a month of each other, two federal district courts have rejected the
Center for Medicare & Medicaid Services' (CMS) beleaguered Medicare
"Improvement Standard," thereby adding to the chorus of federal
judges who have found the standard unsupportable under the Medicare
statute and regulations.
Although CMS continues to claim formally that there exists no such
policy as the "Improvement Standard" (by whatever term it is known),
the courts have repeatedly and consistently repudiated it and CMS's
reliance on it. With two more adverse decisions on the issue, CMS
is becoming hard-pressed to perpetuate the myth that it is not
employing an illegal rule of thumb or condition of coverage.
first of the two cases,
a federal magistrate judge sitting as the district court reversed
the decision terminating coverage to an 81-year-old woman who had
been receiving skilled therapy after hip surgery. The agency's view
was that she had "met her maximum potential for her physical and
Analyzing the beneficiary's two arguments, that the Secretary had
failed to apply the correct legal standard and that she had ignored
evidence in the record to conclude that the beneficiary needed only
custodial care, the court ruled favorably for the beneficiary on
first point, the court pointed to a provision of a Medicare manual
that bases coverage for skilled care on whether "'the condition of
the patient will improve materially in a reasonable and generally
predictable period of time, or the services must be necessary
for the establishment of a safe and effective maintenance program.'"
The court noted that the Secretary had never considered the
alternative basis for coverage in the need for a rehabilitative
maintenance program. The court also relied on the regulation
stating that "'a patient may need skilled services to prevent
further deterioration or preserve current capabilities.'"
On this basis alone, the denial of coverage could not be affirmed.
second part of the decision, the court held that the agency had
ignored evidence indicating that she was, in fact, improving.
The court therefore remanded for an award of benefits.
Anderson, had an unusual history leading to the district
judge's repudiation of the Improvement Standard (which the court
referred to as the "stability presumption"). The magistrate judge
had issued a report and recommendation granting the beneficiary's
motion to reverse the decision denying further coverage for physical
and occupational therapy, but solely on the ground that the
Secretary's analysis was not supported by substantial evidence. The
magistrate judge had specifically rejected the beneficiary's
contention that the Secretary was applying an improper presumption.
The Secretary did not file objections, but the beneficiary did, and
the district judge largely agreed with the beneficiary.
on the Medicare Benefit Policy Manual (MBPM), CMS Pub.
100-02, the district judge began her analysis by stating that "[t]he
touchstone for determining whether skilled services are 'reasonable
and necessary' is from the forward-looking vantage point of the
physician" and "[a] patient's chronic or stable condition does not
provide a basis for automatically denying coverage for skilled
The magistrate judge's mistake, the court observed, was in
misinterpreting the language of 42 C.F.R. § 409.33(a)(2)(i):
Pursuant to the
regulation, "stabilization" determines the duration of
skilled services. It does not, however, negate the
possibility that "skilled care may, depending on the unique
condition of the patient, continue to be necessary for patients
whose condition is stable." MB[P]M § 40.1.1. Accordingly, … [the
magistrate judge] is incorrect in concluding that skilled services
are not covered "when a patient's condition is stable and unlikely
district judge also accused the ALJ of applying "retrospective
stability presumption." This was impermissible, the court noted,
because the Vermont federal court "has previously rejected both the
use of hindsight and a stability presumption in denying coverage for
The court quoted approvingly from one of the prior decisions:
"The services must,
therefore, be viewed from the perspective of the condition of the
patient when the services were ordered and what was, at that
time, reasonably expected to be appropriate treatment for the
illness or injury throughout the certification period … The fact
that skilled care has stabilized a claimant's health does not render
the level of care unnecessary. An elderly claimant need not risk a
deterioration of her fragile health to validate the continuing
requirement for skilled care."
court therefore concluded that the need for services must be
examined "free from any presumption that if hindsight reveals [the
beneficiary's] condition was stable throughout the covered period,
coverage for skilled services should be denied."
two decisions follow a host of decisions over the last 25 years
repudiating the Improvement Standard. Nevertheless, CMS has taken
little or no action to alter the policy. As part of its effort to
change this culture, the Center for Medicare Advocacy has met on
several occasions with CMS officials, but no substantive change has
come of those meetings. The Center is now considering what other
steps may be appropriate, including possible litigation, and is
interested in hearing of beneficiaries who are being harmed by this
policy. If you or someone you know has been affected by this unfair
standard, send a brief description of the experience to the Center
at improvement @ medicareadvocacy.org (remove spaces)
 The language
by which coverage is denied usually employs some variation
of the beneficiary being "stable" or "chronic," having
"plateaued," not improving, or needing services for
"maintenance only," but the policy is the same: coverage is
denied on the ground that the beneficiary is not improving.
 2010 WL
3885605 at *1.
 Id. at
*4. The decision provides a careful discussion of the
difference between skilled nursing care and custodial care,
which is not covered under Medicare. 42 U.S.C. §
1395y(a)(9). Id. at *2-*3.
 Id. at 4
(quoting Medicare Skilled Nursing Facility Manual,
Ch. 2, § 214.3(A)(1)). A similar approach employing the
potential for improvement as an alternative basis for
coverage of therapy appears in the home health regulations.
42 C.F.R. § 409.44(c)(2)(iii).
(quoting 42 C.F.R. § 409.32(c)).
 Id. at
*6. It is unclear whether the two parts of the decision are
in the alternative or are complementary. With respect to
the first part of the decision, rejecting the improvement
standard, the court only concluded that the Secretary was
not entitled to a decision in her favor, but, with respect
to the second part, the court ordered the award of
beneficiary had also complained that the application of the
Improvement Standard violated due process and that she had
been unable to prove that claim because the magistrate
judge, in an earlier decision approved by the district
court, refused to allow the beneficiary to carry out
discovery. In the most recent decision, the district judge
held that that prior ruling had to stand under the law of
the case doctrine. Anderson, 2010 WL 4273238 at *4.
 Id. at
*5-*6. The judge quoted at length from § 40.1.1 of the MPBM,
which requires, inter alia, that the determination be
"based solely upon the patient's unique condition and
individual needs," and is identical to much of the relevant
regulatory language in 42 C.F.R. § 409.44(b)(3)(iii).
 Id. at
*6 (quoting from magistrate judge's report and
(quoting Folland ex rel. Smith v. Sullivan, 1992 WL
295230, at *7 (D.Vt., Sept. 1, 1992)).