Hey, have you heard the good news? CMS has completed all required action items laid out in the Jimmo v. Sebelius settlement. If you’re scratching your head and wondering why that matters, here’s the rundown: a few years ago, a group of Medicare providers alleged that CMS contractors made determinations on claims for skilled care based on an inappropriate “Improvement Standard.” These providers took CMS to court, and the court determined that CMS needed to clarify and educate providers on the definition and proper application of medical necessity. (For the full run-down on Jimmo, check out this resource.)

According to CMS, “the Jimmo Settlement Agreement clarifies Medicare’s longstanding policy that coverage of skilled nursing and skilled therapy services in the Skilled Nursing Facility, Home Health, and Outpatient Therapy settings does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.”

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How does CMS define medical necessity?

Per Medicare, for covered services to be considered medically necessary, they must:

  • Be safe and effective;
  • Have a duration and frequency that are appropriate based on standard practices for the diagnosis or treatment;
  • Meet the medical needs of the patient; and
  • Require a therapist’s skill.

Pretty vague, right? I think so, and so did the plaintiffs in Jimmo v. Sebelius. But unless rehab therapy providers decide that Medicare isn’t worth the headache—which could result in a significant loss of revenue—providers are going to have to play ball. However, it’s hard to play a game when the rules are convoluted and murky. And if your claims get denied because they didn’t meet CMS’s standards for medical necessity, your only recourse is filing a time-consuming appeal—and even then, there’s no guarantee you’ll recoup your losses. So, it’s important that you take the time to learn everything you can about medical necessity as defined by Medicare—including how that definition applies to maintenance care.

What’s next?

So far, CMS has taken the following actions as laid out by the terms of the Jimmo settlement:

  • Clarified within relevant CMS policy manuals that coverage of skilled therapy is not contingent on patient improvement.
  • Launched an educational campaign to further clarify that improvement is not a requirement for coverage of skilled care.

Additionally, to satisfy the settlement’s final mandated item, CMS has developed a new page on its official website to house all the crucial info on the Jimmo Settlement. According to Medicare Advocacy, “The Jimmo webpage is the final step in a court-ordered Corrective Action Plan, designed to reinforce the fact that Medicare does cover skilled nursing and skilled therapy services needed to maintain a patient’s function or to prevent or slow decline.” Essentially, it’s CMS’s official guarantee that providers do not necessarily have to achieve functional improvement with their patients in order for those services to meet the requirements for medical necessity and thus, qualify for reimbursement.

How does this affect you?

It’s important to note that this settlement does not expand Medicare’s coverage. In fact, the actual settlement agreement specifically states that nothing “in this Settlement Agreement modifies, contracts, or expands the existing eligibility requirements for receiving Medicare coverage.” Additionally, proving medical necessity could become an even larger issue for rehab therapists as charts come under increased scrutiny. This is partly because therapy-specific EMRs have made it pretty easy for providers to meet the formatting, reporting, and technical requirements of documentation, which means auditors are actually reading your documentation. So, if insurance auditors are paying closer attention to documentation, it’s even more important that your documents support the medical necessity of services provided.

Will CMS be extra critical of documentation?

This isn’t pure speculation. In fact, the revised manual now includes language that speaks to the role of documentation in determining accurate coverage for claims involving skilled therapy. According to this CMS fact sheet, “While the presence of appropriate documentation is not, in and of itself, an element of the definition of a ‘skilled’ service, such documentation serves as the means by which a provider would be able to establish and a Medicare contractor would be able to confirm that skilled care is, in fact, needed and received in a given case.” That’s right—despite the fact that this explicit reference to documentation requirements was not a part of the settlement terms, CMS is covering their assets, so to speak.


While the Jimmo settlement is good news for rehab therapists and their patients, it also means that providers need to be even more diligent about proving medical necessity. Defensible documentation isn’t a new concept, and hopefully, it’s something you’re already putting into practice. After all, solid documentation doesn’t just keep you out of hot water—it’s also good for patient satisfaction. So if you want to keep your revenue stream flowing, there’s never been a better time to make sure your documentation is top-notch and fully defensible.

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