Prospective and Retrospective Implications of the Jimmo Settlement Agreement for Skilled Care Providers

On January 24, 2013, the U.S District Court for the District of Vermont approved a Settlement Agreement in the so-called Medicare Improvement Standard case, Jimmo v. Sebelius. In addition to its impact on Medicare reimbursement, the Settlement Agreement marks a significant change in the standard for determining eligibility for Medicare coverage of skilled maintenance care.

Skilled Care Medicare Coverage Standard After the Jimmo Settlement -

In the Settlement Agreement, the Secretary of Health and Human Services (“HHS”) clarifies the standard for determining Medicare coverage of skilled nursing facility (“SNF”), home health (“HH”), and outpatient therapy (“OPT”) services (collectively, “Skilled Care”) for both Medicare Parts A and B. Under the Settlement Agreement, Skilled Care is covered for those services that are necessary “to maintain the patient’s current condition or to prevent or slow further deterioration”; this standard is known as the “maintenance coverage standard.” This new standard is meant to clarify the original intent of the law.

Medicare payment contractors formerly used the alleged requirement known as the “improvement standard” to determine coverage of Skilled Care, even though it was never officially part of the HHS or Centers for Medicare & Medicaid Services (“CMS”) policy, according to CMS. Effective immediately, the Settlement Agreement clarifies that denial of Skilled Care coverage should not be based on the inability to restore or improve the beneficiary’s health or condition. Instead, Medicare payment contractors must apply the maintenance standard to determine eligibility for coverage of services.

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