Center for Medicare Advocacy

Advancing Access to Medicare and Healthcare

Issue Brief – July 2020 – Medicare and COVID-19 Updates & Other Issues

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I. COVID-19 and Medicare

A. Latest General Updates

  1. Overview  

The global COVID-19 crisis has led to many changes in health care rules, including in the Medicare program. Most of the Medicare-related changes have been made retroactive to March 1, 2020, and will last until the Public Health Emergency (PHE) related to the COVID-19 crisis is lifted.  Set to expire at the end of July 2020, the PHE is expected to be extended for at least 3 additional months.

Many of these Medicare changes are summarized in the Center’s publication “COVID-19: AN ADVOCATES GUIDE TO MEDICARE CHANGES” (updated June 16, 2020).

  • Considerations re: Extension of Telehealth

While most of the recent waivers and changes of rules have been deemed to be temporary, some rule changes have been made permanent, and efforts are underway by various stakeholders to make other changes permanent as well, particularly concerning telehealth.

On the one hand, during the pandemic, telehealth has been critical in limiting disruptions in care while protecting beneficiaries from the spread of the deadly virus. On the other hand, a crisis isn’t a good time to create this kind of permanent change.  Without publicly released data concerning the types of services provided, including programmatic spending and health outcomes, efforts to make such expansion that could fundamentally change the nature of care delivery in Medicare are premature.   

The Center for Medicare Advocacy has raised concerns regarding current problems that have arisen with telehealth, including confusion over cost-sharing for telehealth services, based in part on the discretion providers have been given to reduce or waive cost-sharing but no corresponding notice requirements prior to such services being rendered.  The suspension of enforcement of HIPAA privacy protections must be addressed. Further, there are significant concerns that a rapid expansion of telehealth will exacerbate existing health disparities (see discussion below).  Availability of telehealth has already been used to weaken Medicare Advantage network adequacy standards.  For further discussion of these issues, see, e.g.:

Center for Medicare Advocacy’s comments on CMS interim final rule re: COVID-19: https://medicareadvocacy.org/center-comments-on-covid-19-rule/; also see discussion below re: Part C and D final rule. 

  • Skilled Nursing Facilities

On June 25, 2020, Center for Medicare Advocacy Senior Policy Attorney Toby Edelman testified before the House Ways & Means Health Subcommitttee re: Nursing Facilities and the COVID-19 Crisis (the full testimony is available here: https://medicareadvocacy.org/cmas-toby-edelman-testifies-at-congressional-hearing-on-covid-in-nursing-homes/). 

The following are excerpts from some of the Center’s latest Weekly Alerts addressing COVID-19 and nursing facilities (for full text and citations, see the linked Alerts):

Additional Infection Control Surveys at Nursing Facilities Show Same Results: Few Deficiencies, Most Called “No Harm” (July 9, 2020, available at: https://medicareadvocacy.org/special-report-more-infection-control-deficiencies/).

On March 4, 2020, the Centers for Medicare & Medicaid Services (CMS) suspended non-emergency inspections of health care facilities and on March 20, CMS limited surveys to two types: targeted infection control surveys and complaint/facility-reported incidents triaged as immediate jeopardy.  On June 24, 2020, CMS released the results of 9899 targeted infection control surveys going back to March 2020.  These surveys included the 5724 targeted infection control surveys that CMS had released on June 4, 2020.  Accordingly, this report analyzes the 4175 targeted infection control surveys that were released for the first time on June 24.  (CMS will continue to update the data on the last Wednesday of each month.) 

Ninety-nine new infection control deficiencies were cited following the 4175 targeted infection control surveys that were released on June 24.  The results are similar to the results from the first group of 5724 infection prevention and control surveys that CMS released on June 4.  Analysis of the newly released surveys again indicates that only a very small fraction of facilities, 2.37%, received a deficiency for infection prevention and control and 96% of the deficiencies were classified as “no harm” or “substantial compliance.”  In addition, facilities cited with infection prevention and control deficiencies were also more likely than facilities that were not cited with such a deficiency to be operated on a for-profit basis, to have had the remedies of civil money penalties or denial of payment for new admissions imposed in the prior three years, and to be Special Focus Facilities or candidates for the Special Focus Facility program

To read the full report, please go to https://medicareadvocacy.org/wp-content/uploads/2020/07/Report-Coronavirus-Infection-Controls-Second-Batch-.pdf

Center for Medicare Advocacy Comments on Coronavirus Reporting Requirements for Nursing Facilities (July 9, 2020, available at: https://medicareadvocacy.org/center-for-medicare-advocacy-comments-on-coronavirus-reporting-requirements-for-nursing-facilities/).

In an Interim Final Rule with Comment, the Centers for Medicare & Medicaid Services requires nursing facilities to report certain information about coronavirus cases and deaths to the Centers for Disease Control and Prevention (CDC) and to residents and families. In comments submitted July 7, the Center for Medicare Advocacy recommends (1) auditing data submitted by nursing facilities to CDC; (2) imposing per day civil money penalties when facilities report materially inaccurate information to the CDC and when facilities fail to report to residents, families, and staff; and (3) requiring ongoing reporting of infections beyond the COVID-19 pandemic. 

By its terms, the rule authorizes national reporting only during the COVID-19 pandemic. Since infections are the most frequently cited deficiency in nursing facilities, leading to hundreds of thousands of hospitalizations and deaths, and current facility practices have not adequately addressed problems of infections,[3] the Center believes that more attention to infections at the national level is critical.

Special Report – Nursing Homes Cited With Immediate Jeopardy Deficiencies During Pandemic: Poor Health Inspection Results, Low Staffing Levels (July 2, 2020, available at: https://medicareadvocacy.org/special-report-nursing-homes-cited-with-immediate-jeopardy-deficiencies-during-pandemic-poor-health-inspection-results-low-staffing-levels/). 

Since March 2020, the Centers for Medicare & Medicaid Services (CMS) has limited surveys of nursing facilities to two types: complaints and facility-reported incidents that states triage as immediate jeopardy and targeted infection control surveys. The Center for Medicare Advocacy analyzed the 5700+ surveys publicly reported on June 4, 2020 and issued two reports about the targeted infection control surveys.  This report describes the 20 nursing facilities nationwide, publicly reported on June 4, 2020, that were cited with immediate jeopardy deficiencies. Data shows facilities cited with immediate jeopardy deficiencies generally have poor survey histories and low nurse staffing levels, are more likely to be operated on a for-profit basis, and had civil money penalties imposed in the prior three years. 

To read the full report, please go to: https://medicareadvocacy.org/wp-content/uploads/2020/07/Immediate-Jeopardy-Report.pdf

CMS Liberalizes Visitation to Nursing Homes. . . A Little (July 2, 2020, available at: https://medicareadvocacy.org/cms-liberalizes-visitation-to-nursing-homes-a-little/).

The Centers for Medicare & Medicaid Services (CMS) recently revised its guidance on visitations to nursing facilities during the COVID-19 pandemic via seven Frequently Asked Questions. CMS is authorizing additional, more flexible guidance on visitation, while reiterating the need for screening, social distancing, hand hygiene, and face coverings during all visits.

CMS provides additional examples of “compassionate care situations” that allow visitation in more than end-of-life situations (Question 2). It recommends “creative means” and flexibility for allowing visitation, including visits outdoors (Question 3). CMS confirms that residents can participate in group activities, if they are able to maintain necessary precautions (Question 4).

Recognizing the importance of the ombudsman program, CMS confirms that facilities must provide ombudsman with immediate access to residents, even if ombudsmen cannot visit in-person due to COVID-19 (Question 7). 

Finally, facilities must comply with all discharge requirements, except for discharges for purposes of cohorting (grouping resident by COVID status). Facilities must send a copy of all discharge notices to the state ombudsman. 

States have already begun liberalizing visitation rules. This will be a welcome change for many residents and families

Coverage of Additional Days in SNF

See the Center’s Weekly Alert “CMS Issues Clarifications on How to Obtain Additional Coverage during the Pandemic” (July 9, 2020, available at: https://medicareadvocacy.org/cms-clarifies-covid-waivers/).  The Centers for Medicare & Medicaid Services (CMS) continues to clarify instructions on authorized Medicare coverage waivers and modifications due to the COVID-19 public health emergency (PHE) through a Medicare Learning Network (MLN) publication. This Alert updates a previous Alert on the subject of coverage for up to an additional 100 days in the SNF (June 11, 2020, available here: https://medicareadvocacy.org/covid-19s-impact-on-beneficiary-rights-a-case-study-examining-medicare-coverage-exceeding-100-days-in-a-skilled-nursing-facility/).    

  • Health Disparities

The following is excerpted from the Center’s Weekly Alert “Recent COVID-19 Data Show Disparities in Rate of Infections” (July 9, 2020), available at: https://medicareadvocacy.org/recent-covid-19-data-show-disparities-in-rate-of-infections/.

The Centers for Medicare & Medicaid Services (CMS) recently released preliminary data on COVID-19 infections derived from Medicare claims. According to the CMS snapshot, between January 1 and May 16, 2020, over 325,000 Medicare beneficiaries were diagnosed with COVID-19, and nearly 110,000 of those beneficiaries were hospitalized. The snapshot provides preliminary data based on Medicare fee-for-service claims, Medicare Advantage encounter data, and Medicare enrollment information. Thus, CMS noted that the findings may not be comprehensive or match other publicly available data sources. Some of the data in the CMS snapshot:

  • Among those hospitalized with COVID-19, the five most prevalent chronic conditions for Medicare fee-for-service beneficiaries were: hypertension (79%); hyperlipidemia (60%); chronic kidney disease (50%); anemia (50%); and diabetes (50%).
  • 28% of hospitalized beneficiaries died in the hospital, and 27% were discharged to their homes. The remainder were discharged to skilled nursing facilities (21%) or other healthcare settings.
  • Half of hospitalizations (50%) were less than 8 days, while 9% were 21 days or longer.
  • Rates are also higher for Black beneficiaries (465 hospitalizations per 100,000 beneficiaries), Hispanic beneficiaries (258/100K), and among beneficiaries who are age 85 or older (379/100k).
  • Beneficiaries eligible for Medicare because they have end stage renal disease (ESRD) have the highest COVID-19 hospitalization rate, with 1,341 cases per 100,000 beneficiaries. 
  • Beneficiaries enrolled in both Medicare and Medicaid (dually eligible individuals or duals) also have a higher rate of COVID-19 hospitalizations, with 473 hospitalizations per 100,000 beneficiaries. The rate for beneficiaries enrolled only in Medicare is 112 hospitalizations per 100,000. The rate of COVID-19 hospitalizations for dually eligible individuals is higher across all age, sex, and race/ethnicity groups. 
  • Medicare payments for fee-for-service hospitalizations totaled $1.9 billion, with an average of $23,094 per hospitalization.

CMS Snapshot, available at: https://www.cms.gov/blog/medicare-covid-19-data-release-blog

The New York Times also recently released their detailed analysis of CDC data that found that racial disparities in COVID infections were present throughout the country and across all age groups. Their analysis, “The Fullest Look Yet at the Racial Inequity of Coronavirus” found that “Latino and African-American residents of the United States have been three times as likely to become infected as their white neighbors, according to the new data, which provides detailed characteristics of 640,000 infections detected in nearly 1,000 U.S. counties. And Black and Latino people have been nearly twice as likely to die from the virus as white people, the data shows.”

New York Times Report, available at:

Center for Medicare Advocacy’s previous alerts on this topic:

  • Medical Rationing  

Since the beginning of the pandemic, health care professionals have been concerned that there will be a lack of acute care services and equipment, notably ventilators, to meet the increasing demand as cases increase and hospitals become overwhelmed. In the last few months, in response to this concern, some states and medical professionals have developed guidance and protocols for rationing acute medical care to determine who will have access to life-saving treatment when there is a limited supply. Even though their language may appear facially neutral, many of these plans rely on discriminatory age and disability-based distinction. The Center has been participating in efforts to ensure equitable treatment of all patients regarding critical COVID-19 life-saving care.

B. FINAL PART C & D RULE

  1. Overview

On June 2, 2020, the Centers for Medicare & Medicaid Services (CMS) published a final rule regarding Medicare Advantage (Medicare Part C) and Part D prescription drug plans (“C & D Rule”) entitled “Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program” at 85 Fed Reg 33796 (June 2, 2020), available at: https://www.govinfo.gov/content/pkg/FR-2020-06-02/pdf/2020-11342.pdf.

Some of the provisions most relevant to Medicare beneficiaries include weakened network adequacy standards for Medicare Advantage plans, and codified Medicare Advantage and Part D Special Election Periods (SEPs) – discussed further below.

Note that for the first time starting 2021, individuals with End Stage Renal Disease (ESRD) will be able to enroll in a Medicare Advantage plan.  The C & D rule includes implementing regulations concerning this change.

In the final rule, CMS noted that it plans to release a second final C & D rule later in 2020.

  • Special Election Periods (SEPs) for MA and Part D Plans

In the final rule, CMS codified all Part D SEPs at 42 C.F.R. § 423.38(c). CMS also retained the right to create SEPs on a case-by-case basis for individuals who meet other exceptional conditions established by CMS.  Note that there is some language in the preamble to the final rule at 85 Fed Reg 33870 that can be helpful to beneficiaries requesting an SEP based on exceptional circumstances, including describing some “situations in which it is in the best interest of the beneficiary that she or he be provided an enrollment (or disenrollment) opportunity […]  Consistent with current practice, CMS will consider granting an enrollment exception when one or more of the following factors is present:

++ Extraordinary Circumstances—Circumstances beyond the beneficiary’s control that prevented him or her from submitting a timely request to enroll or disenroll from a plan during a valid enrollment period. This is inclusive of, but not limited to, a serious medical emergency of the beneficiary or their authorized representative during an entire election period, a change in hospice status, or mailed enrollment forms returned as undeliverable on or after the last day of an enrollment period.

++ Erroneous Election—Situations in which a beneficiary provides a verbal or written allegation that his or her enrollment in a MA or Part D plan was based upon misleading or incorrect information provided by a plan representative or State Health Insurance Assistance Program (SHIP) counselor, including situations where a beneficiary states he or she was enrolled into a plan without his or her knowledge or consent, and requests cancellation of the enrollment or disenrollment from the plan.

++ Plan Accessibility—A SEP may be warranted to ensure beneficiary access to services and where without the approval of an enrollment exception, there could be adverse health consequences for the beneficiary. This is inclusive of, but not limited to, maintaining continuity of care for a chronic condition and preventing an interruption in treatment.”

C. MEDICARE & FAMILY CAREGIVERS ISSUE BRIEF

The Center for Medicare Advocacy has written an Issue Brief, Medicare and Family Caregivers, as part of collaborative work to advance the RAISE Family Caregivers Act, Public Law 115-119 (1/22/2018). The RAISE Act directs the Department of Health and Human Services to develop and maintain a national family caregiver strategy that identifies actions and support for family caregivers in the United States. The Center’s Issue Brief explores the role Medicare does, and could, play in supporting older and disabled beneficiaries and their caregivers. The Issue Brief was written with support from The John A. Hartford Foundation.

Over 62 million Americans who are 65 or older, and certain younger people with significant disabilities, rely on Medicare for health care coverage and access to care. Many Medicare beneficiaries depend on family members to provide or supplement their care. As the population ages, and lives longer with chronic conditions, the need for family caregiving, and support for caregivers, is increasing. Concurrently, however, access to Medicare-covered home health aide care continues to decline. This is often true even for individuals who meet the Medicare law’s qualifying criteria.  

In order to better meet the needs of Medicare beneficiaries and their caregivers, the Center for Medicare Advocacy’s Issue Brief makes several recommendations, including:

  1. Ensure the scope of current Medicare home health benefits, generally, and home health aides, specifically, are actually provided. Simply put, ensure that current law is followed; 
  2. Create a new stand-alone home health aide benefit that would provide coverage without the current skilled care or homebound requirements, using Medicare’s existing infrastructure as the vehicle for the new coverage; and 
  3. Identify other opportunities for further exploration within and without the Medicare program, including additional Medicare revisions, demonstrations, and initiatives overseen by the Center for Medicare and Medicaid Innovation (CMMI).

The issue brief is available at: https://medicareadvocacy.org/wp-content/uploads/2020/06/Medicare-and-Family-Caregivers-June-2020.pdf.

D. LITIGATION UPDATE

Affordable Care Act Case

On December 18, 2019, the Fifth Circuit issued a decision in the lawsuit brought by several states and supported by the Trump administration that seeks to dismantle the entire Affordable Care Act (ACA). A divided panel of the appeals court ruled that the ACA’s individual mandate is now unconstitutional because Congress reduced the penalty for remaining without insurance to $0. Then, although it was clear that Congress did not intend to strike down the entire ACA when it eliminated the penalty (because, among other things, it left the rest of the law in place), the Fifth Circuit concluded that many of the ACA’s provisions may not be “severable” from the mandate and therefore must also be struck down. It ordered the same district court judge who struck down the entire law to parse through all of the ACA’s provisions with a “finer-toothed comb” to determine which can survive. In early 2020 the Supreme Court granted review of the case. It will be argued in the fall of 2020 with a decision to issue by the end of June 2021.

This lawsuit threatens the entire ACA: protections for pre-existing conditions, the expansion of Medicaid, and, critically for older adults and people with disabilities, many provisions that improved Medicare. The ACA closed the donut hole in Part D, saving beneficiaries millions on prescription drugs. It eliminated out-of-pocket costs for preventive services, such as mammograms and diabetes screenings. It extended the solvency of the Part A Trust Fund for many years. Simply put, the ACA is woven into Medicare, including over 165 provisions that help beneficiaries and strengthen the program’s financial well-being. Striking down the ACA would have disastrous ramifications for Medicare beneficiaries and the U.S. health care system as a whole.

UPDATE: The briefing has commenced in the Supreme Court case.  On May 13, 2020 the Center joined AARP and Justice in Aging in submitting an amicus brief in support of California and the other states defending the law. The amicus brief highlights the ACA’s key protections for older adults and the devastating consequences that would ensue if the law is nullified. It was one of 40 amicus briefs that were filed in support of the ACA. On June 25, 2020, Texas and several other states as well as the Trump administration filed their opening briefs, asking the Court to strike down the entire ACA. Three amicus briefs were filed in support.

For more information, see these resources from the Kaiser Family Foundation:

Center for Medicare Advocacy Cases

  • Alexander v. Azar (formerly Bagnall v. Sebelius, Barrows v. Burwell), No. 3:11-cv-1703 (D. Conn.) (Beneficiary Appeals of Observation Status). In November 2011, the Center for Medicare Advocacy and Justice in Aging filed a proposed class action lawsuit on behalf of individuals who have been denied Medicare Part A coverage of hospital and nursing home stays because their care in the hospital was considered “outpatient observation” rather than an inpatient admission. When hospital patients are placed on observation status, they are labeled “outpatients,” even though they are often on a regular hospital floor for many days, receiving the same care as inpatients.  Because patients must be hospitalized as inpatients for three consecutive days to receive Medicare Part A coverage of post-hospital nursing home care, people on observation status do not have access to nursing home coverage.  They must either privately pay the high cost of nursing care or forgo that skilled care.  The number of people placed on observation status has greatly increased in recent years, as CMS has strictly enforced its definition of which services hospitals should bill as inpatient/Part A and which services they should bill as observation/Part B. However, CMS has not allowed beneficiaries to appeal the issue of whether their hospitalizations should be classified as observation or as inpatient for Medicare coverage purposes.

On September 23, 2013, a federal judge in Connecticut granted the government’s motion to dismiss the lawsuit.  Plaintiffs appealed, but limited the appeal to the issue of the right to an effective notice and review procedure for beneficiaries placed on observation status. On January 22, 2015, the U.S. Court of Appeals for the Second Circuit decided that Medicare patients who are placed on observation status in hospitals may have an interest, protected by the Constitution, in challenging that classification.  The panel held that the district court erred when it dismissed the plaintiffs’ due process claims, and it sent the case back to that court for further proceedings.  Barrows v. Burwell, 777 F.3d 106 (2d Cir. 2015).

The parties completed discovery on the issue ordered by the Second Circuit: whether plaintiffs have a “protected property interest” in Part A coverage of their hospital stays, which depends on whether CMS has “meaningfully channeled” discretion on the question of patient status determinations.  If the Secretary has established criteria for inpatient hospitalization, plaintiffs have an interest that is protected by the Due Process Clause and thus they may be entitled to notice and an opportunity to appeal their placement on observation. Plaintiffs received voluminous documentation from the government and conducted depositions of witnesses from the Department of Health and Human Services, Medicare contractors, and some of the hospitals that treated the named plaintiffs. The law firm of Wilson Sonsini Goodrich & Rosati, which has helped the Center in previous litigation, joined as representatives of the plaintiffs during this phase and has provide extraordinary and invaluable pro bono assistance.

After briefing and a hearing on the protected property interest issue and defendant’s supplemental motion to dismiss, the court issued a decision on February 8, 2017, denying both parties’ motions for summary judgment and largely denying the government’s motion to dismiss. The court found that all named plaintiffs have standing and none of their claims was moot, even though some have passed away and some have resolved their underlying individual claims. It decided that factual disputes precluded summary judgment on the property interest question. As for the motion to dismiss, the court found that plaintiffs had plausibly alleged the other two aspects of a due process claim: state action (in the form of pressure on providers by CMS) and inadequacy of existing procedures (it is undisputed that there is currently no appeal method for patients placed on observation status). The court found that plaintiffs’ claim for expedited notice is now moot due to the new requirements being implemented under the NOTICE Act (“MOON” notice).

Plaintiffs then filed a renewed motion for class certification, and on July 31, 2017, the court issued a decision certifying a nationwide class of Medicare beneficiaries who have received “observation services” in a hospital since January 1, 2009. A second round of discovery closed on June 15, 2018, with both parties having conducted numerous depositions and exchanging documents. The government filed for summary judgment for a second time on July 30, 2018, this time on the “what process is due” element of plaintiffs’ claim. The government focused on the three factors from Mathews v. Eldridge, 424 U.S. 319 (1976), which determine what procedural safeguards are due – with a particular focus on the risk of erroneous deprivation of the private interest at stake under the current procedures used (notably, there are currently no procedures for beneficiaries to appeal their hospital status) The government also filed a motion to decertify the class on August 24, 2018.

After a hearing and additional dispositive motions filed by the government, the court

issued a ruling denying the government’s motion for summary judgment, motion to decertify the class, and motion to dismiss on March 27, 2019. Alexander v. Azar, 370 F. Supp. 3d 302 (D. Conn. 2019). The judge concluded that evidence submitted by the plaintiffs could reasonably establish that physician decisions about whether to classify beneficiaries as inpatients are “meaningfully constrained” by criteria set by Medicare, including the Two-Midnight Rule since it came into effect in 2013, and class members may therefore possess a property interest in the inpatient Medicare coverage they seek. It also found that a trial was necessary to balance the evidence submitted about the three Mathews v. Eldridge factors. The court declined to dismiss the case, finding that the plaintiffs continue to have standing and that their claims are not moot. The court also did not take the drastic step of decertifying the nationwide class, but did modify the class definition to target individuals who, in the court’s view, are more certain to experience harm from the observation designation.

A bench trial was held from August 12 – 20, 2019.  The plaintiffs presented several witness who were affected by observation status (two beneficiaries, a family member of a named plaintiff, a doctor), an expert witness, and also several witnesses from the government. The government also examined several witnesses from CMS as well as their own expert. The court then set a post-trial briefing schedule and issued an order containing five questions it requested the parties to address in their post-trial briefing. Post-trial briefing was complete as of November 26, 2019. The parties each submitted proposed findings of fact and conclusions of law, as well as responses to the court’s questions and to the other party’s submission.

On January 28, 2020, the court issued an order requesting additional briefing. The court asked whether it should find a property interest in Medicare Part A coverage for the periods both before and after the Two-Midnight Rule went into effect, whether that interest should be found for patients who are admitted as inpatients but later switched to observation, and how a successful appeal should affect class members’ eligibility for SNF care. Plaintiffs indicated why the court should find an interest in Part A coverage and should not limit that finding to beneficiaries who are switched from inpatient to observation.

On March 24, 2020, the court issued a decision. It held that the Secretary of Health and Human Services is violating the Fifth Amendment Due Process Clause by not allowing certain patients to appeal their placement on observation status. Thus, as matter of constitutional due process, patients who are admitted as inpatients by a physician, but whose status is changed to observation by their hospital, have the right to appeal to Medicare and argue for coverage as hospital inpatients. In making this ruling, the court held that there is a protected property interest in Medicare Part A coverage, meaning that an individual cannot be deprived of that coverage without procedural safeguards. The court did not, however, find a due process violation for patients whose doctors never order inpatient status, or whose status is switched only from observation to inpatient. It drew a distinction between the actions of doctors, and the actions of hospital utilization review staff.  It decided that doctors’ decisions to admit patients as inpatients are not attributable to the government and thus not “state action,” a required component of a due process claim. But it held that then when a hospital’s utilization review staff finds that patient should be in observation status rather than an inpatient, that is due to Medicare’s billing rules and therefore does constitute state action.

The court modified the class definition accordingly. It is now:

All Medicare beneficiaries who, on or after January 1, 2009: (1) have been or will

have been formally admitted as a hospital inpatient, (2) have been or will have

been subsequently reclassified as an outpatient receiving “observation services”;

(3) have received or will have received an initial determination or Medicare

Outpatient Observation Notice (MOON) indicating that the observation services

are not covered under Medicare Part A; and (4) either (a) were not enrolled in Part

B coverage at the time of their hospitalization; or (b) stayed at the hospital for

three or more consecutive days but were designated as inpatients for fewer than

three days, unless more than 30 days has passed after the hospital stay without the

beneficiary’s having been admitted to a skilled nursing facility. Medicare

beneficiaries who meet the requirements of the foregoing sentence but who

pursued an administrative appeal and received a final decision of the Secretary

before September 4, 2011, are excluded from this definition.

The court ordered that the agency establish appeals process for class members, under which they can argue that their inpatient admission satisfied the relevant criteria for Part A coverage—for example, that the medical record supported a reasonable expectation of a medically necessary two-midnight stay at the time of the physician’s inpatient order. Patients will be able to pursue these appeals in an expedited manner while still hospitalized. The court also ordered the agency to provide notice of these procedural rights.

UPDATE: On May 22, 2020, the government appealed the district court’s trial decision to the Second Circuit. Their opening brief will be filed in the fall. In the meantime, the government must implement the court’s order, and plaintiffs’ counsel is trying to determine an approximate timeline for when an appeals process for beneficiaries will be established.

For answers to frequently asked questions from people who think they may be class members, please see the Center’s website here.

  • McKee v. Azar, No. 2:19-cv-114-cr (D. Vt.) (coverage of home health services). On July 2, 2019, Vermont Legal Aid and the Center for Medicare Advocacy filed a lawsuit in federal court in Vermont, on behalf of a Medicare beneficiary whose was denied coverage of home health services. The beneficiary required skilled nursing visits to assess and treat her multiple serious medical conditions. The case challenges the Medicare agency’s failure to follow applicable law, including the standard clarified in the Jimmo v. Sebelius settlement, which requires the determination of whether individuals are eligible for Medicare coverage to be made on the basis of beneficiaries’ need for skilled care, not on their potential for improvement. This determination should be based on each beneficiary’s unique condition and individual needs. In this case, the plaintiff challenges the Secretary’s conclusion that her “stable” condition precludes a determination that she required skilled care and qualified for Medicare coverage of home health services. In addition, she challenges the agency’s failure to afford appropriate weight to the opinion of her treating physician about her need for skilled care.

Plaintiff filed a motion requesting reversal of the coverage decision on November 4, 2019. She argued that the coverage decision violated the standard clarified by the Jimmo settlement, and that she was eligible for home health coverage based on skilled observation and assessment as well as patient education services.

In December 2019 the government filed a request to extend the deadline for its response to the plaintiff’s motion based on the fact that the parties may seek to resolve the matter and require time to confer.

UPDATE: The parties continue to negotiate possible settlement of the case.

  • Dobson v. Azar, No. 4:18-cv-10038-JLK (S.D. Fla.) (Part D Off-Label Drug). On April 6, 2018, the Center for Medicare Advocacy and Florida Health Justice Project filed a lawsuit in the United States District Court for the Southern District of Florida on behalf of a 49-year-old Medicare beneficiary seeking Part D coverage for the “off-label” (non-FDA-approved) use of a critically needed medication. The plaintiff is disabled from a traumatic workplace injury that damaged his spinal cord. As a result of severe pain and multiple surgeries, he suffers daily from debilitating nausea and vomiting. After numerous medications failed to provide relief, his doctor prescribed Dronabinol, which significantly relieved his nausea and vomiting and allowed him to resume many activities of a normal life.

When Mr. Dobson became eligible for Medicare Part D, his plan denied coverage because his particular use of Dronabinol is not FDA-approved.  However, the Part D plan should cover the medication because Mr. Dobson’s use of the drug is supported by one of the “compendia” (DRUGDEX) of medically-accepted indications listed in the Medicare law. Medicare looks to the compendia for acceptable off-label uses of medications, and the symptoms of nausea and vomiting are listed in an entry for Dronabinol.  The plaintiff’s position is strongly supported by a recent federal decision granting Part D coverage of the same medication for a beneficiary with very similar symptoms (Tangney v. Burwell, 186 F. Supp. 3d 45 (D. Mass. 2016)).  In spite of this, Mr. Dobson was denied coverage at each level of administrative review.  In appealing his claim to federal court, Mr. Dobson contests the agency’s use of an inappropriately restrictive reading of the law to claim that coverage cannot be granted.

Briefing on cross-motions for summary judgment was complete as of December 3, 2018. Oral argument on the parties’ cross motions for summary judgment was held on September 25, 2019 in Miami in front of a magistrate judge.

The judge issued a decision on March 31, 2020, finding that Mr. Dobson’s medication cannot be covered by Medicare Part D. She credited the government’s argument that Mr. Dobson’s use was not a “medically accepted indication,” “supported by citation” in DRUGDEX. This was because he does not have the identical diagnosis as the patient in the study contained within the DRUGDEX citation for disease-related, treatment-refractory nausea and vomiting. The judge rejected the reasoning of the Tangney court.

UPDATE: On May 28, 2020 the plaintiff appealed the district court’s decision to the 11th Circuit. His opening brief is due August 24, 2020.

  • Jimmo v. Sebelius, No. 5:11-cv-17 (D. Vt.) (Improvement Standard).  The settlement in Jimmo was approved on January 24, 2013.  CMS issued revisions to its Medicare Benefit Policy Manual to clarify that Medicare coverage is available for skilled maintenance services in the home health, nursing home and outpatient settings.  CMS also implemented a nationwide Educational Campaign for all who make Medicare determinations to ensure that beneficiaries with chronic conditions are not denied coverage for critical services because their underlying conditions will not improve. Pursuant to the settlement, counsel for the parties met twice a year to discuss problems with implementation and possible solutions.

After three years of urging CMS to fulfill its obligation to end continued application of the “Improvement Standard,” the Center and Vermont Legal Aid filed a Motion for Resolution of Non-Compliance with the settlement agreement. The court announced its decision on the Motion on August 18, 2016. The Order required CMS to remedy the inadequate Educational Campaign that was a cornerstone of the original Settlement Agreement. As the judge stated, “Plaintiffs bargained for the accurate provision of information regarding the maintenance coverage standard and their rights under the Settlement Agreement would be meaningless without it.”

On February 2, 2017, the court released a decision ordering CMS to carry out a Corrective Action Plan to remedy noncompliance with the Settlement. Jimmo v. Burwell, 2017 WL 462512 (D. Vt. Feb. 1, 2019) The plan includes a new webpage by CMS dedicated to the Jimmo settlement with frequently asked questions and a statement (which the court largely adopted from plaintiffs’ suggested language) that affirmatively disavows the Improvement Standard; new training for Medicare contractors making coverage decisions; and a new National Call for Medicare contractors and adjudicators to correct erroneous statements that had been made on a previous call. On February 16, 2017, the court approved the final wording of the statement to be used by CMS to affirmatively disavow the use of an Improvement Standard.  Importantly, the statement notes that the “Jimmo Settlement may reflect a change in practice for those providers, adjudicators, and contractors who may have erroneously believed that the Medicare program covers nursing and therapy services under these benefits only when a beneficiary is expected to improve.”

In late August 2017 the government published the new Jimmo-webpage on the CMS website to comply with the Corrective Action Plan. The webpage includes court-approved affirmative disavowal of the Improvement Standard in a blue box titled “Important Message About the Jimmo Settlement.” The webpage also contains links to Jimmo-related documents, such as the transmittals of the revised Manual provisions, and a new set of Frequently Asked Questions. The imprimatur of CMS on these materials will help beneficiaries and their advocate who are arguing against inappropriate coverage denials or service terminations.

The court case has now concluded, but class counsel continues to work on ensuring that access to skilled maintenance nursing and therapy for older adults and people with disabilities is not inappropriately denied or terminated because their conditions are “chronic,” “not improving,” “plateaued,” or “stable.”

For more information on the Improvement Standard, visit the Center’s website here.

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