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In January 2011, the Center for Medicare Advocacy and Vermont Legal Aid filed a lawsuit in the District Court of Vermont challenging Medicare’s “Improvement Standard.” Jimmo v. Sebelius 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.

Attorneys from the Center for Medicare Advocacy, Vermont Legal Aid and the Centers for Medicare & Medicaid Services (CMS) have agreed to settle Jimmo v. Sebelius. A proposed settlement agreement was filed in federal District Court on October 16, 2012.  On November 20, Chief Judge Christina Reiss of the District of Vermont signed an order preliminarily approving the settlement agreement.  Notice of settlement has been posted on the websites of numerous organizations, including the seven national organizations that served as plaintiffs in the case, which alert advocates and beneficiaries to the terms of the settlement.  Class members will be able to file written objections to the settlement.  The court will hold a Fairness Hearing on January 24, 2013 "to determine whether the settlement is agreement is fair, reasonable and adequate," after which it is hoped that the judge will issue an order permanently approving the settlement agreement. 

When the judge approves the proposed agreement, CMS will revise the Medicare Benefit Policy Manual and other Medicare Manuals to correct suggestions that Medicare coverage is dependent on a beneficiary "improving." New policy provisions will state that skilled nursing and therapy services necessary to maintain a person's condition can be covered by Medicare.

Here is a link to more information about the settlement, including a copy of the settlement agreement and a list of frequently asked questions:


Our last Alliance Call in October 2012 included a discussion concerning the Medicare administrative appeals process.  We noted that, based on the Center’s extensive experience with this process, we are continuing to find that: 1) the success rate for beneficiaries at the initial levels of appeal is generally very low; and 2) once appeals get to the Administrative Law Judge (ALJ) stage, where chances of success improve dramatically, and at the subsequent stage of appeal, the Medicare Appeals Council (MAC), the issuance of decisions often far exceeds built-in timeframes (e.g., 90 days).

In November, the Office of Inspector General (OIG) issued a report entitled, "Improvements are Needed at the Administrative Law Judge Level of Medicare Appeals."  The report can be found at   In the report, the OIG interprets the overall percentage of fully favorable decisions awarded to appellants by Administrative Law Judges (ALJs) as evidence that the ALJs are performing inadequately.   The report, however, fails to seriously consider the low percentage of fully favorable decisions awarded by the ALJs to Medicare beneficiaries.  Based on these and other findings, the OIG made recommendations that if implemented will threaten the independence of the ALJs and further hinder beneficiary access to Medicare coverage for reasonable and necessary medical care, and to meaningful review of unjust coverage denials.


  • Congress is currently in a Lame Duck session; Medicare-related issues to watch out for include:
    • Sequester – automatic $1.2 trillion in spending cuts over 10 years due to failure of 2011 SuperCommittee under Budget Control Act of 2011; $110 billion in 2013 sequester cuts do not include Social Security, Medicaid, SSI and certain other programs, but include a 2% provider cut in Medicare (totaling approximately $11 billion).
      • Sequester cuts plus expiration of Bush-era tax cuts combine to create “fiscal cliff” (but see, e.g., Center on Budget and Policy Priorities – it is more like a  “fiscal slope”-
    • “Extenders” Package – physician payment (sustainable growth rate, or SGR – 27% cut scheduled for January 2013), extension of Qualified Individual (QI) program, and extension of therapy cap exceptions.
      • Q: What “offsets” will be used to pay for this?
    • Open questions: how will Congress and President Obama deal with the “cliff” – will agreement be reached before the end of the year?  Will there be a “down payment” to ward off sequester with specific instructions to Congressional committees to find savings in certain programs totaling a designated amount?  Will a larger, long-term “grand bargain” be reached?  How will “revenues” vs. spending reduction be resolved?
  • Various Medicare reform proposals aimed at reducing program expenses (but that would shift costs onto beneficiaries) continue to be discussed in the context of debt and deficit reduction.  For an overview of how various deficit/debt reduction proposals would impact the Medicare program, see, e.g., Kaiser Family Foundation report “Comparison of Medicare Provisions in Debt and Deficit Reduction Proposals” (9/11)  (available at:; also see

    Some of the following proposals appear to have been getting more attention in Congress lately:

    • Raising the Age of Medicare Eligibility – various proposals seek to raise the age of Medicare eligibility to 67 or higher, either gradually or all at once.
    • Further Income-Relating Medicare Premiums – higher-income individuals are already subject to higher Part B and D premiums (individuals earning $85,000, $170,000 for a couple – amounts that are frozen until 2019).  Various proposals seek to increase both the amount paid by these individuals as well as keeping the thresholds at the same level for a longer period of time or lowering them.
      • See Kaiser Family Foundation’s report “Income-Relating Medicare Part B and D Premiums Under Current Law and Recent Proposals: What are the Implications for Beneficiaries?” (2/12) available at:   
    • Redesigning Medicare’s Cost-sharing  (aka “benefit redesign”) – various proposals recommend changing Traditional Medicare’s cost-sharing structure, including, e.g., combining the Part A and B deductibles, setting a single coinsurance rate of 20% for all Medicare services (instead of just Part B services), and establishing an out-of-pocket maximum for beneficiaries.
    • Medigap changes – to discourage “first-dollar coverage” (often coupled with benefit redesign proposals); proposals include adding a “surcharge” to certain Medigap policies, imposing a deductible before benefits can be paid, or adding cost-sharing for certain services.
    • Other Cost-shifting proposals include:
      • Home health copays – several proposals, including President Obama’s FY 2013 Budget, include requiring cost-sharing or copays for HH.


  • 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:


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