Center for Medicare Advocacy

Advancing Access to Medicare and Healthcare

July 2017 – Update on Health Reform & Other Issues

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I. HEALTH REFORM: UPDATE

  1. Overview

On May 4, 2017, the U.S. House of Representatives passed the American Health Care Act (AHCA) by a vote of 217-213.  The bill then moved on the Senate, and was reintroduced, with some minor changes, as the Better Care Reconciliation Act of 2017 (BCRA).

Both AHCA and BCRA would cause substantial harm to millions of Americans.  If enacted, this legislation would decimate health insurance coverage and care.  Here are just some of the dangers:

  • 15 million people will lose their insurance next year and over 20 million people will be uninsured by 2026
  • Medicaid would be cut by up to 26% in the next 10 years – $772 billion – and would face steeper cuts starting in 2025 – after 20 years it would be cut by 35%
  • Millions of people would have skimpier coverage and care, and greater out-of-pocket expenses
    • Older, low-income adults not yet eligible for Medicare would fare particularly poorly
      • The bills would allow plans to charge older people five times as much as younger ones, and allows states to waive that rule and establish an even higher ratio
  • States would be allowed to waive requirements such as covering essential health benefits
  • Health care in rural communities would be devastated
  • Medicare’s finances would be undermined

For more information, see, e.g., the Center’s “Health Repeal Myths and Facts: The Fight Continues” (July 5, 2017), at: https://www.medicareadvocacy.org/health-repeal-myths-facts-the-fight-continues/.

  1. Updated Version of BCRA (July 13, 2017)

After backing off of plans to vote on BCRA before Congress’ July 4th recess, Senate leadership is once again redoubling its efforts to repeal the Affordable Care Act (ACA) and gut Medicaid. As of the publication date of this issue brief (July 14, 2017), action is planned on the bill the week of July 17th: after an updated analysis by the Congressional Budget Office (CBO), expected early in the week, leadership plans to bring up a procedural vote that will start a shortened debate period, followed by a vote on the bill later in the week.

In an attempt to secure the votes of enough reluctant senators to pass the bill, Senate Leader Mitch McConnell has crafted minor changes to the last version of their bill and has released an updated draft on July 13th, 2017 (also see section-by-section summaries here and here).

These changes cannot fix the Senate’s original bill.  Even with the new amendments, the debilitating harm caused by the BCRA remains the same.

As noted by the Center on Budget and Policy Priorities (CBPP), the changes that are in this latest version of BCRA cannot fix its core flaws. For example:

  • Newly added funding to address the opioid crisis would not be enough to off-set the loss of more comprehensive Medicaid coverage,
  • Neither the increased funding for “market stability” nor the expansion of tax credits for health savings accounts (HSAs) will do much to mitigate significant cost-increases for moderate income individuals, and
  • New provisions allowing the sale of plans that do and do not include certain ACA protections will make plans with adequate coverage unaffordable for people with pre-existing conditions.

Moreover, as noted by CBPP, “minor changes in the revised bill’s Medicaid provisions do nothing to limit the harm the bill would cause.”  Here are some resources that address some of the wide-ranging impacts the legislation would have on the Medicaid program: 

II. FEDERAL BUDGET – IMPACT on SOCIAL SECURITY PROGRAMS

  1. Overview

On May 23rd, 2017, the Trump Administration released its proposed FY2018 federal budget.  The budget, entitled “A New Foundation for American Greatness,” would have a wide-ranging and devastating impact on the nation’s safety net programs.  For example, the budget:

  • Assumes the massive cuts to Medicaid in the House-passed American Health Care Act (AHCA) are enacted into law, and then adds to those cuts, totaling almost $1.3 trillion in Medicaid cuts over 10 years.
  • Completely eliminates federal funding for State Health Insurance and Assistance Programs (SHIPs), the only program that provides free, unbiased direct support to Medicare beneficiaries to help navigate the complexities of enrolling in Medicare and ensuring that beneficiaries obtain access to the benefits for which they are eligible, such as low-income cost-sharing assistance. 
  • Makes changes to Medicare appeals, making it even harder for beneficiaries to access needed coverage and care.

For more information, see, e.g., the Center’s Weekly Alert “Budget Response: Abandoning Older Adults and People with Disabilities” (May 24, 2017), available at:  https://www.medicareadvocacy.org/cma-alert-budget-response-abandoning-older-adults-and-people-with-disabilities/.

  1. Impact on Social Security Programs

The budget proposes destructive cuts to agencies and programs that support older people and people with disabilities. In addition to cuts to federal agencies that administer critical services and supports, the budget cuts billions of dollars out of disability programs. SSDI provides critical income support to over 9 million beneficiaries, the majority being older people. Social Security programs such as SSDI and SSI help beneficiaries afford basic life necessities such as food, shelter and medical care. Without this support, many beneficiaries would find themselves living in poverty or homeless. The administration also makes harmful cuts to programs such as SNAP, Medicaid, TANF and housing assistance. Taken together, these cuts would mean serious harm to the health and economic well-being of millions of people with disabilities. As baby boomers age and become more at risk of becoming disabled, these programs must be strengthened, not cut. The Center for Medicare Advocacy will continue to oppose such harmful cuts to safety net programs.

For more information on disability cuts in the administration’s budget proposal, see the below links.

III. LITIGATION UPDATE

  • Barrows v. Price (formerly Bagnall v. Sebelius, Barrows v. Burwell), No. 3:11-cv-1703 (D. Conn.) (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 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 cross motions for summary judgment on the protected property interest issue and defendant’s supplemental motion to dismiss, the court issued a decision on February 8, 2017 denying both motions for summary judgment and largely denying the government’s motion to dismiss.  The court found that all 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 not dispositive or even presumed to be correct.

As for the motion to dismiss, the court found that plaintiffs have 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). The parties filed an updated plan for further discovery as plaintiffs continue to press their due process claim. Plaintiffs filed a renewed motion for class certification on March 3, 2017

Update: Oral argument on the class motion was held June 13, 2017. The court indicated in a follow-up status conference that it is inclined to certify a class consisting only of beneficiaries who experienced the specific substantive harm of non-coverage of medically necessary skilled nursing care after being placed on observation status. The parties were allowed to submit proposals about this particular aspect of the class definition, which they did on July 12, 2017. The court is expected to issue an opinion on class certification soon.

 

  • Exley v. Burwell (formerly Lessler v. Burwell), No. 3:14-cv-1230 (D. Conn.) (ALJ Delays) The Medicare statute and regulations require that an administrative law judge (ALJ) issue a decision within 90 days the filing of a request for hearing. While the Chief ALJ has stated that individual beneficiary cases should not be delayed, still most of the Center’s cases were exceeding statutory timelines for decisions.

On August 26, 2014, the Center filed a nationwide class action lawsuit in United States District Court in Connecticut. The named plaintiffs, from Connecticut, New York and Ohio, all waited longer than the statutory 90-day limit for a decision on their Medicare appeals. On January 29, 2015, defendant’s motion to dismiss was denied.  On June 10, 2015, the court granted the plaintiffs’ motion for certification of nationwide class of Medicare beneficiaries who have been or will be waiting more than 90 days for a decision on their timely-filed request for an ALJ hearing. The parties also conducted discovery. In March 2016 the court preliminarily approved a settlement and notice to the class was posted.

A Fairness Hearing was held on August 1, 2016 and the Court granted final approval of the settlement agreement. The settlement calls for the Office of Medicare Hearings and Appeals (OMHA) to continue its policy of providing beneficiary appellants with priority over other appellants in receiving ALJ decisions, to designate a Headquarters Division Director to oversee inquiries about appeals initiated by beneficiary appellants, and to address any complaints or questions concerning the processing of those appeals. OMHA will also introduce a new, more user-friendly ALJ hearing request form that allows beneficiaries to self-identify, and will also publish data about the length of processing time for beneficiary appeals.

On September 1, 2016 as part of the settlement, OMHA established a toll-free Beneficiary Help Line: (844) 419-3358.  This line, which is staffed by representatives of OMHA, will address inquiries about ALJ appeals being pursued by Medicare beneficiaries. The Center urges anyone pursuing a beneficiary appeal who believes the appeal is not receiving timely attention to call the Beneficiary Help Line. The expectation is that a call to this line will help resolve delays in cases that are eligible to be prioritized. The Beneficiary Help Line is staffed from 8:00 a.m. to 4:30 p.m., Eastern Time. If calling at other times or if the OMHA Beneficiary Help Line staff are assisting other callers, OMHA instructs callers to leave a voicemail. Please report your experiences using the Help Line to the Center at: abers@medicareadvocacy.org.

As of November 1, 2016 CMS updated scripts for 1-800-Medicare to highlight the OMHA beneficiary prioritization policy for beneficiary callers and to refer them to the toll-free OMHA Beneficiary Help Line if they have questions about filing appeals with OMHA or about ALJ appeals that are pending with OMHA. OMHA also posted the beneficiary appeals data required by the settlement on their website at http://www.hhs.gov/about/agencies/omha/about/current-workload/beneficiary-appeals-data/index.html. The data shows beneficiary appeals now being processed within or very close to the 90-day statutory time period.

In late January 2017 the Office of Medicare Hearings and Appeals issued a new ALJ request form, the OMHA-100, which is a unified request for hearing and review and can be used for all appeals to OMHA.  As part of the settlement, the form allows beneficiaries and enrollees to self-identify, making it easier for these claims to be classified as beneficiary appeals and given priority for processing. CMS has also issued instructions to appeal contractors that deal with reconsiderations (the level below ALJ hearings) the begin using revised appeal instructions that include plain-language instructions about OMHA’s beneficiary mail-stop as well as information on the beneficiary help-line that has been established at OMHA.  The OMHA-100 is available at: https://www.hhs.gov/sites/default/files/OMHA-100-Request-for-Hearing-or-Review-of-Dismissal.pdf.

 

  • 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 have been meeting twice a year to discuss problems with implementation and possible solutions, and are in regular contact between meetings.

On March 1, 2016, the Center and its co-counsel, Vermont Legal Aid, filed a Motion for Resolution of Non-Compliance with the settlement agreement. The filing came after three years of urging the Centers for Medicare & Medicaid Services (CMS) to fulfill its obligation to end continued application of an “Improvement Standard” by Medicare providers, contractors and adjudicators to deny Medicare coverage for skilled maintenance nursing and therapy.

If truly implemented and enforced, the settlement should improve access to skilled maintenance nursing and therapy for thousands of older adults and people with disabilities whose Medicare coverage for skilled care is denied or terminated because their conditions are “chronic,” “not improving,” “plateaued,” or “stable.” Unfortunately, providers and contractors continue to illegally deny Medicare coverage and care based on an “Improvement Standard,” resulting in beneficiaries nationwide failing to obtain needed skilled nursing and therapy coverage.

The court announced its decision on the Motion for Resolution of Non-Compliance 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. 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. The government was given an opportunity to object to the language of the corrective statement, and the parties negotiated final wording which was submitted to the court.  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.” The government must certify that it has complied with the Corrective Action Plan by September 4, 2017.

In April 2017, pursuant to the court order, plaintiffs’ counsel submitted suggestions to the government for the Frequently Asked Questions to be included on the new Jimmo webpage.

Update: The government has indicated that it will hold the new National Call for contractors and adjudicators in August 2017, and it has provided a preliminary draft of the “Jimmo webpage message” for commentary by class counsel.

 

  • Sherman v. Burwell (formerly Olsen-Ecker v. Burwell), No. 3:15-cv-1468 (D. Conn.) (Lower level Medicare appeals) On October 9, 2015, the Center filed a complaint in United States District Court in Connecticut against Sylvia Mathews Burwell, Secretary of Health and Human Services, on behalf of plaintiffs who have been denied a meaningful review of their Medicare claims at the first two levels of appeal. The case was brought as a class action on behalf of Medicare beneficiaries seeking home health care coverage, and the named plaintiff represents beneficiaries who have received the usual “rubber stamp” denials at redetermination and reconsideration. The plaintiff also filed a motion for class certification, and the government filed a motion to dismiss. Written discovery was served but responses were stayed while the motion to dismiss was pending. Oral argument was held on February 29, 2016.

On August 8, 2016, the judge largely denied the government’s motion to dismiss and granted plaintiff’s motion for certification of a nationwide class. The court concluded that it had jurisdiction and decided that the case was not moot even though plaintiff’s claim had ultimately been approved. The judge dismissed the statutory claim, but found that plaintiff had stated a valid claim for relief under the Due Process Clause. He found plaintiff’s claim of policies or practices causing the denial rate sufficiently plausible to allow the case to continue to discovery. The judge also certified a nationwide class of Medicare beneficiaries of home health care services who had received adverse decisions at the first two levels of appeal on their Part A or Part B claims, and who had received an initial adverse initial determination on or after January 1, 2012. 

Plaintiffs and the Secretary each served discovery and provided written responses and document production. The parties are conducting discovery which is expected to continue through the summer of 2017.

 

  • Ryan v. Burwell, No. 5:14-cv-269 (D. Vt.) (Prior Favorable Homebound Determination) On December 19, 2014, the Center for Medicare Advocacy and Vermont Legal Aid filed a class action lawsuit against Sylvia Mathews Burwell, the Secretary of Health and Human Services, to stop Medicare’s practice of repeatedly denying coverage for home health services for beneficiaries on the basis that they are allegedly not homebound, when Medicare has previously determined them to be homebound. (Ryan v. Burwell). The lawsuit was filed in the United States District Court in Burlington, Vermont on behalf of two Vermont residents, Marcy Ryan and John Herbert, as a regional class action lawsuit covering New England and New York.

On March 25, 2015, the government filed a motion to dismiss on the grounds that plaintiffs lack standing, that the court lacks subject matter jurisdiction, and that plaintiffs have failed to state claim on which relief may be granted.  On July 27, 2015, the court denied the government’s motion to dismiss, finding four separate grounds on which the dually eligible plaintiffs have standing. The court also found that it had subject matter jurisdiction and that plaintiffs had stated a claim on which relief could be granted.

On December 2, 2015, the court granted plaintiffs’ motion for class certification and, at request of the plaintiffs, issued clarification on the class definition on February 23, 2016.  The regional class is defined as all beneficiaries of Medicare Part A or B in Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont (Medicare Administrative Contractor Jurisdiction K): (a) who have received a “favorable final appellate decision” that he or she was “confined to the home,” i.e. homebound, in the appeal of a home health nursing or therapy claim denial; (b) who have subsequently been denied, or will be denied, coverage for additional service on the basis of not being homebound, on or after January 1, 2010; (c) who had a non-lapsed, viable appeal of the subsequent denial for coverage of additional home health services as of March 5, 2015, or had a particularized individual basis for tolling of any applicable appeal deadline; and (d) for whom the claim for Medicare home health coverage was filed on or before August 2, 2015. Written discovery was served.

The government filed a motion for summary judgment in November 2016 and plaintiffs filed a cross motion and responded in December.  However the parties have now re-entered settlement talks and have postponed further briefing while those negotiations proceed.

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