Alexander v. Azar
(formerly Bagnall v. Sebelius; Barrows v. Burwell)
U.S. District Court, Connecticut; Second Circuit
This nationwide class action seeks appeal rights for Medicare beneficiaries who are placed on “observation status” at hospitals. When patients are placed on observation status, they are considered “outpatients” (covered by Medicare Part B), 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 under Medicare Part A for three days to receive coverage of post-hospital nursing home care, people on observation status do not have access to nursing home coverage. They must either pay the high cost of nursing home care themselves or forgo that care altogether. The number of people placed on observation status has greatly increased in recent years as Medicare has strictly enforced its definition of what hospitals should bill as inpatient/Part A services and what they should bill as observation/Part B services. 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.
The case is co-counseled by Justice in Aging and the law firm of Wilson Sonsini Goodrich & Rosati, which has provided extraordinary pro bono assistance.
- A bench trial was held in the summer of 2019. On March 24, 2020, the district court held that as a matter of constitutional due process, Medicare must allow certain patients to appeal their placement on observation status. Read the Center’s statement and FAQ page about the decision.
- On May 22, 2020, the government filed a notice stating that it is appealing the district court’s decision to the Second Circuit.
Dobson v. Azar
U.S. District Court, Southern District of Florida; Eleventh Circuit
In this case a beneficiary seeks Medicare Part D coverage for his “off-label” (non-FDA-approved) use of a critically needed medication. Off-label prescriptions are common (about one in five outpatient prescriptions in the U.S.) and they are often required for conditions that are rare or that have not been studied in relation to specific medications or population groups. In this case, the plaintiff is disabled from a traumatic workplace injury and experiences debilitating nausea and vomiting. Medicare has denied coverage of the only medication that provides significant relief. There is no dispute about the medical necessity of the drug. Medicare claims, however, that the beneficiary’s use is not “supported by” one of the commercial drug compendia specified by the statute – another requirement for off-label coverage. The agency states that there can be no coverage because the plaintiff does not have exactly the same underlying diagnoses as the patient cited in the relevant compendium entry. Medicare’s reading of the statute is inappropriately narrow and disregards the palliative purpose for which the drug was prescribed. The beneficiary’s doctor has confirmed that his use of the medication is supported by one of the drug compendia.
In March 2020 the district court issued a decision denying Medicare Part D coverage of the medication. The plaintiff has appealed to the U.S. Court of Appeals for the 11th Circuit. The Florida Health Justice Project and the law firm of Akin Gump Strauss Hauer & Feld LLP are co-counsel.
Jimmo v. Sebelius
U.S. District Court, Vermont
The landmark Jimmo settlement was approved in 2013. The nationwide class action challenged Medicare’s use of an “Improvement Standard” to inappropriately deny coverage to beneficiaries who are not improving or making progress. The standard, which is erroneous under the Medicare statute, has operated to deny needed care to thousands of people with long-term, chronic, or debilitating conditions. Under the settlement, CMS clarified that coverage is available for skilled maintenance services in the home health, nursing home, and outpatient therapy settings, and to a certain extent in the inpatient rehabilitation facility setting. The settlement explains that coverage “does not turn on the presence or absence of a beneficiary’s potential for improvement…but rather on the beneficiary’s need for skilled care.”
As a result of continued court enforcement, CMS published a dedicated webpage containing important information about the settlement. The webpage reinforces the fact that Medicare does cover skilled nursing and skilled therapy services needed to maintain a patient’s function or to prevent or slow decline. Improvement or progress is not necessary as long as skilled care is required. The page contains an “Important Message About the Jimmo Settlement,” in which court-approved language emphasizes that the settlement “may reflect a change in practice” for providers and Medicare decision-makers who erroneously believed that the Medicare program covers nursing and therapy services only when a beneficiary is expected to improve.
Vermont Legal Aid and Wilson Sonsini Goodrich & Rosati were co-counsel with the Center. Class counsel continues to work on ensuring that access to skilled maintenance nursing and therapy for Medicare beneficiaries 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.
McKee v. Azar
U.S. District Court, Vermont
This case, brought by Vermont Legal Aid and the Center, sought Medicare coverage of home health services that were denied to a beneficiary who required skilled nursing visits to assess and treat her multiple serious medical conditions. It challenged the Medicare agency’s failure to follow applicable law, including the standard clarified in the Jimmo v. Sebelius settlement. Under Jimmo, the determination of whether individuals are eligible for Medicare coverage is to be made on the basis of beneficiaries’ need for skilled care, not on their potential for improvement. In this case, the plaintiff challenged Medicare’s conclusion that her “stable” condition meant that she did not require skilled care and thus did not qualify for Medicare coverage of home health services. In addition, she challenged the agency’s failure to afford appropriate weight to the opinion of her treating physician about her need for skilled care.
In July 2020, Medicare agreed to pay Ms. McKee’s home health claim in full. Advocates should continue to be alert for inappropriate denials of coverage based on lack of improvement or on “stability” – particularly for individuals with chronic conditions.