8 min read · Last updated September 2, 2026
- A 2013 federal settlement, Jimmo v. Sebelius, clarified that Medicare coverage of skilled nursing and skilled therapy “does not turn on the presence or absence of a beneficiary’s potential for improvement,” but on whether the beneficiary needs a skilled professional to maintain their condition or slow decline.
- This applies to Skilled Nursing Facility, home health, and outpatient therapy benefits, and to Medicare Advantage plans as well as Original Medicare, not just to traditional Part A and Part B.
- The settlement did not expand what Medicare covers. It corrected how an existing standard gets applied, and it never touches unskilled custodial care, which Medicare still does not cover.
- A federal audit released in June 2026 found that during a June 2024 review period, Medicare Advantage plans denied 12 percent of skilled nursing facility admission requests, and when families appealed those denials, 95 percent were overturned in the beneficiary’s favor.
In this article
- The letter that used the wrong test
- What actually changed in 2013
- What this does not mean
- How often “improvement” denials still turn out to be wrong
- What to do when the letter arrives
- Frequently asked questions
Harold Whitcombe had been receiving home health physical therapy for eleven weeks after a stroke left his left side weak. His therapist’s notes said he had stopped making new gains and had reached a plateau. Three days later, a notice arrived stating that because Harold was “not progressing,” Medicare coverage for his therapy would end. His daughter called the number on the notice and was told, incorrectly, that the rule requiring ongoing progress was still in effect. It has not been the law since January 2013.
Harold’s care continued only because his daughter knew to push back, and pushing back worked. Families who do not know this rule exists often accept the denial at face value. A federal watchdog has since put a number on how often that first denial turns out to be wrong when someone actually appeals it.
The letter that used the wrong test
Before 2013, it was common for Medicare contractors, nursing facilities, and home health agencies to deny or cut off skilled services once a patient stopped showing measurable improvement, on the theory that Medicare only pays for care aimed at getting better. A federal class action, Jimmo v. Sebelius, challenged that practice directly, arguing it had no basis in the actual Medicare statute or regulations. The case settled in January 2013, and the U.S. District Court for the District of Vermont approved the agreement.
The Centers for Medicare and Medicaid Services (CMS)‘s own page on the settlement states the operative language specifically: coverage of skilled nursing and skilled therapy under the Skilled Nursing Facility, home health, and outpatient therapy benefits “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.” In plain terms, if a nurse’s or therapist’s specific training and judgment are genuinely needed to keep a patient’s condition from worsening, that qualifies for coverage exactly the same as care aimed at recovery.
The settlement agreement itself defines what it was correcting. It describes the “Improvement Standard” as a practice under which “Medicare coverage of skilled services is denied on the basis that a Medicare beneficiary is not improving, without regard to an individualized assessment of the beneficiary’s medical condition and the reasonableness and necessity of the treatment, care or services in question.” That phrase, an individualized assessment, is the part that actually does the legal work. A blanket rule of “no progress, no coverage” skips the assessment entirely, which is precisely what the settlement said Medicare’s own regulations never allowed in the first place.
What actually changed in 2013
CMS, the federal agency that runs Medicare, rewrote sections of its own Medicare Benefit Policy Manual to state this plainly, and ran a mandatory education campaign for the contractors, adjudicators, and providers who make coverage decisions. The settlement applies to Skilled Nursing Facility care under Part A, home health services under Part A and Part B, and outpatient physical, occupational, and speech therapy under Part B. It applies equally to people enrolled in a Medicare Advantage plan, not only to those on Original Medicare, a distinction worth checking directly against your own Medicare Advantage prior authorization rights if a private plan denies your claim.
Inpatient rehabilitation facility care runs on a related but separate coverage standard and was not folded into this settlement, so a denial from an inpatient rehab facility needs to be checked against its own rules rather than assumed to work the same way. For the three benefits the settlement does cover, the fix was not a new law from Congress. It was a correction to how CMS’s own manual, and the contractors who follow it, had been applying rules that were already on the books.
What this does not mean
The settlement is narrow by design, and CMS said so explicitly: “nothing in this Settlement Agreement modifies, contracts, or expands the existing eligibility requirements for receiving Medicare coverage.” It does not mean Medicare now pays for custodial care, meaning help with bathing, dressing, or daily activities that does not require a nurse’s or therapist’s specific skill. It also does not remove the requirement that care be reasonable and medically necessary, and it does not touch statutory limits on how long a benefit runs, such as the 100-day skilled nursing facility benefit period. What changed is narrower and, for a lot of families, more consequential: the specific reason “he isn’t improving anymore” stopped being a valid basis for a denial on its own.
| Appeal level | Who decides | Deadline to act |
|---|---|---|
| Expedited review | The Beneficiary and Family-Centered Care Quality Improvement Organization (BFCC-QIO) named on your denial notice | Call by noon the day after you get the notice; decision within 72 hours |
| Expedited reconsideration | A Qualified Independent Contractor (QIC) | Request by noon the day after the first denial; decision within 72 hours |
| Administrative Law Judge hearing | A federal Administrative Law Judge (ALJ) | Available if the QIC also denies the claim |
| Best for | Any family told skilled care is ending for lack of “progress” | Acting within the first 24 to 48 hours preserves the fastest review track |
How often “improvement” denials still turn out to be wrong
The scale of the problem is not hypothetical. A report released in June 2026 from the Department of Health and Human Services’ Office of Inspector General (OIG) examined a June 2024 sample and found that Medicare Advantage plans collectively denied 12 percent of requests for skilled nursing facility admission that month, with denial rates at individual plans ranging as high as 23 percent. When families appealed those denials, the plans overturned 95 percent of them in the beneficiary’s favor.
An overturn rate that high is not a sign the appeals process is working well. It is a sign a lot of the original denials should never have happened. A separate, earlier OIG review of one week’s worth of Medicare Advantage denials found a real case matching this exact pattern: a 64-year-old with a serious leg infection and worsening bedsores was denied a transfer from the hospital to a skilled nursing facility on the theory that home health services alone could meet the need. OIG’s own physician panel reviewed the record and found the patient’s “deteriorating functional status, comorbidities, and need for daily skilled care” met Medicare’s coverage requirements, and the plan reversed the denial on appeal.
What to do when the letter arrives
Do not accept a denial that cites a lack of progress or a plateau as its only reason. Ask your provider to state in writing whether the skilled judgment of a nurse or therapist is still needed to maintain your condition or prevent decline, since that is the actual legal standard. Call the Beneficiary and Family-Centered Care Quality Improvement Organization listed on your notice before the deadline passes, request your medical records from the facility, and contact your State Health Insurance Assistance Program for free help navigating the appeal.
If a facility simply stops billing Medicare rather than issuing a formal denial, you have a separate right worth knowing about: you can demand the facility submit a “demand bill” to Medicare anyway, which forces a real coverage decision you can then appeal. Skipping this step is how some families end up paying thousands of dollars out of pocket for weeks of care that a formal appeal would likely have covered.
Frequently asked questions
Does Medicare cover physical therapy if I’m not getting better? Yes, if a nurse’s or therapist’s skilled judgment is genuinely needed to maintain your current condition or prevent further decline. Since a 2013 federal settlement, Jimmo v. Sebelius, “not improving” on its own is not a valid reason for Medicare to deny or stop skilled care.
Does this rule apply to Medicare Advantage plans, or only Original Medicare? It applies to both. The settlement’s standard governs Skilled Nursing Facility, home health, and outpatient therapy coverage regardless of whether you are enrolled in Original Medicare or a private Medicare Advantage plan.
Can I still be denied Medicare-covered therapy for another reason even if I’m not improving? Yes. The care still has to be medically reasonable and necessary, still requires a physician’s order, and is still subject to any statutory limits on how long the specific benefit runs. The 2013 settlement only removed lack of improvement as a standalone reason for denial.
What should I do if a facility tells me my Medicare coverage is ending because I’ve plateaued? Ask in writing whether skilled care is still needed to maintain your condition, then request an expedited review from the Beneficiary and Family-Centered Care Quality Improvement Organization listed on your denial notice. That review typically has to be requested by noon the day after you receive the notice.
Does Medicare now pay for long-term custodial care, like help with bathing or dressing? No. The 2013 settlement did not expand what Medicare covers and explicitly did not touch custodial care. It only affects the standard used to decide whether already-skilled nursing or therapy services qualify for coverage.
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