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CMS Changes Its Coverage of Speech Generating Devices

Through a new interpretation of longstanding rules, CMS is currently leading an outright attack on coverage for Speech Generating Devices (SGDs).  SGDs are typically tablet-like units that allow a person to communicate thoughts by electronic voice generation when he or she is no longer able to speak.  Without an SGD, which is highly personalized and uniquely programmed, many people are isolated and awake, trapped inside a body they cannot control, with no ability to communicate.

Effective April 1, 2014, Medicare will no longer purchase an SGD for a beneficiary; instead it must be rented.  Further, if a person is in the first 13 months of using a rented SGD and he or she enters certain institutional settings, the customized SGD may be unavailable. 

Effective September 1, 2014, if a person's SGD has the potential for any function other than speaking (for example, email), then Medicare will not pay for the person's ability to speak through an SGD – even though Medicare has never paid for additional functionality beyond speaking (any additional functionality has always had to be privately paid).

CMS Forces SGDs to be Rented Instead of Purchased, Effective April 1, 2014

Rather than embracing and encouraging technology, CMS is becoming more restrictive with its regulatory interpretations and coverage allowances.  Up until April 1, 2014, Medicare paid for SGDs under federal regulation 42 C.F.R. §414.220, as "routinely purchased" (rather than rented). 

Medicare claims data for 2012 show that SGDs were "routinely purchased" 99.3% of the time.  According to CMS's new interpretation of the existing regulation, however, since SGDs were not routinely purchased at least 75% of the time from 1986 to 1987 – a time period well before the advent of SGD technologies – SGDs are not considered "routinely purchased."  Consequently, CMS now says, in order for Medicare to pay for an SGD it must first be rented.

The Consequences of Capped Rentals for SGDs

CMS's guidance, effective April 1, 2014, reclassified SGDs into a capped rental regulation, 42 CFR § 414.229. 

Under capped rental durable medical equipment (DME), if a person requires Medicare Part A institutional care (hospital, long term, or hospice), Medicare finds that the "overall package of institutional care" includes any medically necessary DME under the heading of "…drugs, biologicals, supplies, appliances, and equipment…" (See Section 1861n of the Social Security Act  During the course of a stay, the facility is obligated to furnish any medically necessary DME (including an SGD) since the facility's global per diem payment for the covered stay itself already includes any medically necessary DME.

Prior to April 1, 2014, and the SGD reclassification, Medicare beneficiaries usually brought their highly personalized SGD communication devices, purchased under Part B, with them for use during a covered Part A stay.  As of April 2014, only beneficiaries who own their SGD will be allowed to bring their SGD with them to the facility.

The expense of purchasing an SGD through the capped rental program also increases the cost of an SGD.  The capped rental program results in payment of 105% of the original purchase price of the DME, ultimately costing both CMS and the beneficiary more money.

Let Us Hear From You

If you know of any patient who has entered an inpatient facility and has had his or her speech device taken away from them, or if you know of anyone who has been forced to pay for a speech device out-of-pocket after entering an inpatient facility, now or in the future, please call Kathy Holt at the Center for Medicare Advocacy 1-860-456-7790 or email

Also, call 1-800-MEDICARE if you know someone who may become affected by these SGD changes.  Calls to 1-800-MEDICARE are tallied by "complaint" and enough complaints about these unfair SGD policies will make a difference.


On March 10, 2014, the Centers for Medicare & Medicaid Services (CMS) issued a memorandum to Part D Plan Sponsors and Medicare Hospice Providers entitled, "Part D Payment for Drugs for Beneficiaries Enrolled in Hospice – Final 2014 Guidance" (Guidance).   The Guidance identifies a billing problem related to medications after Medicare beneficiaries elect hospice, and designs a solution effective May 1, 2014.  See:  

Medications that should be covered by the Medicare Hospice Benefit are sometimes paid for by the insurance companies that administer Medicare Part D plans.  In an attempt to prevent this outcome, the Guidance requires all prescribed medications for hospice patients that are billed to Medicare Part D to be rejected for payment, by being subject to a prior authorization requirement.

Whenever a beneficiary or family caregiver attempts to fill a prescription at a pharmacy, the Guidance directs the pharmacy to contact the prescriber to determine whether the medication is related to the terminal illness. If the medication is related to the terminal illness, the pharmacy is directed to bill the hospice for the cost of the medication.   

If the medication is not related to the terminal illness or the determination of relatedness is unclear, the pharmacy cannot fill the prescription. Instead, the pharmacy is expected to provide the standardized pharmacy notice that outlines beneficiary appeal rights. In these instances, beneficiaries, who in this case are terminally ill, must subsequently request a formal coverage determination from their Part D plan to access their prescribed medication. From there, CMS directs Part D plans to engage in a chain of communication with multiple parties to determine the medication’s relatedness to the beneficiary’s terminal condition.

CMS has recently issued proposed rulemaking that solicits input on the intersection between hospice and Part D, including the definition of conditions related to a terminal illness.  (See discussion below re: proposed rule, 79 Federal Register 26538, May 8, 2014).

Along with other consumer advocates and stakeholders, CMA is urging CMS to replace this Guidance with a workable alternative that does not place the burden of resolving a payment disputes squarely on the shoulders of terminal Medicare beneficiaries.


  • Notice of Proposed Rulemaking (NPRM) – CMS has recently issued a number of proposed rules, currently open for comment, that are relevant to beneficiary advocates.  These proposed rules include:

o   Inpatient Hospital Rule: see; this proposed rule contains provisions relevant to observation status, including short inpatient stays and suggested exceptions to the two-midnight rule (see, e.g., discussion of these provisions in the Center’s Weekly Alert “Harm From Medicare’s Hospital Observation Status Debated in Congressional Hearing – Center for Medicare Advocacy Presents Beneficiary Perspective” (May 21, 2014), available at:

§  Comments due June 30

o   Hospice Wage Index Rule: see, e.g., CMS Fact Sheet:; link to Federal Register:; as noted above,  this proposed rule includes issues related to hospice and Part D prescription drug coverage, including definitions of conditions related to a terminal illness.

§  Comments due July 1

o   Rule re: Prior Authorization for Certain DME: see

§  Comments due July 28

  • Windsor and New Guidance from the Administration for Community Living (ACL)

On June 26, 2013, the Supreme Court, in U.S. v. Windsor, Executor of the Estate of Spyer, et al, 133 S. Ct. 2675 (2013), found unconstitutional section three of the Defense of Marriage Act (DOMA). In its ruling, the Court stated that Section three of DOMA is a “deprivation of the equal liberty of persons that is protected by the Fifth Amendment of the U.S Constitution.” 

As discussed during the last Alliance Call, in April 2014, the Department of Health and Human Services (HHS) issued an announcement entitled “HHS announces important Medicare information for people in same-sex marriages” (see: 

In May 2014, the Administration for Community Living (ACL), an agency within the Department of Health and Human Services, issued guidance applicable to all ACL grantees concerning the federal government's policy on same-sex marriages following the decision in Windsor.  The Court in Windsor found that Section three of the Defense of Marriage Act (DOMA) impermissibly discriminates against same-sex couples who have been lawfully married in accordance with the laws of a given state.

According to its guidance, the policy of the ACL is to treat same-sex marriages the same as opposite sex marriages to the "extent reasonably possible."  In this regard ACL sets out the following:

  • ACL programs should recognize as family members individuals of the same sex who are lawfully married under the law of a state, territory, or foreign jurisdiction. This policy applies based on the jurisdiction in which the marriage was celebrated.
  • ACL will recognize the marriage, regardless of whether the individuals are domiciled or reside in a state or territory that does not recognize the marriage.
  • When the ACL guidance discusses individuals of the same sex who are "legally married," the intention is to include all legal marriages, regardless of the individuals' current domicile or residence.

Programs affected by the ACL policy include (a) The Administration on Intellectual and Developmental Disabilities; (b) State Protection and Advocacy Systems under the Developmental Disabilities Act ("DD Act"), including their governing boards and advisory councils; (c) the National Network of University Centers for Excellence in Developmental Disabilities; (d) Projects of National Significance, including projects made through grants, contracts, or cooperative agreements; (e)  Help America Vote Act Protection and Advocacy Systems; (f) Home Delivered Nutrition Services; and (g)  the National Family Caregiver Support Program.


  • 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. The case was brought as a class action, and the four named plaintiffs represent thousands of Medicare beneficiaries in Connecticut who cannot get a meaningful review of their case. 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.
  • 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. The Center would like to hear from Advocates with similar ALJ delays. We are considering our options to solve the ALJ delay problem for beneficiaries.
  • 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.
    • 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.  Their opening brief was filed on February 13, 2014.  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.  The Secretary’s brief is due on May 15, 2014.

  • 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:       

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