Two Recent Federal Court Cases Reiterate that Medicare Beneficiaries Can Continue to Be Eligible for Skilled Services Despite Not Demonstrating Continued Improvement

Two federal courts recently rejected the Department of Health and Human Services’ position that Medicare beneficiaries must show the capacity for continued improvement to qualify for on-going home health or skilled nursing facility care. These cases are consistent with litigation over the past twenty-five years that rejects the commonly held but erroneous assumption that Medicare services must be terminated when a beneficiary “plateaus” even if continued therapy would help maintain the beneficiary’s current abilities or slow the progression of disease or disability.

In the first case, Papciak v. Sebelius, --- F.Supp. 2d ---, 2010 WL 3885605 (W.D. Pa.), a federal district court in Pittsburgh rejected the termination of skilled rehabilitation services after 5 weeks to an 81 year old nursing home resident recovering from hip replacement surgery. Although the Secretary determined Ms. Papciak had reached her rehab potential and was receiving only custodial care, the court held that Medicare officials had failed to take into account the beneficiary’s potential need for continued therapy to maintain her current level of functioning. The court cited the Medicare Skilled Nursing Facility Manual Chapter 2, § 214.3 which states that skilled services can be provided if the beneficiary’s condition is likely to “improve materially in a reasonable or generally predictable period of time” or if services are “necessary for the establishment a safe and effective maintenance program.” (emphasis added). In addition, the court cited 42 C.F.R. § 409.32(c) which mandates that “[t]he 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 court in Papciak also rejected the Secretary’s denial of services because the Secretary failed to take into account the appellant’s condition as a whole. While the Medicare Appeals Council asserted that the appellant was unequivocally unmotivated and resistant to therapy throughout her stay, the court took into account that the beneficiary initially suffered from anxiety and depression and noted that the record demonstrated she had benefited significantly from physical and occupational therapy as her mental status improved.

In the second case, Anderson v. Sebelius, 2010 WL 4273238, No. 09-16 (D.Vt., Oct. 25, 2010), brought by a Vermont Legal Aid attorney, a home health care beneficiary with multiple serious medical problems alleged that the Secretary had utilized an informal and unlawful standard resulting in the denial of services because the beneficiary was presumed to be medically stable. Moreover, the plaintiff objected that the Administrative Law Judge characterized her condition as stable with the benefit of hindsight instead of making a determination about whether she was eligible for services from the perspective of her situation at the time the services were ordered. The court noted that services can be covered even when a beneficiary’s condition is stable and unlikely to change and that determinations about eligibility have to be based on the beneficiary’s unique circumstances and individual needs. The court therefore remanded the matter to the ALJ for redetermination.

These circumstances of these cases mirror an extremely common pattern in which nursing home residents and home health beneficiaries are routinely advised that their services will be terminated because they have reached their rehabilitation potential or failed to improve. This misperception is shared by doctors, home health providers, nursing homes, therapists, and others who need to be educated about the true standards of the Medicare program. Excellent information on this issue is available at the website of the Center for Medicare Advocacy, medicareadvocacy.org.