Print Friendly, PDF & Email


The Center for Medicare Advocacy is pleased to announce that the Medicare Policy Manuals have been revised pursuant to the Jimmo vs. Sebelius Settlement.  The Jimmo case ended a longstanding practice denying Medicare coverage to people who had “plateaued,” or were “chronic,” or “stable,” or “not likely to improve.” The Manual revisions, which clarify that improvement is not required to obtain Medicare coverage, were published by the Centers for Medicare & Medicaid Services (CMS) on Friday December 6, 2013. They pertain to care in Inpatient Rehabilitation Facilities (IRF), Skilled Nursing Facilities (SNF), Home Health care (HH), and Outpatient Therapies (OPT). 

As CMS states in the Transmittal announcing the Jimmo Manual revisions: 

No “Improvement Standard” is to be applied in determining Medicare coverage for maintenance claims that require skilled care. Medicare has long recognized that even in situations where no improvement is possible, skilled care may nevertheless be needed for maintenance purposes (i.e., to prevent or slow a decline in condition). The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition. Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves. The manual revisions now being issued will serve to reflect and articulate this basic principle more clearly. [Emphasis in original.]

Per the Jimmo Settlement, CMS will now implement an Education Campaign to ensure that Medicare determinations for SNF, Home Health, and Outpatient Therapy turn on the need for skilled care – not on the ability of an individual to improve. For IRF patients, the Manual revisions and CMS Education Campaign clarify that coverage should never be denied because a patient cannot be expected to achieve complete independence in self-care or to return to his/her prior level of functioning. 

Plaintiffs in Jimmo vs. Sebelius are represented by the Center for Medicare Advocacy and Vermont Legal Aid.  Jimmo is a certified national class action lawsuit brought by individual Medicare beneficiaries and national organizations. It was formally settled by the Plaintiffs and Secretary Sebelius on January 24, 2013, when federal Judge Christina Reiss approved the settlement Agreement.

The CMS Transmittal for the Medicare Manual revisions, with a link to the revisions themselves, is posted on the CMS website.  The CMS MLN Matters article is also available on the CMS site under “Downloads.”

CMS National Provider Call on Clarification (12/19/13, 2pm ET):

Medicare providers (and other interested parties or advocates) are highly encouraged to register and participate in an upcoming webinar hosted by CMS as a component of the educational campaign to review the changes to the policy manuals. Registration information available here:

For more details on the Improvement Standard and the Jimmo case, see:


Medicare Physician Payment (Sustainable Growth Rate, aka SGR)


Congress has recently taken a significant step towards repealing and replacing the Medicare physician payment formula (known as sustainable growth rate, or SGR).  Three Congressional committees have now approved legislation that would permanently repeal the SGR.  It is expected that these proposals will reach the floors of the House and Senate in early 2014.  How the replacement policy will be paid for, which would likely cost somewhere near $150 billion over 10 years, remains unclear.  Also unclear is whether such policy will ultimately include important “extenders” that have traditionally accompanied short-term SGR “fixes”, such as the Qualified Individual (QI) program. In order to prevent immediate cuts to physician payment starting in January 2014, a temporary three-month “patch” is expected to pass both chambers by the end of December 2013 as part of a broader budget agreement.   

Congressional Action

On December 12, 2013, in the first step of a longer legislative process, both the Senate Finance Committee (SFC) and the House Ways and Means (W&M) Committee approved legislation to replace the Medicare physician payment formula, known as the sustainable growth rate (SGR) (note that the House Energy & Commerce Committee passed an SGR bill in July 2013). Both proposals are similar in their approach in the way they would move Medicare physician payment towards a more value-based payment system.  The SFC bill does not include a payment increase over 10 years, but rather allows for bonus payments based upon certain quality measures.  The W&M bill provides for payment increases.

Without Congressional action, physicians face a cut in payment of over 20% starting in January 2014. Almost every year, Congress has temporarily prevented these cuts from going into effect by passing short-term "fixes."


A number of important "extenders" programs have typically accompanied annual short-term SGR fixes, including the Qualified Individual (QI) program and the exception process to Medicare outpatient therapy caps.   The W&M bill does not generally address extenders (except in the temporary, 3-month “patch” described below).  As discussed below, the SFC bill does address two important extenders.

QI (Qualified Individual)

The Qualified Individual (QI) program pays the Medicare Part B premium for enrolled individuals between 120 and 135% of the Federal Poverty Level (FPL).  The SFC bill proposes to extend QI only temporarily, through 2018 (see Description of Chairman’s Mark, p. 55).  We are deeply disappointed that QI is not made permanent in this bill, and hope that as the legislative process continues, it will be made so.

Repeal of Therapy Caps

Under current law, there are two annual per beneficiary payment caps for all Medicare-covered outpatient therapy services, one for physical therapy services and speech-language pathology services, the other for occupational therapy services, each set at $1,900.  In addition to the caps, a manual medical review process occurs when a higher threshold of $3,700 is reached.  There is currently a burdensome exceptions process to the caps (see, e.g., February 2012 Medicare Advocates Alliance Issue Brief at:

The SFC bill would repeal the caps and replace them with a new medical review program including prior authorization.  According to the Description of the Chairman’s Mark, “The therapy cap would be repealed upon enactment. The $3,700 threshold would be extended for one year, through the end of 2014, after which it would be repealed. Beginning January 1, 2015, a new medical review program for outpatient therapy services would be established for therapy for therapy providers as defined below. The Secretary would identify the services for medical review, using appropriate factors…”

Additional Provisions

There are a number of other Medicare and Medicaid-related provisions in the SFC bill that advocates should review carefully (see, e.g., Table of Contents, Description of Chairman’s Mark, at:   In addition, other provisions may be added to the overall SGR package as the legislative process continues.  

Three Month Temporary Patch and Long-Term “Pay-Fors”

On December 12, 2013, the House passed a budget (see below) that included a 3 month patch of the SGR (meaning the cuts won’t go into effect in January 2014), which includes the extenders referenced above. This will presumably allow Congress time to come up with how to pay for the SGR replacement package (in the neighborhood of $150 billion dollars over 10 years).

How SGR replacement may be paid for will be a critical issue moving forward.  As noted in previous issue briefs, many advocates would like to see a "fix" for SGR but are concerned about how it might be paid for (e.g. by shifting costs onto beneficiaries). 

The Budget Deal and Medicare

On December 12, 2013, the House passed a budget deal that would fund the government through September 2015 (the debt limit will still need to be addressed in early 2014).  The budget plan now goes to the Senate, which is expected to address the budget the week of December 16th, 2013.

The House-passed budget deal offsets a portion of the sequester (automatic cuts to certain federal spending pursuant to the Budget Control Act of 2011), but keeps the 2% Medicare provider cuts in place through 2023 (for an estimated savings of $23 billion; see, e.g., New York Times, 12/10/13:


Dual Eligible Special Needs Plans

Dual Eligible Special Needs Plans (D-SNPs) are a type of Medicare Advantage (MA) plan that enrolls only individuals dually eligible for Medicare and Medicaid. Though results have been mixed, D-SNPs were created as a possible route to better integration between Medicare and Medicaid, in turn leading to better quality, higher value care.

Authority for Special Needs Plans will expire on January 1, 2015 unless Congress takes action.  If SNP authority expires, D-SNPs will be required to function as any other MA plan or cease operation. The Medicare Payment Advisory Commission (MedPAC) has recommended that authority lapse for 80% of current D-SNPs. In light of MedPAC’s recommendations, Congress should use SNP reauthorization as an opportunity to improve D-SNP performance and better hold MA plans accountable for quality and cost.

Considerations for D-SNP Reauthorization

Advocates have raised concerns regarding the value of D-SNPs for several years. MedPAC's recommendation that only a few high quality, integrated plans be reauthorized comports with prior advocate recommendations regarding SNP reauthorization. 

In certain areas, D-SNPs may provide a vehicle for more coordinated, quality care and should not be totally abandoned as a potential source of improvement. However, through continued reauthorization of D-SNPs, Congress should seek to hold plans accountable for true clinical and financial integration as recommended by MedPAC, while taking the utmost care to preserve and enhance important consumer protections.  Recommendations for improving D-SNPs include:

1. Integration of Medicaid LTSS and Behavioral Health Services

In its report, MedPAC found that highly integrated D-SNPs provide some or all Medicaid LTSS and behavioral health services.  According to MedPAC’s recommendations, those D-SNPs not assuming at least some  responsibility for Medicaid LTSS or behavioral health services would expire and could work with states now or in the future to become more fully integrated and seek authorization as a D-SNP under the new more rigorous authorizing standard. While a requirement that D-SNPs provide some or all LTSS may promote integration, many managed care plans (even those serving Medicaid-only populations) have little to no experience providing the full suite of community-based LTSS services.

Any move toward integration of Medicaid LTSS into a managed care model must do so in a way that best supports independence and the ability of beneficiaries to remain in, or return to, community settings. Significant oversight by CMS and state Medicaid agencies, in conjunction with stakeholder input, will be required to ensure that appropriate safeguards are in place. Importantly, managed care plans must demonstrate sufficient plan infrastructure, comprehensive home and community based services benefit packages, and robust provider networks prior to being allowed to enroll dually eligible individuals.

2. Integrated Notices, Enrollment and Member Services

An integrated and streamlined enrollment, notice, and member services process could help reduce confusion and promote a more seamless experience for enrollees. An integrated system involves a single enrollment mechanism, a single identification card and member handbook. Integrated notices and member materials should be written in plain language, be limited English proficiency accessible, and accessible to people with disabilities. A streamlined enrollment and member services process is a key component of the demonstrations to integrate care for dually eligible beneficiaries, and has been pioneered by states like Minnesota for several years.

However, integrated enrollment should not be pursued at the expense of beneficiary choice. In their recommendations on D-SNP reauthorization, the National Association of Medicaid Directors suggested Congress expand authority for states to conduct passive enrollment, and to implement mandatory enrollment and lock-in policies for D-SNPs.  Past passive enrollment schemes have resulted in coverage changes without the knowledge of beneficiaries, sometimes with enrollees ending up in a plan that did not cover their long-standing providers, treatments, and medications. The threat of disruption is made more significant if passive enrollment is allowed with lock-in. Passive enrollment, mandatory enrollment and lock-in allows plans guaranteed enrollment without demonstrating that the product is worth having and infringes on a beneficiary’s free choice of provider, a foundational element of the Medicare program since its beginning.

3. Integrated Appeals and Grievances

The right of a person to appeal decisions about his or her health care is a critical consumer protection, and can be strengthened through an integrated D-SNP appeals process that retains the elements from both Medicare and Medicaid that provide the greatest protection to dual eligible beneficiaries.  In its 2012 report to Congress, the Medicare-Medicaid Coordination Office sought Congressional authority to integrate the Medicare and Medicaid appeals processes.  The President’s 2014 budget reflected this request and proposed to implement a streamlined, single beneficiary appeals process for managed care plans that integrate Medicare and Medicaid.

Medicare and Medicaid have distinct rules and protections related to notice, levels of appeal, review entities, timelines for filing appeals and making decisions and more. In resolving conflicts between the two programs, it is important that any integrated D-SNPs appeals process retain crucial consumer protections from each. These protections include but are not limited to:

  • Unified notices of both Medicare and Medicaid appeals, with notice timing and content following Medicaid guidelines;
  • Unified time frames for internal and external appeals following Medicaid guidelines;  
  • No more than five levels of appeal with the option to pursue an external hearing instead of or in addition to plan level review;
  • Continuation of Medicare and Medicaid benefits pending a decision by the first level decision maker;
  • Training for hearing officers to ensure that they are prepared to adjudicate both Medicare and Medicaid claims applying the appropriate standards of review.

An integrated, easily navigable appeals process that combines appeals for both Medicare, including Medicare Part D, and Medicaid services could alleviate confusion, inefficiencies and administrative burden for beneficiaries as well as state and federal government. However, any attempt to integrate appeals must be done with care and caution. 

4. Easier identification of FIDE-SNPs

The Center recommends that Congress make information on the identity of D-SNPs, and in particular FIDE SNPs, more transparent to beneficiaries and their advocates. Often times individuals enrolled in FIDE SNPs are not aware that their plan is, or should be, fully integrated. This makes it difficult for beneficiaries and their advocates to hold FIDE-SNP plans accountable.


SNP reauthorization offers Congress the opportunity to improve MA plan accountability and quality, and to improve care for some of the nation’s most vulnerable Medicare beneficiaries. Through the reauthorization process, Congress should seek to make D-SNPs more fully integrated, but not at the expense of important consumer protections.

We want your stories!!!  Please contact Andrea Callow ( with your personal experiences with Dual Eligible Special Needs Plans


  • Jimmo v. Sebelius (Improvement Standard) No. 11-cv-17 (D.Vt. filed 1/18/11).  As reported during previous Alliance calls, the Settlement in Jimmo was approved on January 24, 2013 during a scheduled fairness hearing.  As noted above, CMS has begun to issue revisions to its Medicare Benefit Policy Manual and numerous other policies, guidelines and instructions to ensure that Medicare coverage is available for skilled maintenance services in the home health, nursing home and outpatient settings.  CMS must also develop and implement a nationwide education campaign for all who make Medicare determinations to ensure that beneficiaries with chronic conditions are not denied coverage for critical services because their underlying conditions will not improve.
  • Bagnall v. Sebelius (Observation Status) No. 3:11-cv-01703 (D. Conn., filed 11/3/2011). In November 2011, the Center for Medicare Advocacy and the National Senior Citizens Law Center 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. When hospital patients are placed on observation status they are labeled "outpatients," even though they are often on a regular hospital floor for many days, receiving the same care as inpatients.  Because patients must be hospitalized as inpatients for three consecutive days to receive Medicare coverage of post-hospital nursing home care, people on observation status do not have nursing home coverage.  They must either privately pay the high cost of nursing care or forgo that skilled care.  The number of people placed on observation status has greatly increased in recent years.
    • As previously reported, unfortunately, on September 23, 2013, a federal judge in Connecticut granted the government’s motion to dismiss the lawsuit.
    • For more information concerning the dismissal of the lawsuit, see the Center’s Weekly Alert (9/26/13) at:
    • There is bipartisan support in both the House and Senate to fix this problem. Representatives Joseph Courtney (D-CT) and Tom Latham (R-IA) have introduced the Improving Access to Medicare Coverage Act of 2013 (H.R.1179) to help Medicare beneficiaries who are hospitalized in observation status. This bill would require that time spent in observation be counted towards meeting the three-day prior inpatient stay that is necessary to qualify for Medicare coverage of SNF care. Senator Sherrod Brown (D-OH) has introduced a companion bill, S.569, cosponsored by Senator Susan Collins (R-ME).
    • For more information about observation status, including pending legislation   see:

Comments are closed.