March 2017 – Updates on Litigation, Health Reform, Observation Status & Other Issues

LITIGATION UPDATE

  • Barrows v. Price (formerly Bagnall v. Sebelius, Barrows v. Burwell), No. 3:11-cv-1703 (D. Conn.) (Observation Status). In November 2011, the Center for Medicare Advocacy and Justice in Aging filed a proposed 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 Part A coverage of post-hospital nursing home care, people on observation status do not have access to 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.

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.  On January 22, 2015, the U.S. Court of Appeals for the Second Circuit decided that Medicare patients who are placed on observation status in hospitals may have an interest, protected by the Constitution, in challenging that classification.  The panel held that the district court erred when it dismissed the plaintiffs’ due process claims, and it sent the case back to that court for further proceedings.  Barrows v. Burwell, 777 F.3d 106 (2d Cir. 2015).

The parties completed discovery on the issue ordered by the Second Circuit: whether plaintiffs have a “protected property interest” in Part A coverage of their hospital stays, which depends on whether CMS has “meaningfully channeled” discretion on the question of patient status determinations.  If the Secretary has established criteria for inpatient hospitalization, plaintiffs have an interest that is protected by the Due Process Clause and thus they may be entitled to notice and opportunity to appeal their placement on observation. Plaintiffs received voluminous documentation from the government and conducted depositions of witnesses from the Department of Health and Human Services, Medicare contractors, and some of the hospitals that treated the named plaintiffs. The law firm of Wilson Sonsini Goodrich & Rosati, which has helped the Center in previous litigation, joined as representatives of the plaintiffs during this phase and is continuing to provide invaluable pro bono assistance.

After briefing was complete, a hearing on cross motions for summary judgment on the protected property interest issue and defendant’s supplemental motion to dismiss was held on December 15, 2016. The court ordered supplemental briefing on several issues, which was filed on January 17, 2017.

Update: On February 8, 2017, the court issued a decision denying both motions for summary judgment and largely denying the government’s motion to dismiss.  The court found that all plaintiffs have standing and none of their claims was moot, even though some have passed away and some have resolved their underlying individual claims. It decided that factual diputes precluded summary judgment on the property interest question, though it did note that CMS considers the billing of hospitalizations as inpatient or observation to be a regulatory matter, under the authority of the Secretary, as opposed to a clinical decision. The court also found that while a treating physician’s status order plays a “role” in Medicare’s review of a hospital claim, it not dispositive or even presumed to be correct.

As for the motion to dismiss, the court found that plaintiffs have plausibly alleged the other two aspects of a due process claim: state action (in the form of pressure on providers by CMS) and inadequacy of existing procedures (it is undisputed that there is currently no appeal method for patients placed on observation status). The court did find that plaintiffs’ claim for expedited notice is now moot due to the new requirements being implemented under the NOTICE Act (“MOON” notice). The parties have since filed an updated plan for further discovery as plaintiffs continue to press their due process claim. Plaintiffs also filed a renewed motion for class certification on March 3, 2017, which should be fully briefed by early May.

  • Exley v. Burwell (formerly Lessler v. Burwell), No. 3:14-cv-1230 (D. Conn.) (ALJ Delays) The Medicare statute and regulations require that an administrative law judge (ALJ) issue a decision within 90 days the filing of a request for hearing. While the Chief ALJ has stated that individual beneficiary cases should not be delayed, still most of the Center’s cases were exceeding statutory timelines for decisions.

On August 26, 2014, the Center filed a nationwide class action lawsuit in United States District Court in Connecticut. The named plaintiffs, from Connecticut, New York and Ohio, all waited longer than the statutory 90-day limit for a decision on their Medicare appeals. On January 29, 2015, defendant’s motion to dismiss was denied.  On June 10, 2015, the court granted the plaintiffs’ motion for certification of nationwide class of Medicare beneficiaries who have been or will be waiting more than 90 days for a decision on their timely-filed request for an ALJ hearing. The parties also conducted discovery. In March 2016 the court preliminarily approved a settlement and notice to the class was posted.

A Fairness Hearing was held on August 1, 2016 and the Court granted final approval of the settlement agreement. The settlement calls for the Office of Medicare Hearings and Appeals (OMHA) to continue its policy of providing beneficiary appellants with priority over other appellants in receiving ALJ decisions, to designate a Headquarters Division Director to oversee inquiries about appeals initiated by beneficiary appellants, and to address any complaints or questions concerning the processing of those appeals. OMHA will also introduce a new, more user-friendly ALJ hearing request form that allows beneficiaries to self-identify, and will also publish data about the length of processing time for beneficiary appeals.

On September 1, 2016 as part of the settlement, OMHA established a toll-free Beneficiary Help Line: (844) 419-3358.  This line, which is staffed by representatives of OMHA, will address inquiries about ALJ appeals being pursued by Medicare beneficiaries. The Center urges anyone pursuing a beneficiary appeal who believes the appeal is not receiving timely attention to call the Beneficiary Help Line. The expectation is that a call to this line will help resolve delays in cases that are eligible to be prioritized. The Beneficiary Help Line is staffed from 8:00 a.m. to 4:30 p.m., Eastern Time. If calling at other times or if the OMHA Beneficiary Help Line staff are assisting other callers, OMHA instructs callers to leave a voicemail. Please report your experiences using the Help Line to the Center at: abers@medicareadvocacy.org.

As of November 1, 2016 CMS updated scripts for 1-800-Medicare to highlight the OMHA beneficiary prioritization policy for beneficiary callers and to refer them to the toll-free OMHA Beneficiary Help Line if they have questions about filing appeals with OMHA or about ALJ appeals that are pending with OMHA. OMHA also posted the beneficiary appeals data required by the settlement on their website at http://www.hhs.gov/about/agencies/omha/about/current-workload/beneficiary-appeals-data/index.html. The data shows beneficiary appeals now being processed within or very close to the 90-day statutory time period.

Update: In late January 2017 the Office of Medicare Hearings and Appeals issued a new ALJ request form, the OMHA-100, which is a unified request for hearing and review and can be used for all appeals to OMHA.  As part of the settlement, the form allows beneficiaries and enrollees to self-identify, making it easier for these claims to be classified as beneficiary appeals and given priority for processing. CMS has also issued instructions to appeal contractors that deal with reconsiderations (the level below ALJ hearings) the begin using revised appeal instructions that include plain-language instructions about OMHA’s beneficiary mail-stop as well as information on the beneficiary help-line that has been established at OMHA.  The OMHA-100 is available at: https://www.hhs.gov/sites/default/files/OMHA-100-Request-for-Hearing-or-Review-of-Dismissal.pdf.

  • Jimmo v. Sebelius, No. 5:11-cv-17 (D. Vt.) (Improvement Standard).  The settlement in Jimmo was approved on January 24, 2013.  CMS issued revisions to its Medicare Benefit Policy Manual to clarify that Medicare coverage is available for skilled maintenance services in the home health, nursing home and outpatient settings.  CMS also implemented a nationwide Educational 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 have been meeting twice a year to discuss problems with implementation and possible solutions, and are in regular contact between meetings.

On March 1, 2016, the Center and its co-counsel, Vermont Legal Aid, filed a Motion for Resolution of Non-Compliance with the settlement agreement. The filing came after three years of urging the Centers for Medicare & Medicaid Services (CMS) to fulfill its obligation to end continued application of an “Improvement Standard” by Medicare providers, contractors and adjudicators to deny Medicare coverage for skilled maintenance nursing and therapy.

If truly implemented and enforced, the settlement should improve access to skilled maintenance nursing and therapy for thousands of older adults and people with disabilities whose Medicare coverage for skilled care is denied or terminated because their conditions are “chronic,” “not improving,” “plateaued,” or “stable.” Unfortunately, providers and contractors continue to illegally deny Medicare coverage and care based on an “Improvement Standard,” resulting in beneficiaries nationwide failing to obtain needed skilled nursing and therapy coverage.

The court announced its decision on the Motion for Resolution of Non-Compliance on August 18, 2016.  The Order required CMS to remedy the inadequate Educational Campaign that was a cornerstone of the original Settlement Agreement. As the judge stated, “Plaintiffs bargained for the accurate provision of information regarding the maintenance coverage standard and their rights under the Settlement Agreement would be meaningless without it.” The parties negotiated but could not come to agreement on what a Corrective Action Plan should entail.  The court then ordered each party to submit a brief explaining and justifying their proposed corrective action plans, as well as a response to the other party’s plan.

Update:  On February 2, 2017, the court released a decision ordering CMS to carry out a Corrective Action Plan to remedy noncompliance with the Settlement. The plan includes a new webpage by CMS dedicated to the Jimmo settlement with frequently asked questions and a statement (which the court largely adopted from plaintiffs’ suggested language) that affirmatively disavows the Improvement Standard; new training for Medicare contractors making coverage decisions; and a new National Call for Medicare contractors and adjudicators to correct erroneous statements that had been made on a previous call. The government was given an opportunity to object to the language of the corrective statement, and the parties negotiated final wording which was submitted to the court.  On February 16, 2017, the court approved the final wording of the statement to be used by CMS to affirmatively disavow the use of an Improvement Standard.  Importantly, the statement notes that the “Jimmo Settlement may reflect a change in practice for those providers, adjudicators, and contractors who may have erroneously believed that the Medicare program covers nursing and therapy services under these benefits only when a beneficiary is expected to improve.” The government must certify that it has complied with the Corrective Action Plan by September 4, 2017.

  • Sherman v. Burwell (formerly Olsen-Ecker v. Burwell), No. 3:15-cv-1468 (D. Conn.) (Lower level Medicare appeals) On October 9, 2015, the Center filed a complaint in United States District Court in Connecticut against Sylvia Mathews Burwell, Secretary of Health and Human Services, 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 on behalf of Medicare beneficiaries seeking home health care coverage, and the named plaintiff represents beneficiaries who have received the usual “rubber stamp” denials at redetermination and reconsideration. The plaintiff also filed a motion for class certification, and the government filed a motion to dismiss. Written discovery was served but responses were stayed while the motion to dismiss was pending. Oral argument was held on February 29, 2016.

On August 8, 2016, the judge largely denied the government’s motion to dismiss and granted plaintiff’s motion for certification of a nationwide class. The court concluded that it had jurisdiction and decided that the case was not moot even though plaintiff’s claim had ultimately been approved. The judge dismissed the statutory claim, but found that plaintiff had stated a valid claim for relief under the Due Process Clause. He found plaintiff’s claim of policies or practices causing the denial rate sufficiently plausible to allow the case to continue to discovery. The judge also certified a nationwide class of Medicare beneficiaries of home health care services who had received adverse decisions at the first two levels of appeal on their Part A or Part B claims, and who had received an initial adverse initial determination on or after January 1, 2012.

Update: Plaintiffs and the Secretary each served discovery and provided written responses and document production. Plaintiffs are beginning the process of conducting depositions and discovery is expected to continue through the summer of 2017.

  • Ryan v. Burwell, No. 5:14-cv-269 (D. Vt.) (Prior Favorable Homebound Determination) On December 19, 2014, the Center for Medicare Advocacy and Vermont Legal Aid filed a class action lawsuit against Sylvia Mathews Burwell, the Secretary of Health and Human Services, to stop Medicare’s practice of repeatedly denying coverage for home health services for beneficiaries on the basis that they are allegedly not homebound, when Medicare has previously determined them to be homebound. (Ryan v. Burwell). The lawsuit was filed in the United States District Court in Burlington, Vermont on behalf of two Vermont residents, Marcy Ryan and John Herbert, as a regional class action lawsuit covering New England and New York.

On March 25, 2015, the government filed a motion to dismiss on the grounds that plaintiffs lack standing, that the court lacks subject matter jurisdiction, and that plaintiffs have failed to state claim on which relief may be granted.  On July 27, 2015, the court denied the government’s motion to dismiss, finding four separate grounds on which the dually eligible plaintiffs have standing. The court also found that it had subject matter jurisdiction and that plaintiffs had stated a claim on which relief could be granted.

On December 2, 2015, the court granted plaintiffs’ motion for class certification and, at request of the plaintiffs, issued clarification on the class definition on February 23, 2016.  The regional class is defined as all beneficiaries of Medicare Part A or B in Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont (Medicare Administrative Contractor Jurisdiction K): (a) who have received a “favorable final appellate decision” that he or she was “confined to the home,” i.e. homebound, in the appeal of a home health nursing or therapy claim denial; (b) who have subsequently been denied, or will be denied, coverage for additional service on the basis of not being homebound, on or after January 1, 2010; (c) who had a non-lapsed, viable appeal of the subsequent denial for coverage of additional home health services as of March 5, 2015, or had a particularized individual basis for tolling of any applicable appeal deadline; and (d) for whom the claim for Medicare home health coverage was filed on or before August 2, 2015. Written discovery was served.

The government filed a motion for summary judgment in November 2016 and plaintiffs filed a cross motion and responded in December.  However the parties have now re-entered settlement talks and have postponed further briefing while those negotiations proceed.

  • Lodge v. Burwell, No. 3:15-cv-390 (D. Conn., filed 3/17/2015) (Medically necessary oral health care). This appeal filed in federal court, District of Connecticut, presents an opportunity for the court to review whether surgical treatment to a Medicare beneficiary’s teeth damaged by radiation therapy to the head and neck was 1) properly characterized by an Administrative Law Judge as a covered physician service that was medically reasonable and necessary as a part of an overall plan of care for cancer or 2) improperly characterized by the government contractor as excluded dental services.  These competing interpretations depend upon how the specific treatment is characterized. The plaintiff amended the complaint on June 30, 2015 to add a claim under the Administrative Procedure Act (APA), stating that in 1974 the agency removed the word “routine” from the description of excluded dental services without following proper notice-and-comment procedure. Plaintiff requests that the court therefore read the relevant regulation as if the word “routine” had never been removed, which would allow for coverage of his extraordinary, non-routine oral health care.

The government filed a partial motion to dismiss in October 2015. The motion sought to dismiss the APA claim as barred by the statute of limitations. However after the motion was briefed, the government requested and was allowed to withdraw the partial motion to dismiss. The parties also conducted limited written discovery.  Cross motions for summary judgment were fully briefed and oral argument was conducted on September 23, 2016.

On December 30, 2016, the court issued a decision denying plaintiff’s motion for summary judgment and granting the government’s motion.  The court found that neither Chevron nor Skidmore deference should apply to Medicare’s manual provisions interpreting the dental exclusion. However, rather than accept the distinction between “routine” and “non-routine” services urged by the plaintiff, the court essentially created a new dichotomy between “routine and non-routine” services and “complex surgical procedures,” raising the bar for coverage higher than is justified by the statute and legislative history. The court also found that the exception for dental care that is incident to and an integral part of covered non-dental services did not apply to Mr. Lodge’s services. As for the APA claim, the court found that the proposed rule explanation “put interested persons on notice that the regulations would be amended to conform to the statute.”

Update: While plaintiff disagrees with the decision, the Lodge case will not be appealed.  We note that the court did caution against a “a too-literal application” of the agency’s requirement that dental services that are “incident-and-integral” to other covered services be performed by the same doctor and on the same occasion in order to be covered under an exception contained in the Medicare Benefit Policy Manual.  The court stated that a strict application of the same-time/same-dentist rule to “incident-and-integral” services “is not compelled by the language of the Act and could under certain circumstances lead to results at odds with the purpose of the Act, e.g. excluding coverage for dental services performed.” Advocates should be aware of services that may be coverable under the “incident-and-integral” exception.

  • Bremby v. Burwell, No. 3:15-cv-1397 (D. Conn.) (per se skilled services). This case was filed on September 22, 2015, in the U.S. District Court for the District of Connecticut.  It challenges the denial of Medicare home health coverage for a beneficiary who required monthly Vitamin B-12 intramuscular injections.  Intramuscular injections are, by regulation, a per se skilled service, and the beneficiary in this case has a condition (Total Gastrectomy) for which Medicare policy expressly recognizes B-12 injections to be a medically necessary treatment.  The Center is interested in hearing about similar problems that others are encountering with respect to denials of home health or SNF coverage for per se skilled services listed at 42 C.F.R.  409.33(b).  Advocates and beneficiaries are encouraged to contact Wey-Wey Kwok at wkwok@medicareadvocacy.org.
  • Other examples of health care services that are defined by Medicare as skilled in either a Skilled Nursing Facility or for Home Health care include:

(1) Intravenous or intramuscular injections and intravenous feeding.

(2) Enteral feeding that comprises at least 26 per cent of daily calorie requirements and provides at least 501 milliliters of fluid per day.

(3) Nasopharyngeal and tracheostomy aspiration;

(4) Insertion and sterile irrigation and replacement of suprapubic catheters;

(5) Application of dressings involving prescription medications and aseptic techniques;

(6) Treatment of extensive decubitus ulcers or other widespread skin disorder;

(7) Heat treatments which have been specifically ordered by a physician as part of active treatment and which require observation by nurses to adequately evaluate the patient’s progress;

(8) Initial phases of a regimen involving administration of medical gases;

(9) Rehabilitation nursing procedures, including the related teaching and adaptive aspects of nursing, that are part of active treatment, e.g., the institution and supervision of bowel and bladder training programs.

On December 28, 2015, the government filed a motion to remand the case to the Medicare Appeals Council. On April 29, 2016, the court granted the government’s motion to remand, but retained jurisdiction and ordered defendant to submit a status report on further action taken by the Secretary of Health and Human Services by August 15, 2016.

On June 13, 2016, the Medicare Appeals Council issued a new decision, favorable to the beneficiary. It decided that the monthly Vitamin B-12 injections should be covered, however its rationale was questionable.  The Appeals Council stated that the medical records did not “clearly indicate the purpose for giving” the B-12 injections, “nor do most of the skilled nursing visit notes specifically reference the beneficiary’s gastrectomy.”  It found coverage as warranted nonetheless because the beneficiary’s plans of care referenced the total gastrectomy.  The decision made no reference to the serious problems with the original Appeals Council decision, which theorized that the beneficiary could have performed the intra-muscular injections herself. Despite the favorable ruling, the Center was not satisfied with the reasoning of the Appeals Council.

On August 15, 2016, as required by the court, the government filed a status update which stated that since coverage had been granted the case is now moot.  The Center responded with a filing explaining its continuing disagreement with the rationale used by the Appeals Council.  On August 16 the court ordered the government to file a motion to dismiss based on its contention that the case is moot. The motion to dismiss was fully briefed as of November 7, 2016. In opposition the plaintiff contends that the resolution of the single underlying claim did not resolve the policy issue the case sought to address.

Update: On March 6, 2017, the court granted the government’s motion to dismiss, finding the claim to be moot.  It found that when the Appeals Council granted coverage of the injections in question, it also was asserting a policy of covering B-12 injections for patients that have had a gastrectomy.  Plaintiff believes this misses the more general complaint that the Secretary has added unknown additional requirements for coverage of per se skilled services. Plaintiff is considering appeal.

THE FIGHT TO PROTECT THE ACA, MEDICARE AND MEDICAID

American Health Care Act (AHCA)

On March 6, 2017, House GOP leadership introduced their bill to “repeal and replace” the Affordable Care Act (ACA), called the American Health Care Act (AHCA).

See Energy & Commerce Committee bill here and the Ways & Means Committee bill here;  also see E&C Section-by-Section, here, and W&M Section-by-Section, here and the summary, here. Impose devastating Medicaid cuts Phase out expansion Medicaid starting in 2020Structurally reform Medicaid by imposing per capita caps (limited, pre-set, per person amounts)Cost-shift to states resulting in cuts to services, eligibility requirements and provider paymentsGive tax cuts to the wealthy by gutting key financing mechanisms of the Affordable Care Act (ACA), including: Weaken Medicare’s finances, putting more pressure to impose more sweeping Medicare reformHarm older adults not yet eligible for Medicare by, among other things, allowing insurers to charge them much more, including: Instead of the current 3:1 premium ration based upon age, the bill would impose a 5:1 ratioFamilies USA: http://familiesusa.org/ Center on Budget and Policy Priorities: http://www.cbpp.org/ Kaiser Family Foundation: http://kff.org/

Center for Medicare Advocacy, “Look for the Moon!” CMA Alert (March 1, 2017), http://www.medicareadvocacy.org/look-for-the-moonCenter for Medicare Advocacy, “CMS Issues Instructions Regarding the Medicare Outpatient Observation Notice (MOON),” CMA Alert (Feb. 15, 2017), http://www.medicareadvocacy.org/cms-issues-instructions-regarding-the-medicare-outpatient-observation-notice-moon/Center for Medicare & Medicaid Services (CMS) FAQ (following link, then click on FAQs at the bottom of the page): https://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html?redirect=/bni    S. 568/ H.R. 1421) was reintroduced in the House and Senate on March 8, 2017.  The legislation would count all time spent in the hospital, whether inpatient or outpatient, for purposes of satisfying the three-day hospital requirement for Medicare coverage of care in a skilled nursing facility.  The legislation would resolve the biggest financial risk that observation status causes Medicare beneficiaries.

Read the Joe Courtney/Judith Stein Op-Ed in The Hill: Today, the bipartisan Improving Access to Medicare Coverage Act was reintroduced in Congress. If passed, the bill would end the harm for the most vulnerable patients – those who need post-hospital nursing home care. It would require that all the time a patient spends in the hospital count toward the three-day hospital requirement to qualify for Medicare.

http://thehill.com/blogs/congress-blog/healthcare/322974-a-healthcare-bill-that-everyone-can-agree-on http://www.nbcnews.com/news/us-news/law-aims-protect-medicare-patients-surprise-hospital-bill-n730686  Are beneficiaries not able to find a home health agency to serve them?If beneficiaries can get care, can they get the amount of services their doctor ordered?If beneficiaries can get care, are they discharged after an episode or two?If beneficiaries cannot get the care they need, are they not able to remain at home?If denied care, and the beneficiary chooses to private pay for services, have they appealed the denial?Administrative – So far there is little progress on removing regulatory barriers to careLegislative – The law on coverage is clear. CMS and home health agencies should provide what the law covers.Judicial – Examining an array of legally based arguments.http://www.medicareadvocacy.org/submit-your-home-health-access-story/. We seek experiences of people who have been unable to obtain services for which they are legally eligible. We would also like to hear from people who have been unable to remain at home and are forced to choose care in an institution because they cannot obtain adequate home care services. These stories continue to prove valuable with members of the administration, congress and the press to illustrate the injustice and hardship caused by lack of access to home care. We encourage you to direct people to the story repository link to share their experiences.

ADMINISTRATION ON COMMUNITY LIVING GRANT – FOR MEDICARE BENEFICIARIES UNDER AGE 65

There are a wealth of materials focused on younger Medicare beneficiaries under age 65, on the Center’s website. For more information, see: http://www.medicareadvocacy.org/under-65-project.

The information includes 8 topical webinars, articles, surveys, and links to organizations that provide valuable resources. Although funding for this project is winding down, we will strive to keep materials updated and available as a resource.