DoJ press release, intervention in 8 whistleblower cases against Health Management Associates, Jan. 13, 2014, http://www.justice.gov/opa/pr/2014/January/14-civ-037.html) and Office of Inspector General, HHS, compliance reviews of hospitals seek repayments of inpatient claims that OIG says should have been submitted as outpatient claims (e.g., Heartland Regional Medical Center, Dec. 2013, http://oig.hhs.gov/oas/reports/region7/71201120.pdf). http://www.justice.gov/opa/pr/2014/January/14-civ-037.html http://oig.hhs.gov/oas/reports/region7/71201120.pdf www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 11

12. FEDERAL LEGISLATION  H.R.1179, S.569, “Improving Access to Medicare Coverage Act of 2013,” count all time in hospital towards meeting 3-day qualifying inpatient stay.  Coalition of 20 national organizations – including LeadingAge, American Health Care Association, AARP, AMA, American Medical Directors Association, CMA – supports legislation; no opposition to legislation.  Primary Congressional concern about the bills: What is the Congressional Budget Office score? What is the cost of implementation? www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 12

13. UPDATES ON OBSERVATION STATUS  See CMA website, http://www.medicareadvocacy.org/medicare -info/observation-status/. http://www.medicareadvocacy.org/medicare -info/observation-status/ www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 13

14. MYTH OF IMPROVEMENT  Pervasive belief among health care professionals, providers, Medicare reviewers, and contractors that Medicare pays only if beneficiary is expected to improve.  Not true. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 14

15. CURRENT REGULATIONS FOR SNFs  “The restoration potential of a patient is not the deciding factor in determining whether skilled services are needed.” 42 C.F.R. §409.32(c).  Medicare covers “Maintenance therapy, when the specialized knowledge and judgment of a qualified therapist is required to design and establish a maintenance program....” 42 C.F.R. §409.33(c)(5). www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 15

16. MANUAL GUIDANCE FOR SNFs  “When rehabilitation services are the primary services, the key issue is whether the skills of a therapist are needed. The deciding factor is not the patient’s potential for recovery, but whether the services needed require the skills of a therapist or whether they can be provided by nonskilled personnel.” Medicare Benefit Policy Manual, Pub. No. 100-02, Chapter 8, §30.2.2. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 16

17. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 17 JIMMO v. SEBELIUS, Civ. No. 5:11-CV-17 (D. VT. 1/18/2011)  Federal class action lawsuit to eliminate Improvement Standard.  Filed Jan. 18, 2011 in federal district court in Vermont.  Settled Oct. 16, 2012.  Court approved settlement Jan. 24, 2013.  Plaintiffs: 5 individuals and 6 organizations Alzheimer’s Association National Multiple Sclerosis Society National Committee to Preserve Social Security & Medicare Paralyzed Veterans of America Parkinson’s Action Network United Cerebral Palsy

18. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 18 WHAT JIMMO SETTLEMENT MEANS: NO DENIALS BASED ON IMPROVEMENT STANDARD  Medicare coverage is improperly denied for skilled nursing or rehabilitation services when the denial is based on: Individual’s stable or chronic condition No expectation of improvement in a reasonable period of time  Services can be skilled and covered even when: Individual has “plateaued” Services are “maintenance only”

19. JIMMO CLARIFIES PROPER STANDARD  Is a skilled health care professional (nurse or therapist) needed to ensure that nursing or therapy is safe and effective?  Is a qualified nurse or therapist needed to provide or supervise the care?  If yes, Medicare covers care, regardless of whether the skilled care is to improve, maintain, or slow deterioration. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 19

20. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 20 INDIVIDUALIZED ASSESSMENTS REQUIRED  What does this individual need?  Not, what do people with similar disease or condition need in general?  Not, overall rule based on diagnosis or treatment norm Example: People who can walk 50 feet without assistance do not need physical therapy

21. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 21 EXAMPLES OF PROHIBITED 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: e.g., SNF, 100 days in a benefit period

22. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 22 WHAT JIMMO SETTLEMENT MEANS: REVISION OF CMS MANUALS  CMS revised Medicare Benefit Policy Manual for SNF, home health, outpatient therapy, and inpatient rehabilitation facility.  CMS clarifies skilled maintenance therapy and skilled maintenance nursing are covered by Medicare; eliminates conflicting provisions in Medicare Manuals. Transmittal 179 (Jan. 14, 2014), http://www.cms.gov/Regulations-and- Guidance/Guidance/Transmittals/Downloads/R179BP.pdf (replacing Transmittal 176 (Dec. 13, 2013), http://www.cms.gov/Regulations-and- Guidance/Guidance/Transmittals/Downloads/R176BP.pdf).http://www.cms.gov/Regulations-and- Guidance/Guidance/Transmittals/Downloads/R179BP.pdf http://www.cms.gov/Regulations-and- Guidance/Guidance/Transmittals/Downloads/R176BP.pdf

23. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 23  CMS conducted nationwide Educational Campaign.  CMS explained Settlement and new Manuals to providers, Medicare Contractors, Medicare adjudicators, patients, residents, caregivers. CMS Website, National Calls, Open Door Forums, written materials, trainings. WHATJIMMO SETTLEMENT MEANS: EDUCATIONAL CAMPAIGN

24. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 24 WHAT JIMMO SETTLEMENT MEANS: ACCOUNTABILITY AND REVEWS  CMS will review random samples of Qualified Independent Contractor (QIC) decisions address errors raised in reviews meet regularly with Plaintiffs’ counsel to correct errors in individuals’ cases (up to 100) First meeting, Jan. 6, 2014

25. WHAT JIMMO SETTLEMENT MEANS: RE-REVIEWS  Individuals may request Re-review of Medicare’s decisions made after Jan. 18, 2011.  Re-review applies to individuals’ cases only based on improvement standard.  Re-review is not available to health care providers/Medicaid State Agencies, only beneficiaries.  CMS developing form and process now. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 25

26. BIGGEST OBSTACLE TO IMPLEMENTATION SINCE COURT APPROVAL OF SETTLEMENT  Continuing belief among providers and adjudicators that beneficiary must be improving before Medicare will pay (we still get daily calls about patient who has “plateaued”). www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 26

27. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 27 WHAT WE TELL PEOPLE TO DO IF MEDICARE COVERAGE IS DENIED  Use Jimmo Settlement, regulations and Manual, CMS Jimmo materials, and CMA self-help packets to educate Medicare contractor/adjudicator and ask provider to continue services.  Physician is best ally to order care and keep services in place.  If denied Medicare coverage: 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 and request ALJ hearing.

28. UPDATES ON JIMMO See CMA website: http://www.medicareadvocacy.org/hidden/highlight-improvement- standard/http://www.medicareadvocacy.org/hidden/highlight-improvement- standard/. www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 28

29. CMA Toby S. Edelman Senior Policy Attorney Center for Medicare Advocacy 1025 Connecticut Avenue, NW Washington, DC 20036 (202) 293-5760, ext. 102 tedelman@medicareadvocacy.org www.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. 29