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                On October 22, 2012, the New York Times reported that the federal government had reached a settlement in a Maine class action case that should have a positive impact for nursing home patients.              

                The lawsuit challenged the practice of a nursing home patient needing to show ongoing proof of the “likelihood of medical or functional improvement” to receive continued Medicare coverage in the nursing home.

                As many Medicaid Planners are keenly aware, Medicare provides coverage for a portion of the bill at the nursing home when for the first 100 days after a hospital stay that lasts three days or longer.  But in many cases, patients with degenerative conditions are deemed ineligible for Medicare coverage during that period if they have been determined to not be likely to have any improvement in their health condition.  Once that determination is made, Medicare stops paying and the patient must privately pay if Medicaid eligibility has not been achieved.

                I will never forget the first time I saw this happen.  I was working with a patient and her family on a Medicaid plan.  Her private insurance covered the difference between the Medicare reimbursement rate, so we estimated we’d have about 3 months to develop and implement the plan.   About 40 days into her first 100 days of care, the physical therapist came by to ask her if she wanted to go to do her daily physical therapy.  She wasn’t quite feeling up to it that day and declined to go.  The next day, the nursing home gave her notice that Medicare was no longer going to pay for the cost of her care.  Private pay would begin immediately; and would you please pay us a $5,500 deposit immediately.

                That notice was almost enough to give the patient a heart attack.              

                The justification for that notice was the longstanding policy that has been used to deny coverage if there’s no likelihood of improvement.  However, neither the Medicare law nor any official Medicare regulations make a Medicare recipient show a likelihood of improvement to qualify for coverage. Some provisions of the Medicare manual and guidelines given to Medicare contractors established more restrictive standard that suggests coverage should be denied or terminated if a patient’s care “reaches a plateau or is not improving or is stable.”

                The lawsuit settlement will put a stop to this.  In the settlement, the Medicare department agrees to rewrite the Medicare manual in order to clarify that Medicare coverage of nursing home patient “does not turn on the presence or absence of an individual’s potential for improvement,” but is solely based on the patient’s ongoing need for skilled care.

                The settlement is also good news for Medicaid Planners.  If the new rules are properly applied, it should guarantee that Medicare will provide coverage for the full 100 days. This 100-day coverage period is often critical to providing a Medicaid Planner with the time needed to thoughtfully lay out an asset protection plan and implement the plan.              

                While the health crisis often happens instantaneously, the process needed to rearrange a patient’s finances in order to achieve eligibility will often take weeks or even months depending on how complex the case is.  That timetable can often be unsettled by an early determination that Medicare will not provide its full 100 days of coverage – sometimes causing the patient to have to take drastic steps in order to avoid full payment for the remainder of the month when Medicare coverage is prematurely terminated.              

                Now with the new clarification that will come about as a result of the class action suit, most of the typical Medicaid Planning clients will now be able to rest assured that Medicare will provide its coverage for 100 days and the Medicaid Planner will be able to more ably rely on that coverage to gauge how long it will take to implement a Medicaid Plan. 

                Anytime the government does something proactive that helps keep the rug from being pulled out from underneath your client, that’s considered a success.