The settlement of Jimmo v. Sebelius, Docket No. 11-cv-17 (D.Vt., January 18, 2011), a nationwide class-action lawsuit, has resulted in a significant change in Medicare coverage rules. Under the settlement, Medicare will scrap a decades-old practice that required beneficiaries to show medical or functional improvement before Medicare would pay for skilled nursing and therapy services. Now, under the settlement, Medicare will pay for skilled nursing and therapy services if they are needed to “maintain the patient’s current condition or prevent or slow further deterioration,” regardless of whether the patient’s condition is improving.

On January 18, 2011, the Center for Medicare Advocacy and Vermont Legal Aid filed the Jimmo v. Sebelius lawsuit on behalf of five Medicare enrollees and the National Multiple Sclerosis Society, the Parkinson’s Action Network, the Paralyzed Veterans of America, the National Committee to Preserve Social Security and Medicare, and the American Academy of Physical Medicine and Rehabilitation. The lawsuit was filed against Kathleen Sebelius, the Secretary of Health and Human Services, as the official responsible for implementing and enforcing the Medicare program.

The aim of the lawsuit was to terminate the application of the Medicare “improvement standard.” Under the “improvement standard,” Medicare coverage of skilled nursing care and therapy services requires a beneficiary to be improving. Coverage is denied when a beneficiary has “plateaued,” is “medically stable,” has a condition which is “chronic,” or needs services for “maintenance only,” on the grounds that the beneficiary needs only custodial care, which Medicare does not cover. According to the plaintiffs in the Jimmo v. Sebelius case, the “improvement standard” imposes an improper requirement that is not supported by Medicare law. That is, it is not necessary to improve in order to get coverage under the law and related regulations. Rather, plaintiffs claimed that Medicare provides coverage for health care and services that are “reasonable and necessary for the diagnosis or treatment of illness or injury.” Plaintiffs also alleged that the use of the “improvement standard” was illegal and resulted in the termination, reduction, or denial of coverage for thousands of Medicare beneficiaries who are most in need of care. Plaintiffs sought declaratory, injunctive and mandamus relief to terminate application of the “improvement standard” and to provide remedies to those illegally denied coverage.

After the plaintiffs filed an amended complaint, the government filed a motion to dismiss, claiming the court lacked jurisdiction over the plaintiffs’ claims and that plaintiffs failed to state a claim for which relief could be granted.  Oral argument on the motion to dismiss was held on July 14, 2011.  On October 25, 2011, the court denied the government’s motion to dismiss.  The Secretary then filed an answer to the amended complaint.  The court stayed proceedings in the lawsuit after the parties asked for an opportunity to engage in settlement discussions. In July 2012, the parties informed the court that they had an agreement in principle, and a proposed written settlement agreement was submitted to the court earlier this month. If the court approves the proposed agreement, the Medicare Benefit Policy Manual will be revised to eliminate any suggestion that continued coverage is dependent on the beneficiary showing medical or functional improvement.

The settlement could help people with chronic conditions like Alzheimer’s disease, Parkinson’s disease, multiple sclerosis, strokes, spinal cord injuries and brain trauma.

The proposed settlement agreement filed with the court:  Proposed Settlement Agreement.

New York Times article on the settlement: Settlement Eases Rules for Some Medicare Patients

Los Angeles Times article on the Jimmo v. Sebelius lawsuit: Medicare’s Policy On Therapy Comes Under Attack

Center for Medicare Advocacy website: http://www.medicareadvocacy.org/

UPDATED ON JANUARY 24, 2013: The Settlement Agreement in the Jimmo v. Sebelius case was approved by a federal judge today at the conclusion of a scheduled fairness hearing, ending Medicare’s  longstanding practice of requiring beneficiaries to show a likelihood of improvement in order to receive coverage of skilled care and therapy services. The Order Granting Final Approval is annexed hereto.