Medicare Will Not Be Able to Use "Improvement Standard" for Denying Therapy Coverage


By Stephanie Yamkovenko

UPDATE: A federal judge has approved the settlement on January 24. Read more here. 

An older adult has a spinal cord injury and, although she is living at home, she is experiencing declines in her health and her ability to complete activities of daily living. Occupational therapy would help keep her from declining (and likely keep her out of the hospital or nursing home), but because of the “improvement standard,” Medicare would not pay for those services.

Until now, that is.

In a nationwide class-action lawsuit, Jimmo v. Sebelius, the Department of Health and Human Services (HHS) and Department of Justice (DOJ) have reached a settlement with plaintiffs that will require revisions to the Medicare Benefit Policy Manual to correct any suggestion that continued therapy coverage is dependent on the Medicare beneficiary improving. The Centers for Medicare & Medicaid Services (CMS) will be required to educate providers, contractors, and adjudicators that they cannot base coverage on the improvement standard, but instead must base it on whether the beneficiary needs skilled care. AOTA reported on the class filing of the lawsuit in January 2011 and has been following this case throughout.

If the judge approves the settlement, Medicare beneficiaries can no longer be denied coverage if they are not showing measurable functional improvement as the result of therapy. (Read the full proposed settlement here). In the case of the woman with a spinal cord injury, she could continue receiving occupational therapy.

“This is good for occupational therapy and those we serve; Medicare beneficiaries may now continue to receive care for as long as medically necessary,” says Jennifer Hitchon, AOTA’s in-house counsel. “Patients will be able to receive therapy services that maintain their current condition or slow further deterioration, regardless of whether their functional status is expected to measurably improve.”

Although contractors have cited CMS Manual guidance to deny claims where improvement over time could not be shown, CMS and HHS claimed in court filings that such a standard does not exist as part of Medicare policy. Government lawyers are framing this settlement a clarification of policy.

“This settlement clarifies existing Medicare policy,” said Erin Shields Britt, a spokeswoman for the HHS told The Associated Press.1 “We expect no changes in access to services or costs.”

Despite the claims that the improvement standard is not an official policy, for the past 25 years a host of court decisions rejecting the applied standard is evidence of the agency’s reliance on it.2 The Center for Medicare Advocacy, which represented the plaintiffs in the case, says that the improvement standard affects people living with chronic conditions such as multiple sclerosis, Alzheimer’s disease, diabetes, Parkinson’s disease, and stroke, as well as disproportionately affecting people with low incomes.3

Although there are no cost estimates included in the settlement, AOTA believes that in the long run the elimination of the improvement standard could lower Medicare costs. “This settlement has the potential to lower costs, because it will enable people to stay in their homes longer,” says Hitchon. “As patient decline is slowed, hospital admissions and readmissions will be reduced. This is great way to keep people out of institutions—this is a welcome policy shift and money saver.”

Stephanie Yamkovenko is AOTA’s staff writer.


1. Alonso-Zaldivar, R. (2012, October 23). Disabled patients to benefit from Medicare change. Retrieved from

2. Center for Medicare Advocacy, Inc. (2010, December 2). Two federal courts reject “improvement standard” for denying Medicare coverage. Retrieved from

3. Center for Medicare Advocacy, Inc. (2012, October 23).Settlement reached to end Medicare’s “improvement standard.Retrieved from