Medicare, Rehab, and “Failure to Improve”

After a hospital stay, Medicare-covered people may need rehab to continue improving from the treatment that the hospital provided.  (As discussed in the March 10, 2017 installment, the hospital stay must be at least three days and a full “admission” to the hospital.)  In the past, as a way to save money, Medicare would cut off rehab for someone who wasn’t getting better (or wasn’t getting better fast enough.)

BUT, Medicare’s rules don’t allow for a cut-off of rehab for a failure to improve.  Medicare got sued to stop using the “improvement” standard.  A class action lawsuit was filed in 2011 in Vermont, Jimmo v. Sebelius (Kathleen Sebelius was the United States Secretary for Health and Human Services between 2009-2014.)  Jimmo and the other claimants pointed out that the Medicare rules do not set restoration of the patient’s condition as the only goal of rehab.  Instead, the rules specifically list the preservation of current capabilities and the prevention of further deterioration as alternate goals if restoration isn’t possible.

Now, restoration is listed in the rules as the goal of rehab when the patient is trying to recover from a malformed body part.  Unfortunately, that restoration goal came to be applied to most or all rehab programs, not just to malformed limbs.  Using a “failure to restore” the patient’s function test allows payment to be cut off earlier in the rehab process than would using a “preservation of current function/prevention of deterioration” test.  Cutting off rehab earlier saves Medicare and its insurance affiliates save a great deal of money when rehab gets shut down early.  As a result, bit by bit, most or all rehab patients came to be measured by their progress toward restoration of function, and when the patient failed to improve toward that goal, payment for rehab get cut off.

The Jimmo lawsuit forced Medicare to face its failure to follow its own rules.  The Jimmo lawsuit didn’t go to trial but, instead, led to a settlement agreement that Medicare would stop improper use of the “restoration” standard and its “failure to improve” test for ending rehab payments.  (The restoration goal still applies to malformed body parts.)  The judge approved the settlement as a court order.

Unfortunately, years later, rehab providers and Medicare’s insurers are still applying the failure to improve standard.  The Jimmo case went back to court to demand that Medicare follow the settlement agreement.  (Based on the resulting court order, it appears that the judge is not happy with Medicare.)  Under the new court order that adds to the original settlement agreement, Medicare must undertake an effort to educate the public that the failure to improve test does not apply.

To patients undergoing rehab, the Jimmo case is the basis to argue that rehab should not be ended.  The proposed ending of rehab must come in writing with an explanation of the right to appeal.  The Jimmo settlement is an argument to present in the appeal.

Unfortunately, many hearing officers are more familiar with the incorrect approach that “failure to improve” is a reason to end rehab than they are familiar with the Jimmo agreement.  Appeals about the continuation of rehab may require the help of an attorney who works in Medicare or Medicaid.

Also, the Jimmo settlement does not get rid of the 100-day limit on Medicare payments for rehab.  The 100 days of available rehab does not reset unless the patient can go 60 days without needing Medicare’s support for the health issue that led to rehab.  If the family is concerned about the patient going 60 days without needing more medical help, the family may not wish to push the Jimmo issue too far.  The family may wish to “save” some of the 100 days.

In summary, if a patient seems to be getting pushed out of rehab early and the patient or family wishes rehab to continue, argue that Medicare can’t cut off rehab for a failure to improve.  Use the name “Jimmo,” so the care provider, insurer, or hearing officer can look for the agreement.

Medicare, Rehab, and Observation Status

Rehab is expensive.  No surprise there.  Under the right circumstances, the person getting rehab care sees little or no cost.  Under the wrong circumstances, the person getting rehab will get stuck with the entire cost.

Just to be sure we all understand, “rehab” is rehabilitation.  An example of rehab is the effort to strengthen the legs after a knee replacement.

In our discussion today, rehab follows a hospitalization.  Most often, rehab takes place in a nursing home or in a facility similar to a nursing home that has chosen to focus on rehab services.  (There is a trend to rehab at home, relieving the insurer from the room and board cost of a care facility.)

To have Medicare or an Advantage Plan cover rehab, the patient must be admitted to a hospital for a three-day period immediately before the start of rehab.  If such a hospitalization took place and the patient has Medicare, then Medicare will usually pick up the entire bill for the first 20 days of rehab and all but $165 of the costs for any additional days (up to 100.)  The patient or supplemental insurance picks up the $165.  If the patient has an Advantage Plan, the plan’s rules will control how the costs of rehab will be handled.  (Ed. Note:  The $165 amount was inserted on 3/20/2017 after receiving new information.)

Separate from rehab, hospitals have economic pressures to control who gets “admitted” to the hospital.  If a Medicare-covered person is re-admitted to the hospital within 30 days, Medicare will penalize the hospital for the first hospitalization for not treating the patient’s malady adequately enough the first time that another hospitalization was needed.  The penalty will be a reduction in the Medicare reimbursement for the first hospital stay.

Because the risk of this payment reduction, hospitals tend not to “admit” someone on Medicare if the hospital’s staff isn’t sure that the patient can be cured.  Many chronic illnesses of older adults can’t be cured.  Perhaps they can be treated, or perhaps the symptoms can be controlled, but the illness may not be curable.  The lack of a cure creates a stronger likelihood of the need for more hospital care for the same person for the same medical needs.  This risk of more care creates a high risk of a “readmission” for the patient.  So, the hospital has a reason to look for a way to avoid admitting someone with an uncurable chronic illness or with symptoms that can’t be completely diagnosed.

Hospitals have started to use “observation status.”  Observation status takes place in the hospital in a hospital bed in a hospital room and looks just like an admission to the hospital, but it’s not an admission.  A person on observation is “outpatient” for billing purposes.  Medicare is billed via Part B rather than Part A.  Advantage Plans are billed via outpatient billing codes.  But, the patient doesn’t see a difference.

If a patient goes from observation status to rehab, the rehab will NOT be covered by Medicare.  Rehab in a nursing home or rehab center can cost $10,000 per month.  Unfortunately, someone on observation status may not know that rehab won’t be covered by Medicare or an Advantage Plan until it’s too late.

So, a person on Medicare or an Advantage Plan who is in the hospital (or the person’s loved ones) needs to advocate for full admission to the hospital.  When the patient goes into a hospital room (i.e., not in the emergency room any more,) ask if the patient is admitted or on observation status.  (Just using the terminology will get the staff’s attention.)  If not admitted, demand to know why.  Demand to know how to get fully admitted  Demand to be fully admitted.  Talk to the hospital social worker.  Talk to the nurses.  Talk to the doctors.  Talk to the patient ombudsman.  Talk to anyone necessary to get a full admission.  (It may not happen, but if you don’t try, it definitely won’t happen.)

Check again everyday.  (Status can change at any time.)

Being an advocate isn’t fun (for most people,) but it may be necessary.