Gavel on sounding block

Alleged overpayment and audit findings in violation the Jimmo settlement.

Today I will be writing about a settlement agreement between the Centers for Medicare & Medicaid Services (CMS) and the skilled nursing community, which apparently CMS conveniently forgot about just recently. The Jimmo settlement agreement redefines medical necessity for skilled nursing, especially for terminal, debilitating diseases. According to CMS and the Medicare Administrative Contractor (MAC) audit, my client, which exclusively serves multiple sclerosis (MS) patients on Medicare, owes over half a million dollars. The alleged overpayment and audit findings are in violation of the Jimmo settlement, and must cease.

My client received correspondence dated Feb. 25, 2021, regarding CMS Inquiry No. 2349, which re-alleged an overpayment in the amount of $578,564.45, but the audit is in violation of the Jimmo settlement with CMS. One basis for the claim denials is that “there is (documentation) that the (patient) has a (diagnosis) of MS, with no (documentation) of recent exacerbation or change in function status.” After the first level of appeal, on June 8, 2021, the denial reason was as follows:

“The initial evaluation did not document there was an acute exacerbation of this chronic condition that would support the need for skilled services.” This basis is in violation of the Jimmo settlement.

In January 2013, CMS settled a lawsuit, and the agreement was approved by the court in the matter of Jimmo v. Sebelius, No. 5:11-CV17 (D. Vt., 1/24/2013). The Jimmo settlement agreement clarified that, provided that all other coverage criteria are met, the Medicare program covers skilled nursing care and skilled therapy services under Medicare’s skilled nursing facility, home health, and outpatient therapy benefits when a beneficiary needs skilled care in order to maintain function, or to prevent or slow decline or deterioration. Specifically, the Jimmo settlement agreement required Medicare Manual revisions to restate a “maintenance coverage standard” for both skilled nursing and therapy services under these benefits. The agreement dictated that:

“Specifically, in accordance with the settlement agreement, the Manual revisions clarify that coverage of skilled nursing and skilled therapy services in the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) settings ‘…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.’ Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”

In the case of Jimmo v. Sebelius, the Center for Medicare Advocacy (CMA) alleged that Medicare claims involving skilled care were being inappropriately denied by contractors based on a rule-of-thumb “improvement standard,” under which a claim would be summarily denied due to a beneficiary’s lack of restoration potential, even though the beneficiary did in fact require a covered level of skilled care in order to prevent or slow further deterioration in clinical condition. In the Jimmo lawsuit, CMS denied establishing an improper rule-of-thumb standard

While an expectation of improvement would be a reasonable criterion to consider when evaluating, for example, a claim in which the goal of treatment is restoring a prior capability, Medicare policy has long recognized that there may also be specific instances in which no improvement is expected – but skilled care is nevertheless required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function. For example, in the federal regulations at 42 CFR 409.32(c), the level-of-care criteria for SNF coverage specify that the “restoration potential of a patient is not the deciding factor in determining whether skilled 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.” The Medicare statute and regulations have never supported the imposition of an “improvement standard” in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition.

A beneficiary’s lack of restoration potential cannot serve as the basis for denying coverage, without regard to an individualized assessment of the beneficiary’s medical condition and the reasonableness and necessity of the treatment, care, or services in question. Conversely, coverage in this context would not be available in a situation in which the beneficiary’s care needs can be addressed safely and effectively through the use of nonskilled personnel. Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves.

Any Medicare coverage or appeals decisions concerning skilled care coverage must reflect this basic principle. In this context, it is also essential, and has always been required, that claims for skilled care coverage include sufficient documentation to substantiate clearly that skilled care is required, that it is provided, and that the services themselves are reasonable and necessary, thereby facilitating accurate and appropriate claim adjudication.

The Jimmo settlement agreement includes language specifying that “nothing in this settlement agreement modifies, contracts, or expands the existing eligibility requirements for receiving Medicare coverage.” The agreement clarifies that when skilled services are required in order to provide care that is reasonable and necessary to prevent or slow further deterioration, coverage cannot be denied based on the absence of potential for improvement or restoration.

MS is a chronic condition that facilitates a consistent decline over a long period of time. Ninety percent of those with MS do not suffer from acute exacerbations after approximately five years following their initial diagnosis. They move into a new phase of their disease called “secondary progressive,” where there are no exacerbations, but a slow, consistent decline. According to the Jimmo settlement, there is no requirement that a provider demonstrate recent exacerbation or change of function. This has been litigated and settled. The Medicare audit of my client, TRF, is in violation of the Jimmo settlement and must cease.

TRF’s documents clearly demonstrate that its consumers qualify for skilled therapy, based on their physicians’ recommendations. The Jimmo settlement clearly states that if the therapist determines that skilled nursing is necessary to stop further decline, then skilled nursing is appropriate. Therefore, Safeguard’s audit, which was based solely on extrapolation and did not include a review and analysis of each patient situation, is in violation.

Now my client is having to defend itself against erroneous allegations, which is adversely affecting the company financially. It’s amazing that in 2021, my client is defending a right given in a settlement agreement from 2013. Stay proactive!

Programming Note: Listen to healthcare attorney Knicole Emanuel’s RAC Report Mondays on Monitor Mondays, 10 Eastern.

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