Wednesday, October 24, 2012

Dramatic Change in Medicare Rules a Potential Boon To Seniors and the Disabled

For many years, nursing homes and home health care providers have routinely terminated Medicare coverage for rehabilitation and related care on the theory that the patient has “ceased to improve”, notwithstanding the skilled nursing care.

While the patient has always had the right to appeal such a determination, many patients, when faced with the legal costs and emotional strain, simply throw in the towel and accede to the decision.  After Medicare is terminated because a patient has allegedly flunked the “improvement standard” - and thus no longer remains covered by “skilled” care - the patient is deemed eligible only for custodial care, which is not covered under Medicare.

In those cases, the patient (assuming that they do not have long-term care insurance) either needs to privately pay for their care, or apply for Medicaid if they meet the financial eligibility criteria.

These seemingly arbitrary determinations by health care providers have been especially troubling, since nothing in the Medicare statutes or enabling regulations includes anything resembling an improvement standard. Rather, the improvement standard had become ingrained as standard operating procedure by the vast majority of nursing facilities and health care providers.

In January 2011 a class action lawsuit, Jimmo v. Sebelius, was filed by the Center for Medicare Advocacy in conjunction with Vermont Legal Aid on behalf of patients affected by this draconian policy. The Obama administration initially defended the use of the improvement standard.  But after the government lost not only the motion to dismiss, but also two similar Federal Court cases brought in Pennsylvania and Vermont, the administration agreed to settle the class action lawsuit by conceding that the “failure to improve standard” has no basis in law. They agreed to no longer apply – or ask other health care providers to apply – any type of improvement standard in determining the Medicare eligibility for a sick or disabled patient receiving skilled nursing care.

As a result of the proposed settlement - which still requires the judge’s approval - the government will revise its procedure manual to specifically provide that skilled nursing care shall not be dependent on a determination that the patient has or has not shown improvement as a result of the care, but instead that skilled nursing care will be provided solely because the beneficiary needs such care as a result of the patient’s condition, regardless of any actual improvement of their condition.   

Medicare will continue to cover skilled nursing care even in circumstances where the patient’s condition were to deteriorate during the receipt of such care, so long as the care is determined to have slowed such deterioration.

While it is unclear at this early stage as to the actual impact of this policy change, it is likely that a significant percentage of people who enter a nursing facility for rehabilitation purposes will be covered by Medicare for the duration of the Medicare coverage period for facility rehabilitation, which currently is a maximum of 100 days.

Note that Medicare will only pay 100% of the cost for such services for the first 20 days. Most Medicare supplements will cover the cost for most if not all of days 21-100, but those without supplemental insurance will be on the hook for the co-pay, which presently runs a hefty $144.50 per day.

Perhaps even more dramatically, we may see a significant increase in Medicare-funded home care services for patients with chronic conditions such as Alzheimer’s, Parkinson’s, traumatic brain injuries, and multiple sclerosis.

Going forward, patients with these conditions should find greater access to Medicare-covered services such as physical, occupational and speech therapies in their home setting.  While the costs to Medicare for such services is almost certain to increase in the near term, we can hope that the greater availability of home-based care will reduce the number of people who need to be placed in nursing homes, where the costs of care are even greater than in the home setting.

Further information regarding this landmark settlement can be found at the Center For Medicare Advocacy, Inc.'s website.

Thursday, October 4, 2012

Second Circuit Court of Appeals Smacks Down Connecticut's Claim that a Non-Assignable Annuity is a Resource for Medicaid Purposes

In a definitive decision released on October 2, 2012, the 2nd Circuit Court of Appeals affirmed a prior determination by the Federal District Court for the District of Connecticut that held that a non-assignable immediate annuity purchased by a "Community Spouse" in fact properly converted an "excess resource" to a stream of income.  I had previously discussed the District Court's opinion in this prior post from December 2011.

In the case -- Lopes v. Department of Social Services, the Court of Appeals gave great deference to the brief filed by the Department of Health and Human  Services in support of Mrs. Lopes' claim that the a Community Spouse's purchase of an immediate non-assignable annuity was consistent with the Medicaid's purpose of supporting the indigent and protection Community Spouse's from impoverishment.

Although New York's Department of Social Services have not taken the aggressive posture as we have seen in Connecticut, the 2nd Circuit's ruling -- which is legal precedent for New York as well as Connecticut -- provides us with the assurance that spousal annuity planning remains a viable strategy for New York Medicaid planning.

The Court's full opinion can be found here.