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The Year Ahead

1. Legislative & Budget Landscape in a New Congress

In the 114th Congress staring in January 2015, Republicans will control both the House of Representatives and the Senate.  What will this mean for health care policy generally and Medicare specifically?  Here are a few different takes:

2. Medicare Physician Payment (SGR)

The new Congress will have to address the perennial issue of payment for Medicare physicians: the fundamentally flawed reimbursement system known as the sustainable growth rate or SGR.  If Congress does not take action by the end of March 2015, physicians will face an approximate 21% cut in payment from Medicare.    Instead of permanently fixing the SGR, since 2003 Congress has enacted approximately 16 temporary fixes, or patches, at a higher cumulative cost than what would have been spent if the payment formula had been fixed more than a decade ago.

Earlier this year, Congress produced bipartisan proposals to fix the SGR that would have replaced the current volume-based payment system with one that rewards quality, efficiency and innovation, but instead of permanently fixing SGR, these broader, more permanent policies were not enacted.  Instead, the current short-term “fix” lasts only through March 2015.

Of critical concern to beneficiaries, there are a number of “extenders” – extensions of other temporary Medicare fixes – that have traditionally been part of a larger SGR bill.  These extenders include future funding for the Qualified Individual (QI) program that pays Part B premiums for certain low income individuals, and an exceptions process to Medicare’s annual caps on coverage of outpatient therapy services. 

3. Debt and Deficit Reform Proposals 

Over the last few years, many Medicare reform proposals have been discussed at various Congressional hearings.  See, e.g., a hearing held recently on December 9, 2014 by the Energy & Commerce Committee, Subcommittee on Health entitled “Setting Fiscal Priorities.”

4. What Will the President’s FY2016 Budget Proposal Contain? 

While the President’s FY2015 proposed budget included a number of proposals that we supported, including prescription drug rebates, it also contained policy proposals we oppose, including adding a copayment to the home health benefit, adding a surcharge to Medigap “first dollar” coverage, and further income-relating Part B and D premiums.

5. Draft Legislation

Hospital Improvements for Payment (HIP) Act & Observation Status

On November 19, 2014, the House Ways & Means Committee introduced a draft bill entitled the Hospitals Improvements for Payment (HIP) Act of 2014. 

While much of the draft bill focuses on changes to hospital payment, the bill does address observation status – treating certain hospitalized Medicare patients as outpatients when their care is indistinguishable from that of formally admitted inpatients.   In certain instances, the draft bill proposes to count different types of hospital stays towards the 3-day hospital inpatient requirement for subsequent skilled nursing facility care.  Unlike the Improving Access to Medicare Coverage Act (H.R. 1179/S. 569), this potential relief for beneficiaries would not be effective immediately upon passage, and would happen only as part of other changes to hospital payment reimbursement systems.   The Committee is currently soliciting feedback on this draft legislation.   

Protecting Integrity of Medicare Act (PIMA) of 2014

On December 2, 2014, the House Ways & Means Committee released a draft bill with provisions that include efforts to prevent prescription drug abuse under Medicare Part D through drug management programs, and prohibition of inclusion of Social Security account numbers on Medicare cards.

Pending Draft Legislation

In April 2014, the House Energy & Commerce Committee launched its “21st Century Cures Initiative” which includes an effort to speed drug and medical device development.  Draft legislation is expected in early 2015.

  • See;   “… [W]e in Congress are going to take a comprehensive look at what steps we can take to accelerate the pace of cures in America. We are looking at the full arc of this process – from the discovery of clues in basic science, to streamlining the drug and device development process, to unleashing the power of digital medicine and social media at the treatment delivery phase.”


1. Home Health Proposed Rule

On October 9, 2014 CMS issued a proposed rule to revise the current conditions of participation (CoPs) for home health agencies. Comments are due January 7, 2014.

Proposed provisions include:

Providing patients the right to be given written and verbal notice of their rights in their primary or preferred language and in a manner they can understand, during the initial evaluation visit and in advance of care being furnished;

  • Ensuring the home health patient’s right to participate in, be informed about, and consent to or refuse care, which includes establishing and revising the plan of care (POC), and identifying goals, preferences, anticipated risks of care, the disciplines that will furnish care and the frequency of visits;
  • A new standard which lists the criteria by which HHAs may transfer or discharge patients, including criterion that expressly permits termination of care “when the physician and HHA agreed that the patient no longer needed HHA services because the patient’s health and safety had improved or stabilized sufficiently.” 42 C.F.R. § 484.50(d)(3); 
  • A discharge for cause provision at § 484.50(d)(5), which permits discharge if the patient’s (or other persons in the patient’s home) behavior is “disruptive, abusive, or uncooperative to the extent that delivery of care to the patient or the ability of the HHA to operate effectively is seriously impaired”; and
  • A major substantive a change to the written plan of care (POC) at 42 C.F.R. § 484.60; in addition to specifying the care and services necessary to meet the patient-specific needs as identified in the comprehensive assessment, the POC would also have to specify “the measurable outcomes that the HHA anticipates will occur as a result of implementing and coordinating the plan of care.” 

2. Proposed Rule Implementing Windsor in Long-Term Care Facilities

On Friday, December 12, 2014, CMS issued a proposed rule implementing the Windsor decision in long-term care facilities.  Comments are due February 10, 2015.

According to CMS, “This proposed rule would revise the applicable conditions of participation (CoPs) for providers, conditions for coverage (CfCs) for suppliers, and requirements for long term care facilities, to ensure that certain requirements are consistent with the Supreme Court decision in United States v. Windsor, 570 U.S.12, 133 S. Ct. 2675 (2013), and HHS policy. Specifically, we propose to revise certain definitions and patient’s rights provisions, in order to ensure that same sex spouses in legally-valid marriages are recognized and afforded equal rights in Medicare and Medicaid participating facilities.”


  • Problems with Medicare Appeals – As previously discussed during Alliance calls, the Center’s experience with dismal success rates in beneficiary appeals at the lower levels of review are quite staggering, and have been getting exponentially worse over the past few years.

•On June 4, 2014, the Center filed a complaint in United States District Court in Connecticut against Kathleen Sebelius, Secretary of Health and Human Services (at that time), on behalf of plaintiffs who have been denied a meaningful review of their Medicare claims at the first two levels of appeal. Hull v. Sebelius, No. 14-801 (D.Conn.).  The case was brought as a class action on behalf of Connecticut Medicare beneficiaries seeking home health care coverage, and the four named plaintiffs represent the thousands of beneficiaries who cannot get a meaningful review of their cases.”. Instead, Medicare beneficiaries receive almost automatic denials of coverage, which is essentially “rubber stamped” at both the Redetermination and Reconsideration levels. The problem persists throughout the country.

  • For more information, see the Center’s press release “Lawsuit Challenges Unjust and Inefficient Medicare Appeals Process” (June 5, 2014), available at:;
  • Also see:
  • ALJ Delay Issues – The “rubber stamp” denials at the lower levels of Medicare appeals have resulted in huge backlogs to receive an ALJ hearing – the only meaningful review of a Medicare appeal and chance for success. The statute and regulations require that an ALJ issue a decision within 90 days of the Request for Hearing. While the Chief ALJ has stated that individual beneficiary cases should not be delayed, still most of the Center’s cases are greatly exceeding statutory timelines for decisions.
  • On August 26, 2014, the Center filed a nationwide class action lawsuit in United States District Court in Connecticut: Lessler v. Burwell, No. 14-1230 (D.Conn.).. The five named plaintiffs, from Connecticut, New York and Ohio, have all waited longer than the statutory 90-day limit for a decision on their Medicare appeals. The current average wait time is over five times the congressionally mandated time limit.  The complaint is available here:
  • 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 previously discussed, CMS has issued revisions to its Medicare Benefit Policy Manual to ensure that Medicare coverage is available for skilled maintenance services in the home health, nursing home and outpatient settings.  CMS also implemented 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. Pursuant to the Settlement, counsel for the parties are meeting twice a year to discuss problems with implementation and possible solutions, and are in regular contact between meetings.
  • For more information, see the Center’s website at:
  • 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. 

Plaintiffs appealed, but limited the appeal to the issue of the right to an effective notice and review procedure for beneficiaries placed on observation status.  .Both the AMA and the American Health Care Association filed amicus briefs in support of plaintiffs, and the American Hospital Association filed an amicus brief that was neutral as to the parties.  With the appeal fully briefed, oral argument has been scheduled for this Thursday, October 23.

  • 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:
  • Haro v. Johnson (Medicare Secondary Payer) No. 09-cv-134-TUC-DCB (D.Ariz.), filed March 10, 2009.  Appeal filed June 30, 2011 (No. 11-16606, 9th Cir.). 

The issue in Haro was whether the Secretary's aggressive methods for attempting to collect payments under her Medicare Secondary Payer (MSP) program, directed at beneficiaries and their attorneys, violates the Medicare statute and the Due Process Clause.  Plaintiffs sought declaratory and injunctive relief prohibiting defendant's MSP recovery practices, including termination of Social Security benefits before there has been resolution of an administrative appeal of the MSP claim or waiver of recovery request, and requiring attorneys to withhold liability proceeds from their clients.

Status: After remand to the District Court, the parties entered into settlement discussions. On December 1, 2014, they jointly filed papers with the district judge, which, if granted, will result in changes to the challenged system and dismissal of the complaint. For more information about this case, including the full procedural history, see:

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