California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Settlement Proposed for Medicare Coverage of Home Health Care

The Obama administration has proposed a settlement in a nationwide class-action lawsuit that would allow thousands of U.S. residents with chronic conditions or disabilities to qualify for Medicare coverage of home health care services, the New York Times reports (Pear, New York Times, 10/22).

Background on Lawsuit

In January 2011, the Center for Medicare Advocacy -- which filed the lawsuit in U.S. District Court in Vermont on behalf of five national organizations -- alleged that CMS was illegally denying thousands of chronically ill beneficiaries essential therapies and medical services.

The suit challenged a decades-old policy that requires patients to achieve "demonstrable improvements in functioning" before Medicare will pay for physical, speech or occupational therapy, as well as skilled nursing care.

At the time, Medicare did not cover services if such improvements were absent. The plaintiffs argued that Medicare is obligated by law to cover care and therapies that are "reasonable and necessary for the diagnosis or treatment of illness or injury" (California Healthline, 1/19/2011).

Details of Proposed Settlement

Under the proposed settlement, the administration agreed to change Medicare rules to cover skilled nursing and therapy services when they are needed to "maintain the patient's current condition or prevent or slow further deterioration."

The settlement -- which was submitted by lawyers from HHS and the Department of Justice last week to a federal district court judge in Vermont -- is expected to be approved and could be enforced for up to four years.

The changes would apply to the traditional Medicare program and private Medicare Advantage plans. More than 10,000 beneficiaries whose claims were denied before Jan. 18, 2011 -- when the lawsuit was filed -- are expected to benefit as their claims would be re-examined under the new standards, the Times reports.

Center for Medicare Advocacy Director Judith Stein said the proposed deal could help beneficiaries with chronic conditions such as Alzheimer's disease, multiple sclerosis, Parkinson's disease, stroke, spinal cord injuries and traumatic brain injury.

Although Stein and Medicare officials are unsure about how much the settlement will cost the federal government, experts say the cost of expanding the coverage could be substantial, the Times reports.

However, the changes also are expected to generate savings, according to the Times. For example, fewer patients would need to depend on hospitals and nursing homes for physical therapy and similar services (New York Times, 10/22).

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