Medicare Policy Changed: No “Improvement Standard” Can Be Used to Deny Coverage

Stephanie Yamkovenko

For the past 25 years, Medicare beneficiaries were denied care if they were not showing measurable functional improvement as the result of therapy. Despite claims by the Centers for Medicare & Medicaid Services (CMS) that an “improvement standard” was not official policy, Medicare contractors would cite CMS Manual guidance to deny claims where improvement over time could not be shown.

A nationwide class-action lawsuit, Jimmo v. Sebelius, has put an end to the so-called improvement standard, with a settlement being approved on January 24, 2013. Read AOTA’s article about the settlement here.

Per the terms of that settlement, CMS recently released Transmittal 175, implementing manual changes that are effective January 7, 2014. The changes clarify that Medicare coverage for therapy and nursing services is based on a beneficiary’s need for skilled care, not on the ability to improve. The manual instructs contractors that no “improvement standard” can be used. The change applies to inpatient rehabilitation facilities, skilled nursing facilities, home health, and all outpatient settings.

According to the transmittal, “skilled occupational therapy services are covered when the individualized assessment of the patient’s clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified occupational therapist are necessary.” CMS is also rolling out an education campaign for providers.

The elimination of the improvement standard is a win for occupational therapy and the beneficiaries we serve. “These revisions help ensure Medicare beneficiaries receive fair access to the coverage and care that is promised to them under law,” says Jennifer Hitchon, AOTA’s Counsel and Director of Regulatory Affairs. “Patients with multiple chronic conditions who needed occupational therapy to maintain their function or to prevent or slow their decline were targeted by the ‘improvement standard’ policy, and it is excellent to see CMS finally acknowledging that occupational therapy practitioners should be reimbursed for providing care to those patients.”

AOTA encourages providers to notify AOTA and appeal any denials received for medically necessary, skilled maintenance therapy.

Stephanie Yamkovenko is AOTA’s Web editor.