“Discharge” from a Skilled Nursing Facility: What Does it Mean and What Rights Does a Resident Have?

Skilled nursing facilities (SNFs) often tell Medicare beneficiaries and their families that they intend to “discharge” a Medicare beneficiary because Medicare will not pay for the beneficiary’s stay under either Part A (traditional Medicare) or Part C (Medicare Advantage).  Such a statement unfortunately misleads many beneficiaries into incorrectly believing, not only that Medicare has decided that it will not pay for the stay, but also that a SNF can evict a resident from the facility if it concludes that Medicare is unlikely to pay for the resident’s stay.[1]  The truth is that when a SNF tells a beneficiary that he or she is “discharged,” (1) at that point, Medicare has not yet made any determination about coverage and (2) a resident cannot be evicted solely because Medicare will not pay for the stay.

Whether Medicare will pay for a resident’s stay is one question, determined by Medicare coverage rules and governed by various notices and appeal rights.  Whether the resident can continue to live in a SNF is a totally separate question, determined by the Nursing Home Reform Law (1987), which has its own distinct notice and appeal rights.  This Alert sets out the notice and appeal rights for both Medicare coverage and nursing home transfers and discharges.

Medicare Coverage Rules

A SNF’s statement that Medicare will not pay for a beneficiary’s stay is the SNF’s determination; it is not Medicare’s determination.  A Medicare beneficiary has the right to have Medicare make the coverage decision.  Two processes are available: the (newer) expedited appeals process and the (older) standard appeals process.  The expedited appeals process is intended to keep Medicare-covered services continuing, without interruption.  The standard appeals process serves a similar function of enabling a beneficiary to seek Medicare payment for a SNF stay, but it is also necessary to inform the beneficiary of possible non-coverage and, if Medicare agrees that coverage is not appropriate, to shift the costs of care from the SNF to the beneficiary.  These appeal rights have different notices and beneficiaries are entitled to receive both.[2]  CMS provided a helpful summary of the various notices in 2014.[3]

Expedited Determination, 42 C.F.R. §405.1202

The purpose of an expedited appeal is to keep services in place.  The SNF must give notice to the beneficiary at least two days prior to termination of all Part A services when the beneficiary still has days left in the benefit period,[4] using the Notice of Medicare Provider Non-Coverage, Form CMS-10123, to inform the beneficiary of how to request an expedited redetermination and, if the beneficiary seeks an expedited determination, the Detailed Explanation of Non-Coverage (DENC), Form CMS-10124.[5]

In order to request an expedited appeal, the resident or family must call the Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO), by no later than noon the following day..[6]  The beneficiary has the right to submit evidence to the BFCC-QIO.[7]  There are two BFCC-QIOs serving different parts of the country – KEPRO[8] and Livanta.[9]

Medicare-covered care continues until the day of discharge identified in the SNF notice, unless the BFCC-QIO reverses the SNF’s determination.[10]

If the SNF does not provide timely information to the BFCC-QIO, it may be financially responsible for providing covered care to the beneficiary.[11]  If the BFCC-QIO finds that the SNF’s notice was not valid, coverage continues until at least two days after valid notice is provided.[12] The burden of proof is on the SNF to prove that termination of services was correct.[13]

When the BFCC-QIO notifies the SNF that a beneficiary has initiated an expedited appeal, the SNF must send a detailed notice, the DENC, to the beneficiary by the close of the business day.  This notice must include:

• “A specific and detailed explanation why services are either no longer reasonable and necessary or are no longer covered.”[14]
• “A description of any applicable Medicare coverage rule, instruction, or other Medicare policy,” with citations.[15]
• “Facts specific to the beneficiary and relevant to the coverage determination . . . .”[16]

The SNF must also provide the BFCC-QIO with the information it needs[17] and, at the beneficiary’s request, must provide the beneficiary with a copy of, or access to, information it provided to the BFCC-QIO.[18]

The BFCC-QIO must:

• Determine whether the SNF notice was valid;
• Examine records submitted by the SNF;
• Solicit the views of the beneficiary who requested the expedited hearing;
• Provide an opportunity for the provider/practitioner to explain why termination of services was appropriate; and
• Within 72 hours, notify the beneficiary, the beneficiary’s physician, and the SNF of its determination.[19]

The BFCC-QIO must inform the beneficiary of its decision within 72 hours.  Telephone notification, while permitted, must be followed by written notification describing the rationale for the decision, an explanation of the Medicare payment consequences, and information about how to request Reconsideration (the next level of appeal).[20]

A beneficiary is unlikely to prevail in any appeal without strong physician support.  A physician letter providing detailed, specific, and personal information about the beneficiary and the reasons why continued coverage is medically necessary is most helpful.  If the basis for the SNF’s decision is its contention that the beneficiary “plateaued” or is unlikely to improve further, the beneficiary should bring to the BFCC-QIO’s attention that this basis for “discharge” is prohibited under the settlement in Jimmo v. Sebelius.[21] Jimmo confirmed that Medicare pays for care for a beneficiary who needs professional nursing or therapy services, or both, to maintain function or to prevent or slow the beneficiary’s decline or deterioration.[22]  Services cannot be discontinued for lack of improvement in most cases. The settlement applies nationwide to SNFs, home health, and outpatient therapy (physical, occupational, and speech therapy).

Expedited Reconsideration, 42 C.F.R. §405.1204

This appeal, to the Qualified Independent Contractor (QIC), has similar procedures as the expedited review by the BFCC-QIO.  The beneficiary may request up to 14 days’ additional time.[23]  However, if the QIC grants additional time, it is not required to inform the beneficiary, physician, and provider of its decision within 72 hours, as otherwise required for expedited reconsideration.[24]

Standard Appeal

As a result of the May 1989 settlement in Sarrassat v. Bowen,[25] a SNF must give the beneficiary written notice when it makes a determination that Medicare will not pay for the beneficiary’s care – either a Denial Letter or, as later combined by CMS into a single form, a SNF Advance Beneficiary Notice (SNF ABN, form CMS-10055).[26]  These notices are used at the initiation, reduction, or, as relevant for this discussion, termination of Part A-covered care in traditional Medicare for level of care reasons.  The SNF must file the claim with Medicare when requested by a beneficiary, and may not charge the resident for Part A services until CMS makes an initial determination.[27]

In 2009, CMS clarified that the SNF ABN is separate from the notices required in expedited appeals and that a SNF must use a Denial Letter or SNF ABN to “fulfill the provider’s obligation to advise the beneficiary of potential liability for payment.”[28]  If the SNF fails to provide this notice to the beneficiary, it may not shift the costs of care to the beneficiary.[29]

Transfer and Discharge, Nursing Home Reform Law

The federal Nursing Home Reform Law (1987) provides that a SNF (or nursing facility[30])

must permit each resident to remain in the facility and must not transfer or discharge the resident from the facility unless –

(i) The transfer or discharge is necessary to meet the resident’s welfare and the resident’s welfare cannot be met in the facility;

(ii) The transfer or discharge is appropriate because the resident’s health has improved sufficiently so [that] the resident no longer needs the services provided by the facility;

(iii) The safety of individuals in the facility is endangered;

(iv) The health of individuals in the facility would otherwise be endangered;

(v) The resident has failed, after reasonable and appropriate notice, to pay…for a stay at the facility; or

(vi) The facility ceases to operate.[31]

The SNF must give the resident advance written notice of its intention to transfer or discharge the resident.[32]  The notice must explain the reason,[33] advise the resident of the right to a state hearing to contest the transfer or discharge,[34] and provide the name, mailing address, and telephone number of the State long-term care ombudsman.[35]  If the resident has resided in the facility for 30 or more days, the SNF must generally give the resident 30 days’ advance notice of the transfer or discharge.[36]

SNFs must also conduct “sufficient preparation and orientation to residents to ensure safe and orderly transfer or discharge from the facility.”[37]

If Medicare does not pay for a resident’s stay, the resident must have another source of payment, typically out-of-pocket payments or Medicaid.

Conclusion

Notice issues are confusing and complex.  The key points are that Medicare beneficiaries are entitled to have Medicare, not the facility, determine whether the beneficiary’s care is covered by Medicare; a SNF must give a beneficiary the proper notices (in expedited and standard appeals) and provide information to the BFCC-QIO (in expedited appeals) or else it is responsible for the costs of the beneficiary’s care; and even if Medicare does not pay for the care, a resident has the right to remain in the SNF (if the resident has another source of payment).