Center for Medicare Advocacy

Advancing Access to Medicare and Healthcare

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

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I. COVID-19 and Medicare

A. Latest General Updates

  1. Policy Updates Issued by CMS

While there are some Medicare coverage provision changes in the bills discussed below, most of the Medicare-related changes have been issued by the Centers for Medicare & Medicaid Services (CMS) through regulation and sub-regulatory guidance (see CMS’ webpages devoted to the COVID crisis here and here; note that CMS has compiled a list of their ongoing waivers here).   On April 6, 2020, CMS published an Interim Final Rule (hereinafter referred to as the IFR), at 85 Federal Register 19230 (April 6, 2020), available here.  On May 8, 2020, CMS published another Interim Final Rule (hereinafter referred to IFR 2) at 85 Federal Register 27550 (May 8, 2020) available here. 

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. 

CMS has also issued new guidance concerning Part A and B enrollment and the availability of equitable relief, along with a Special Enrollment Period for Medicare Advantage and Part D plans.

Many of these Medicare changes are summarized in the Center’s publication “COVID-19: AN ADVOCATES GUIDE TO MEDICARE CHANGES” (updated May 11, 2020).

  • Legislation

As of May 11, 2020, Congress had passed four bills relating to the COVID-19 crisis:

  1. On 3/6/2020, the President signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act, H.R. 6074 (sometimes referred to as COVID Bill #1);
  2. On 3/18/2020, the President signed into law the Families First Coronavirus Response Act, H.R. 6201 (COVID Bill #2); 
  3. On 3/27/2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, H.R. 748 (COVID Bill #3), and
  4. On 4/24/2020, the President signed into law the Paycheck Protection Program and Health Care Enhancement Act, H.R. 266 (referred to as an interim emergency funding package).

Congress is debating another large COVID-related bill, but the contents and timing remain uncertain.  Democratic Leadership (Speaker Pelosi, Senate Minority Leader Schumer) are planning to unveil broad-based legislation soon, according to an article in The Hill “Schumer, Pelosi set to unveil ‘Rooseveltian’ relief package” (May 7, 2020).

Senate Aging Committee Ranking Member Sen. Casey has introduced a bill – see Press Release “Sens. Casey, Brown, Jones, Rep. Schakowsky Unveil Legislation to Address the Needs of Seniors, People with Disabilities During COVID-19 Pandemic” (May 7, 2020) regarding “COVID-19 Recovery for Seniors and People with Disabilities Act”  (see Discussion Draft).  According to the Press Release, the bill is “aimed at removing barriers to accessing Social Security benefits, facilitating enrollment in Medicare and reducing the risks the virus poses to seniors and people with disabilities. Representative Jan Schakowsky (D-IL-9), Co-Chair of the House Democratic Caucus Task Force on Aging and Families, is releasing legislation that contains the health and Social Security-related provisions in the House of Representatives alongside other Task Force leaders.”

According to the Press Release: The COVID-19 Recovery for Seniors and People with Disabilities Act would:

• Require the Social Security Administration to halt unnecessary activities like continuing disability reviews and collection of overpayments for seniors and people with disabilities;

• Remove administrative barriers to accessing disability benefits and health care, and expand eligibility for Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI);

• Open a Medicare Part B Special Enrollment Period (SEP) to easily and quickly enroll more people during the public health emergency;

• Increase funding for the Federal Trade Commission and the Federal Communications Commission to educate seniors about coronavirus-related scams; and

• Provide flexibility for the senior food box program to limit the number of times a senior must leave their home in order to access proper nutrition.”

  • Skilled Nursing Facilities

CMS Waivers and Flexibilities

  • Expansion of coverage:
    • waiver of three-day inpatient hospital stay requirement for Part A coverage (traditional Medicare)
    • extension of benefit period (allowing continuation of coverage beyond 100 days if the reason for the continued stay is related to the pandemic)
  • But waivers of long-standing resident protections, including
    • Transfer/discharge protections, to allow certified facilities to move residents without advance written notice and an opportunity for a hearing when  the purpose is “cohorting” – that is, grouping residents by COVID-19 status (positive, negative, unknown).
    • Complete ban on visitors (families, ombudsman program) since mid-March.
    • Suspension of standard surveys (announced March 20 and continuing indefinitely).  The only surveys being conducted are
      • Complaints and facility-reported incidents that are triaged by state as “immediate jeopardy”
      • Infection control surveys:
        • CMA, “Special Report, Infection Control Surveys at Nursing Facilities: It Looks Like Business as Usual” (May 7, 2020), https://www.medicareadvocacy.org/wp-content/uploads/2020/05/Special-Report-Infection-Control-5-7-2020.pdf.
          • Looked at 171 infection control surveys in 20 states:
            • 130 surveys (76%) did not cite a deficiency;
            • 30 of 41 surveys citing a deficiency (73%) called the deficiency “no harm.”
            • 8 surveys (.05%) cited immediate jeopardy, but found jeopardy was removed during the survey.
            • 3 surveys (.02%) cited immediate jeopardy (include Life Care Center of Kirkland).

Federal Legislation

  • H.R. 6698, the Quality Care for Nursing Home Residents and Workers During COVID-19 Act, (Schakowsky; companion bill to be introduced in Senate by Senators Blumenthal and Booker); most comprehensive bill, establishing a national framework for addressing pandemic in nursing facilities; including
    • 100% testing of residents and staff
    • Daily reporting by facilities of all deaths, personal protective equipment (availability and need)
    • Protections for residents in transfer/discharge situations during cohorting
    • Federal standards for COVID-19 only facilities
    • Requirement that infection preventionist work full in facility
    • $500,00 for strike teams to go to facilities with greatest need for PPE, staff
    • Guarantees of worker safety
    • Statement by CMA at press briefing announcing introduction of the bill (May 5, 2020)
  • Access to Coverage and Care Amid Pandemic

Case Study: Medicare Advantage and Repeated SNF Denials Amid the COVID Crisis

Mr. A, is a retired professor from a state university. He was auto-enrolled in his state’s retiree Medicare Advantage (MA) plan. An active 73-year old, Mr. A went to his primary care doctor because he was experiencing some unusual discomfort. Within a short time it was determined that Mr. A had pancreatic cancer.  He had surgery in January 2020; fortunately, the prognosis for his recovery was good. He was discharged home after a few weeks in the hospital, but within a few hours of being home had a stroke. He returned to the hospital by ambulance. After that hospital stay he was admitted to a skilled nursing facility (SNF) on February 4th for nursing and multi-disciplinary therapies to care for his post-stroke disabilities and post pancreatic cancer surgery needs. Mr. A’s Medicare Advantage plan purports to cover an unlimited number of days in a SNF.

As a result of his stroke, Mr. A was paralyzed on his left side. He made gains. Within a few weeks, he could speak and swallow again, although not normally, and was able to discontinue use of a feeding tube. The speech pathologist recommended continued therapy to perfect his swallowing, reduce the danger of aspirating, and continue working on his speech. He could move his left arm and leg and had gained strength. He was even able to work with the therapist and a device to begin efforts to possibly walk again. But he needed more therapy to maximize his potential and maintain what he’d gained. Nonetheless, his Medicare Advantage plan issued a notice of Medicare denial after 14 days in the SNF.

The SNF nurses, therapists, and Mr. A’s physician all documented his receipt of care, needs, and progress. His treating physician ordered continued daily nursing and therapy in the SNF. The family successfully appealed with support from the physician and the Center for Medicare Advocacy (the Center). But the MA plan continued to review his case weekly; it issued 7 denials in 9 weeks. With a great deal of help from Mr. A’s doctor and the Center, the family kept successfully appealing, from February 2020 through May 2020.

During this entire time the MA plan asserted that Mr. had reached his “maximum level of practical improvement” and that he could go home. Not only is improvement not a legal standard upon which to deny Medicare coverage, this simply was not true. In fact, Mr. A is now able to use his left arm and hand and swallow normally; his speech is markedly improved, he can transfer from bed to wheelchair with assist, and is beginning to walk with a walker and therapist assistance.

Each time the MA plan denied further Medicare coverage, the so-called “discharge plan” was to teach his wife to use the equipment necessary to help Mr. A out of bed, to help him transfer, and to obtain 24 hour in-home care. This would not meet Mr. A’s health and therapeutic care needs, nor could the family afford 24-hour care.  As a practical matter, and as ordered by his attending physician, Mr. A’s care could only be provided in a SNF. This was particularly true beginning mid-March 2020, when the COVID pandemic prohibited Mr. A’s wife from visiting him in the SNF and learning from his nurses and therapists how to provide his care.

An honest review and analysis of the law, medical records, and treating physician’s opinion confirms that Mr. A qualifies for continued Medicare coverage:

  • He was an inpatient in a hospital for over three days before entering the SNF;
  • His doctor ordered daily skilled care to be provided in the SNF for care related to the conditions for which he was hospitalized;
  • He needs, and received, daily skilled nursing and therapies that, as a practical matter, can only be provided in a skilled nursing facility.

The MA plan denials are inappropriate and add unnecessary and harmful stress for Mr. A and   his family.  Fortunately, a Medical Director at the relevant Medicare Quality Improvement Organization (QIO) that reviews appeals has agreed and overturned each MA plan denial to date.

The following is an excerpt from the Center for Medicare Advocacy’s Covid-19: An Advocates Guide To Medicare Changes.  Recent changes to home health rules during the current Public Health Emergency include:

  • Physician assistants, nurse practitioners, and clinical nurse specialists can: (1) order home health services; (2) establish and periodically review a plan of care for home health services (e.g. sign the plan of care), (3) certify and re-certify that the patient is eligible for Medicare home health services.[i]  However, IFR2 clarifies that those non-physician practitioners would only be able to practice to the top of their state licensure as they are allowed to practice in accordance with state law. CMS review of state prescriptive authority websites reveals that a majority of states require physician collaboration for non-physician practitioners.[ii]
  • Initial assessments and determination of a patient’s homebound status may be performed by a home health agency remotely or by record review.[iii]
  • Occupational therapists (OTs) from home health agencies can now perform initial and comprehensive assessments on  all homebound patients who are receiving therapy services as part of the plan of care, regardless of whether occupational therapy is the service that establishes eligibility, allowing home health services to start sooner and freeing home-health nurses to do more direct patient care. It is unchanged that OTs and other therapists are not permitted to perform assessments in nursing only cases.[iv] [v]
  • MLN Matters # MM-11721 (Release Date 5/1/2020; Effective Date: 1/1/2020), reiterates that therapy to maintain an individual’s function is a covered Medicare service. The MLN also authorizes therapist assistants to perform maintenance therapy as a covered Medicare home health benefit, if the therapy is initially assessed and supervised by a qualified physical therapist. The authorization for therapist assistants implements this change made in the CY 2020 Medicare Home Health Prospective Payment System.
  • The requirement for a nurse to conduct an onsite visit every two weeks for home health aide supervision is waived. This includes waiving the requirements for a nurse or other professional to conduct an onsite visit every two weeks to evaluate if aides are providing care consistent with the patient’s Plan of Care, as this may not be physically possible during the COVID crisis.[vi] [vii]

Home Health and Telecommunication

  • For home health coverage, Medicare continues to generally require in-person visits (defined as when a home health agency employee enters the beneficiary’s home and provides a covered service) and only in-person visits can be reported on the home health claim.  
  • Once a home health agency achieves the number of in-person visits to exceed a low-utilization payment amount (LUPA), all additional visits (in-person or telecommunication) will count toward the full bundled payment.
  • Telecommunication technology, tele-visits, and remote-monitoring can be substituted for in-person visits only when the physician:
    • Notes the technology in the Plan of Care (this can be retro-changed prior to final billing),
    • States how the use of technology is ties to patient-specific needs, and
    • States how the use of such technology will help to achieve the goals outlined in the Plan of Care.[viii]
  • The required face-to-face encounter for home health can be conducted via telehealth (i.e. 2-way audio-video telecommunications technology that allows for real-time interaction between the physician/allowable practitioner and the patient).[ix]

Telecommunications technology can include, for example, remote patient monitoring; telephone calls (audio only and TTY); and 2-way audio-video technology that allows for real-time interaction between the clinician and patient. Again, however, only in-person visits can be reported on the home health claim.[x]

  • Homebound definition relaxed to include that one can be considered homebound if it is medically contraindicated for individual to leave home:
  • Due to a confirmed or suspected diagnosis of COVID-19, or
  • The patient has a condition that may make the patient more susceptible to contracting COVID
  • The record must indicate:
  • A physician certification that it is medically contraindicated for a person to leave home.
  • Documentation as to why the individual condition of the patient is such that leaving home is medically contraindicated.
  • Documentation that the medical contraindication makes it such that there exists a normal inability for an individual to leave home and leaving home safely would require a considerable and taxing effort.
  • Example of a covered home health service from the Interim Final Rule “Even if the patient is confined to the home because of a suspected diagnosis, a home health visit solely to obtain a nasal or throat culture would not be considered a skilled service because it would not require the skills of a nurse to obtain the culture as the specimen could be obtained by an appropriately trained medical assistant or laboratory technician. However, a home health nurse, during an otherwise covered skilled visit, could obtain the nasal or throat culture to send to the laboratory for testing.” [xi]
  • Clinical Records

Home health agencies have ten business days to provide a patient’s clinical medical record to the patient at no cost, when requested by the patient, instead of four days.[xii]

  • Patient Assessment Reporting

The home health comprehensive assessment must be completed within 30 days, extending the 5-day completion requirement. The 30 day submission requirement is waived, but home health agencies must submit the assessment data prior to submitting their final claim.[xiii]

Systemic Considerations re COVID-19 Changes

While most of the recent waivers and changes of rules have been deemed to be temporary, and are set to expire when the current Public Health Emergency (PHE) is over, some rule changes have been made permanent, and efforts are underway by various stakeholders to make other changes permanent as well.

From a consumer advocacy perspective, some waivers of rules are favorable for beneficiaries, including, e.g., the extension of:

  • waiver of three-day inpatient hospital stay requirement for Part A coverage (traditional Medicare)
  • extension of benefit period (allowing continuation of coverage beyond 100 days if the reason for the continued stay is related to the pandemic)

Some important rules have been suspended, including reporting requirements by and oversight of providers.  In a climate of regulatory roll-back, will important consumer protections and oversight return?

The pandemic is putting pressure on Medicare financing.  According to the Congressional Budget Office (CBO), advanced payment to providers is primarily responsible for an increase in outlay for October-April of $117 billion, or 32% over the same period last year (see CBO monthly budget review for April 2020, flagged by Juliette Cubanksi, Kaiser Family Foundation, https://twitter.com/jcubanski/status/1258811852672270337).  How will policymakers react.

II. 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 the 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 lower-court judge who struck down the entire law last year to parse through all of the hundreds of the ACA’s provisions with a “finer-toothed comb” to determine which can survive. The Center had filed an amicus brief along with AARP and Justice in Aging highlighting the critical protections the law provides for older Americans and people with disabilities.

The Fifth Circuit ruling 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.

On January 15, 2020, the Center joined AARP and Justice in Aging in filing an amicus brief in the Supreme Court in support of the states defending the law, urging the Court to grant immediate review of the lawsuit rather than allow it to be remanded to the district court and appealed again. The brief highlights the ACA’s key protections for older adults and the devastating consequences of nullifying the law. It also emphasized that prolonged uncertainty will harm millions of older Americans and people with disabilities who rely on the ACA.

While the Court denied expedited review, as of March 2, 2020, it granted California’s petition for certiorari on a standard timeline. This means it will likely be argued in the fall of 2020, with a decision to issue by the end of June 2021. The Center is pleased that the Supreme Court has granted review and we will continue to urge a decision that the ACA remains constitutional and should not be struck down.

Update: Briefs for California and U.S. House of Representatives, defending the ACA, were filed on May 6, 2020. The Trump administration did not change its position that the entire law needs to be struck down, thus there was no filing from the Department of Justice. Amicus briefs will be filed by May 13.

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

Center for Medicare Advocacy Litigation

  • 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.

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 is continuing to provide 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, though it did note that CMS considers the billing of hospitalizations as inpatient or observation to be a regulatory matter, under the authority of the Secretary, as opposed to a clinical decision. The court also found that while a treating physician’s status order plays a “role” in Medicare’s review of a hospital claim, it is not dispositive or even presumed to be correct.

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, and have received an “initial determination” that such services were covered, or subject to coverage, under Medicare Part B. In response to a motion for reconsideration filed by plaintiffs, the court issued a decision redefining the class to specifically include beneficiaries who have received a MOON notice. The court declined to include beneficiaries who do not have Part B, as plaintiffs had requested, but stated that it may revisit the class definition as more evidence is presented.

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 (note: 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.

A hearing was held on November 26, 2018 to address the motion for summary judgment on the Eldridge factors, the motion to decertify the class, and the court’s own question on whether it should bifurcate the trial to deal with the protected property interest separately. However, the hearing focused mostly on the court’s questions about the criteria plaintiffs rely on for a protected property interest, in particular CMS’s “Two-Midnight Rule,” which plaintiffs have argued is the governing standard for inpatient admission since it was introduced in 2013. The court gave plaintiffs an opportunity to amend their complaint as it relates to the Two-Midnight Rule, which plaintiffs declined because the second complaint in intervention (filed in 2015) already makes sufficient allegations about the Rule. The court decided that the government should have an additional opportunity to address whether the Two-Midnight Rule can create a protected property interest. It removed the scheduled trial from the calendar and directed the government to file another, supplemental summary judgment motion specifically on whether the Two-Midnight Rule can serve to create a protected property interest. It also directed the government to address how the court should treat the remaining claims from the original complaint and first complaint in intervention if it grants summary judgment with respect to the property interest theory based on the Two-Midnight Rule. On December 6, 2018, the government alerted the court and plaintiffs that in addition to the supplementary summary judgment motion, it would also file a motion to dismiss claims from the first two complaints for lack of subject matter jurisdiction pursuant Fed. R. Civ. P. 12(h)(3).

On January 30, 2019, the government filed its supplemental summary judgment motion regarding a protected property interest based on the Two-Midnight Rule, and a motion to dismiss based on lack of subject matter jurisdiction (claiming that all of the named plaintiffs lack standing and that their claims are moot). On March 27, 2019, the court issued a ruling denying the government’s motion for summary judgment, motion to decertify the class, and motion to dismiss. 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.

The court requested additional briefing from the parties on whether it should create two subclasses, consisting of people whose hospitalizations occurred before the Two-Midnight Rule came into effect in October 2013, whose assertion of a protected property interest relies on the application of commercial screening tools in determining patient status, and those whose hospitalizations occurred after the Two-Midnight Rule came into effect, who rely on the Rule itself. The court inquired whether the subclasses may require separate counsel, or whether they should be created solely for “case management” purposes.

In early April 2019, the government filed a motion for clarification and reconsideration of the court’s March 27 ruling. It asked the court to identify what the criteria for admission are under the Two-Midnight Rule and the “legal framework” the court applied in determining that such criteria would give rise to a protected property interest. The government also requested that the court reconsider the new class definition on the grounds that not everyone who is hospitalized for three days requires follow-up SNF care. (This issue was addressed by the parties in previous briefing.) On June 4, 2019, the court issued a ruling denying the government’s motion for reconsideration, meaning the class definition remained the same. The court also declined to further detail its reasoning on the issue of a protected property interest. Additionally, the court decided that it would not subdivide the class, formally or otherwise.

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 whose status is initially inpatient 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. In short, Medicare’s rules regarding patient status apply equally to people who are initially designated as observation as to those who are switched from inpatient, creating a legitimate claim of entitlement. There is also state action in both situations as it is Medicare rules being applied.

Update: 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. This is because 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.

  • 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.

The government filed an Answer and the administrative record on September 3, 2019, and the 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 an unopposed request for a 30-day extension of 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. The government’s deadline to respond to plaintiff’s opening brief is now extended until June 3, 2020.

  • 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.

The parties consented to proceed before a magistrate judge on June 13, 2018. Briefing on cross-motions for summary judgment was complete as of December 3, 2018. On January 10, 2019, the court alerted the parties that the case had been reassigned to a different magistrate judge. The parties consented to jurisdiction by the new judge. Oral argument on the parties’ cross motions for summary judgment was held on September 25, 2019 in Miami.

Update: 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.

  • 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.” The parties negotiated but could not come to agreement on what a Corrective Action Plan should entail.  The court then ordered each party to submit a brief explaining and justifying their proposed corrective action plans, as well as a response to the other party’s plan.

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.

[i] IFR 2 Pages 27571-27572,p. 27599; also see https://www.cms.gov/files/document/covid-home-health-agencies.pdf

[ii] IFR 2, page 27572.

[iii] COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf, Page 12.

[iv] CMS Press Release “Trump Administration Acts to Ensure U.S. Healthcare Facilities Can Maximize Frontline Workforces to Confront COVID-19 Crisis” (April 9, 2020), available at: https://www.cms.gov/newsroom/press-releases/trump-administration-acts-ensure-us-healthcare-facilities-can-maximize-frontline-workforces-confront.

[v] COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf, Page 13.

[vi] See CMS memo “COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers” page 15, available at: https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf; also see CMS memo “Additional Background: Sweeping Regulatory Changes to Help U.S. Healthcare System Address COVID-19 Patient Surge” (March 30, 2020), available at:  https://www.cms.gov/newsroom/fact-sheets/additional-backgroundsweeping-regulatory-changes-help-us-healthcare-system-address-covid-19-patient.   

[vii] COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers https://www.cms.gov/files/document/summary-covid-19-emergency-declaration-waivers.pdf, Page 12.

[viii] IFR, Pages 19247-19250.

[ix] https://www.cms.gov/files/document/covid-home-health-agencies.pdf

[x] Id.

[xi] IFR, Pages 19246-19247.

[xii] https://www.cms.gov/files/document/covid-home-health-agencies.pdf

[xiii] Id.

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