Lawsuit: Medicare ‘improvement standard’ illegally denies coverage to thousands

A group of patient advocates, including the Mansfield-based Center for Medicare Advocacy, has filed a class-action lawsuit seeking to end what it calls a “clandestine policy” that leads thousands of people to be wrongly denied Medicare benefits.

The lawsuit, filed against U.S. Department of Health and Human Services Secretary Kathleen Sebelius, alleges that a so-called “improvement standard” is used to deny coverage of care such as physical, occupational or speech therapy to patients if their conditions are not improving, even though the standard is not supported by Medicare statute or regulations.

Judith Stein

Judith Stein

Although Medicare covers services that are “reasonable and necessary” and its regulations acknowledge that patients whose conditions won’t improve might need services to maintain their capabilities, the lawsuit says that some written policies, including contractor instructions, suggest that a patient must be expected to improve for services to be covered. And, the lawsuit argues, those written policies are what lower-level decision makers typically follow.

“It’s like an urban myth,” said Judith Stein, executive director of the Center for Medicare Advocacy. “The people who provide the care and issue claims decisions believe very strongly that maintenance care is not covered.”

Stein said that belief leads thousands of people to be told Medicare will not cover services they need and are legally entitled to receive.

One was Edith Masterman, a 79-year-old Maine resident who has been a paraplegic since she was a teenager and is one of five individual plaintiffs in the lawsuit. For much of the past 10 years, she received wound care for pressure sores from a home health care agency, a service covered by Medicare.

But the care stopped when she was hospitalized in 2009, and when Masterman got home last year, the home care agency refused to accept her back because “Medicare will not pay for a chronic problem,” according to the lawsuit. It is the only Medicare-certified home health agency in the area, and Masterman, who only leaves her home for medical appointments, now receives less frequent service from another agency, paid for by Medicaid, and travels to a wound care clinic every four weeks.

In another case cited in the complaint, 90-year-old Bloomfield resident David Katz was denied Medicare coverage for the nursing home where he was being cared for after a hospitalization for metastatic renal cancer and a high-grade intestinal obstruction. The care was not covered because it was not expected to improve his condition. He stayed in the nursing home and died in December. His widow now faces a nursing home bill of more than $10,000.

The lawsuit seeks an injunction prohibiting the improvement standard from being applied in any Medicare coverage decisions. It also seeks a review of coverage decisions made using the standard, for written material supporting the standard to be corrected, and for employees of entities that make Medicare coverage decisions to be educated about making coverage in accordance with the Medicare Act and regulations.

Ellen B. Griffith, a spokeswoman for the federal Centers for Medicare & Medicaid Services, which is part of HHS, said, “We have not yet had a chance to review the complaint, and therefore are not in a position to comment on the lawsuit.”

U.S. Rep. Joe Courtney, D-2nd district, who joined Stein and some of the plaintiffs on a conference call with reporters, said the use of the improvement standard represents an incorrect interpretation of the law and most likely acts as “back-door rationing.”

“It’s certainly not something that Congress ever authorized or that anyone ever counted on as savings in terms of the solvency of the Medicare program,” he said.

Courtney said the Medicare standard is clear: It covers medically necessary treatment prescribed by a doctor. Denying necessary care, he and Stein said, could lead people to require more costly care.

Other plaintiffs in the case include the National Committee to Preserve Social Security and Medicare, National Multiple Sclerosis Society, Parkinson’s Action Network, Paralyzed Veterans of America, and American Academy of Physical Medicine and Rehabilitation. The lawsuit argues that the improvement standard primarily impacts people with chronic conditions, who are denied skilled care that is “critical to slow their disease process and to maintain their functional ability.”

Federal judges have sided with plaintiffs in two recent cases challenging denials of Medicare coverage under the improvement standard.

The class-action suit was filed in U.S. District Court in Vermont. The Medicare Advocacy Project of Vermont Legal Aid also represents the plaintiffs.