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Failure of the Super-Committee

On November 21, 2011, members of the Joint Select Committee on Deficit Reduction ("Super-Committee") announced that they had failed to put together a legislative package to cut the deficit by approximately $1.2 trillion, as outlined by the Budget Control Act of 2011.  Without further Congressional action, automatic cuts in domestic and defense spending will be triggered in January 2013 (through a process called "sequestration"), and while Medicare benefits are protected, providers face payment cuts up to 2%. 

Extender Bill

Action by Congress is required by end of the month in order to prevent cuts to, or preserve, several important Medicare provisions.  

  • The Qualified Individual (QI) program, one of the Medicare Savings Programs (MSP), allows state Medicaid programs to pay Medicare Part B premiums for individuals with incomes between 120 and 135% of the federal poverty level (FPL) who are otherwise not eligible for Medicaid. This program is scheduled to expire at the end of 2011.
  • Medicare therapy caps exceptions process – Current law imposes a limit on Medicare payment for certain outpatient therapy services: for physical therapy and speech language pathology services combined, the limit on incurred expenses is $1,870 in 2011; for occupational therapy services, the limit is $1,870 in 2011.  An exceptions process applicable to these caps is set to expire at the end of 2011.  See generally:
  • Under the current sustainable growth rate (SGR) payment formula for physicians, doctors face a cut of almost 30% in payment starting January 2012.
  • House Republicans have released their proposed package that includes provisions for extenders. See


Bagnall v. Sebelius (Observation Status) No. 3:11-cv-01703 (D. Conn., filed 11/3/2011).

On November 3rd, the Center for Medicare Advocacy filed a class action lawsuit on behalf of individuals who have been denied Medicare Part A coverage of hospital and nursing home stays because their care in the hospital was considered "outpatient observation" rather than an inpatient admission. Here is a link to the Press Release announcing the suit:­federal-government-to-improve-access-to-medicare-coverage/

Jimmo v. Sebelius (Improvement Standard) No. 11-cv-17 (D.Vt., filed 1/18/11).

This case argues that the "Improvement Standard", which operates as a rule of thumb to terminate or deny Medicare coverage to beneficiaries who are not improving, violates substantive and procedural requirements of the Medicare statute, the Administrative Procedure Act, the Freedom of Information Act, and the Due Process Clause of the Fifth Amendment. For a description of the case, see On October 25, 2011, the presiding judge issued an order denying the government’s Motion to Dismiss. See “Federal Judge Refuses to Dismiss Medicare Beneficiaries’ Challenge to the Medicare ‘Improvement Standard’” (October 27, 2011), available at:­beneficiaries-challenge-to-the-medicare-improvement-standard-2/

For a list of all of the Center’s active cases, see:

Inpatient Rehabilitation Hospitals and the Three-Hour Rule (of Thumb):

  • In Hooper v. Sullivan (1989 WL 107497 (D. Conn.)) the Center for Medicare Advocacy reached a settlement in a class action case challenging the application of a “three-hour rule” to deny Medicare coverage to patients in rehabilitation hospitals.  A screening criterion in the Medicare Intermediary Manual required that patients receive at least three hours per day of physical and/or occupational therapy. This was being used by Medicare contractors to create an irrebuttable presumption of noncoverage for patients who did not require or could not tolerate three hours of therapy per day.
  • The parties came to an agreement that denials based on the three-hour rule or other rules of thumb were not appropriate.  As part of the settlement, the court entered an order calling for a revision of the Medicare Intermediary and Hospital Manuals. CMS also issued a bulletin to all rehabilitation facilities in Region I.  
  • However, recent changes in regulations governing inpatient rehabilitation coverage (42 C.F.R. §412.622(a)(3)(ii)) have been interpreted to support the use of a three-hour rule to deny coverage.  The Center understands that Medicare contractors are again denying inpatient rehabilitation coverage on the basis that a patient does not require and receive three hours of therapy each day.
  • The Center is considering action to enforce the Hooper court’s 1989 order. We are interested in hearing about any individual (particularly from New England) who has recently been affected by the three-hour rule, and whether advocates, organizations, or providers are also seeing application of this rule.


  • Medicare Annual Coordinated Election Period (ACEP)

    The Medicare Annual Coordinated Election Period (ACEP) ended on December 7, 2011. Most people must wait until next year’s ACEP in order to make a change to their Medicare Advantage or Part D prescription drug plan.  However, individuals may have an opportunity to change plans before the next ACEP if certain triggering events occur or if they meet certain criteria (such as qualifying for the Part D Low-Income Subsidy, or LIS). 

  • For a discussion of other opportunities to changes plans, see, e.g., “Annual Enrollment Period Ends … What if You Missed It?” (December 7, 2011), available at:­-missed-it/.


  • New Point-of-Service Notice for Part D Benefit

    Starting January 1, 2012, Part D prescription drug plan sponsors (including Medicare Advantage-Prescription Drug plan sponsors) must arrange with their network providers to distribute written notices at the pharmacy instructing enrollees how to contact their plans to obtain a coverage determination or request an exception if they disagree with the information provided by the pharmacist (in other words, if a prescription cannot be filled).   For a description of this new rule, including other Medicare Part C and D provisions that go into effect in 2012, see “New Rules for Medicare Advantage and Part D Plans” (June 2, 2011), available at:

  • No Part D cost-sharing for HCBS Recipients

    Starting January 1, 2012, Part D cost-sharing will be eliminated for full-benefit dual eligible individuals who are receiving home and community-based services (HCBS) under certain home and community-based waivers, a state plan amendment, or if enrolled in certain Medicaid managed care organizations. The existing Best Available Evidence (BAE) policy which requires plans to charge a lower copayment if certain evidence is provided will also apply to these individuals.

  • Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) 

    The DMEPOS competitive bidding program was created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).  The MMA required the Secretary of Health and Human Services (HHS) to establish and implement programs for the competitive bidding of DMEPOS in competitive bidding areas (CBAs) within Metropolitan Statistical Areas (MSAs) throughout the United States for contract awards to furnish certain competitively priced items for which payment is made under Medicare Part B.  The program was created in order to hold down prices and to decrease fraud and program abuse.  Bidding for Round 2 begins in January 2012.

    See “Fall Updates” (December 1, 2011), available at:­in-snfs-dme/; for a more detailed description, see “CMS to Begin Round 2 of Its Competitive Bidding Program” (September 1, 2011)  available at­bidding-program-for-the-provision-of-durable-medical-equipment-prosthetics-orthotics­and-supplies-dmepos/.

  • Therapy and Home Health Technical Correction and Clarifications

    In the Federal Register for November 4, 2011, (Home Health Prospective Payment System Rate Update for Calendar Year 2012), please note the CMS technical correction and clarifications found at 76 Fed. Reg. 68526, 68607-8 (November 4, 2011). 

    Clarification: When “occupational therapy” would be considered a dependent service -§409.42(c)(4) Subsequent to an initial covered occupational therapy service, continuing occupational therapy services (subsequent and adjacent episodes) which meet the requirements of §409.44(c) are considered qualifying services.

    Therapy technical correction: changes the word “before” to “no later than” in 42 C.F.R. §409.44(c)(2)(i)(D)(2) – reassessment must occur “close to but no later than” the 19th visit per the plan of care.

    Clarification: Face-to-face encounter – 42 C.F.R. §424.22(a)(1)(v)(face-to-face physician encounter requirement) – For patients admitted to home health immediately after an acute or post-acute stay, the certification of a face-to-face encounter by the physician or recognized non-physician practitioners (NPPs) who cared for the patient in an acute or post-acute care facility will satisfy the face-to-face encounter requirement. See also:­bin/wa.exe?A2=HH-PPS-L;fb4f5cdb.1112.

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