Medicare and the "Improvement Myth"

It is a familiar story:  an elderly woman falls down in her home and suffers a broken hip or other serious injury.  After a too-brief hospital stay, she is sent to a nursing home for rehabilitation.  Since the woman was in the hospital for at least three days prior to entering the nursing home, Medicare assumes the initial responsibility for covering the costs of her care in the nursing home.  Assuming that she is qualified, Medicare will pay 100% of the cost of  the first 20 days of skilled care, and will pay a percentage of the cost for days 21 through 100; in New York, the patient – or their supplemental insurer, if any – will pay a co-payment of $137.50 for days 21 through 100.

In practice, there is no guarantee that a Medicare will pay for the full 100 days.  Medicare directs nursing homes and home healthcare providers to terminate Medicare coverage upon a determination that the patient has failed to “improve” as a result of their treatment and is no longer in need of “skilled” care, but requires only “custodial” care.  The “failure to improve” standard has become so ingrained in Medicare lore that these determinations are rarely questioned. 

Contrary to common belief, the “failure to improve standard” is not found in any Medicare statute or its implementing regulations.  Rather, this rule is derived from references in various Medicare practice manuals, and has become “gospel” within the health care field.

Two recent Federal court decisions have affirmed that it is not required that a patient show improvement in order to receive Medicare coverage for their rehabilitation treatment.  In Papciak v. Sebelius, the U.S. District Court in Pittsburgh ruled that Medicare was improperly denied for an 81-year-old woman being treated for a broken hip whom, the nursing home claimed, was unlikely to improve.  In determining that continued Medicare coverage was warranted, the court stated,

[t]he restoration potential of a patient is not the deciding factor in determining whether skilled nursing services are needed.  Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.

Likewise, in Anderson v. Sebelius, the U.S. District Court in Vermont held that a 60-year-old woman was improperly denied home care Medicare coverage after suffering a second stroke.  The court noted that, “[a] patient’s chronic or stable condition does not provide a basis for automatically denying coverage for skilled services.”

Both of these court decisions confirm that the “failure to improve” standard that is almost reflexively employed in Medicare denials has no basis in law.  Patients denied Medicare on that basis may challenge these determinations and retain the coverage to which they are entitled.  Even better, perhaps the Federal Government will advise nursing homes and other health care providers to follow the appropriate guidelines in determining their patients’ ongoing eligibility for skilled nursing coverage under Medicare.