LegalEase: Changes for Medicare termination notices

By Elizabeth E. Hogue, Esq.
Burtonsville, MD

A recent ruling in Healey v. Thompson may mean that home health agencies (HHAs) will be required to provide notice to Medicare patients whenever services are reduced or discontinued for any reason.

That lawsuit was filed in 1998 just after implementation of the interim payment system. The goal of the lawsuit was to force HHAs to provide greater procedural protections before reducing or terminating services to Medicare beneficiaries.

There have been two previous court decisions in this case. In Healey I, the judge ruled that Medicare beneficiaries have a legal right to receive written notice from an HHA before services are reduced or terminated because the patient no longer meets the eligibility requirements of the Medicare home health benefit.

Recent multiple revisions to Advanced Beneficiary Notices (ABNs) were, at least in part, a result of this court decision.

In Healey II, the court declined to extend the notice requirement required by Healey I to reductions or termination of services for reasons other than failure to meet the eligibility criteria of the Medicare home care benefit, including physicians’ failure to certify plans of care for patients. Consequently, agencies currently are not required to provide ABNs to patients if physicians do not provide orders for services.

The case was appealed to the U.S. Court of Appeals for the Second Circuit, which reached a decision Feb. 26, 2004.

Specifically, the court decided:

1. The Medicare statute requires notice to beneficiaries whenever an HHA reduces or terminates home health services regardless of whether the reason for that change is a Medicare coverage determination, lack of physician certification, an agency’s unwillingness to provide services for business reasons unrelated to coverage or "sheer caprice."

2. Although notice prior to reductions or termination of services may be required, no review of such decisions (i.e., pre-deprivation review) is required.

Agencies should be concerned about what happens next. First, either party to the lawsuit may decide to appeal the court’s most recent ruling. If either side appeals, agencies must wait for further court decisions.

But if neither side appeals, the case will be returned to a lower court to work out the details of providing notice to beneficiaries in the event of reductions or terminations of services for any reason.

What should agencies do now?

1. Agencies should NOT change their current practices with regard to provision of ABNs to patients. Patients should receive a home health agency ABN when they no longer meet the eligibility criteria of the Medicare home health benefit and there are physicians’ orders for care.

2. Whether on appeal or as the details of additional notice are worked out, the realities of the provision of home health services must be considered. For example, it does not appear that the plaintiffs and the court have considered that services often are reduced or discontinued because patients have met the goals of their plans of care. Does the court really mean to require agencies to provide notice of termination/reduction of services under these circumstances? If so, will such notice be required in the form of an ABN with all of the current requirements for delivery, patients’ signatures, etc? If so, agencies may have to expend considerable time and resources in meeting such requirements. Agencies should work with their trade associations to be heard with regard to these and other issues that do not yet appear to have been considered.

3. With regard to termination of services for other reasons such as noncompliance, violence, or threatened violence, agencies already should provide both verbal and written notice prior to discontinuation of services. But if the court decides that such notices must be given in the form of an ABN with current requirements for delivery, agencies may have an additional burden to meet. They should, therefore, closely monitor developments in this case.

The Healey case has been pending since 1998. It may continue for many years to come. Stay tuned!

To obtain a complete set of policies and procedures governing termination of services to patients under a variety of circumstances, send a check for $105 (includes shipping and handling) made out to Elizabeth E. Hogue, Esq. at the address below.

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