1 42 U.S.C. § 1395y(a)(1)(A) (2006); see, e.g., Hays v. Sebelius, 589 F.3d 1279 (D.C. Cir. 2009) (discussing medical necessity and the Secretary's ability to pay for certain drugs); Mount Sinai Hosp. of Greater Miami, Inc., v. Weinberger, 425 F. Supp. 5 (S.D. Fla. 1976) (holding that the Secretary of Health, Education and Welfare may not pay for Medicare services that are medically unnecessary).

2 42 U.S.C. § 1395y(a); see also Eleanor D. Kinney, National Coverage Policy Under the Medicare Program: Problems and Proposals for Change, 32 ST. LOUIS U. L.J. 869, 971 (1988) (arguing that CMS should develop a better administrative process including publication to better “promote the entitlement interest of Medicare beneficiaries … over the achievement of other goals,” such as efficiency). For a high-level discussion of national and local coverage decisions in the outpatient therapy context, see MEDICARE PAYMENT ADVISORY COMM’N, REPORT TO THE CONGRESS: MEDICARE AND THE HEALTH CARE DELIVERY SYSTEM 237 (2013), available at http://www.medpac.gov/documents/Jun13_EntireReport.pdf.

3 See 42 U.S.C. § 1395kk-1 (containing the statutory authority for CMS to contract with MACs); see also Erringer v. Thompson, 371 F.3d 625 (9th Cir. 2004) (upholding an LCD as interpretative guidance not subject to notice and comment rulemaking); Almy v. Sebelius, 749 F. Supp. 2d 315 (D. Md. 2010) (holding that the MAC's LCD process was a legitimate interpretation of Medicare coverage), aff’d 679 F.3d 297 (2012), cert. denied, 133 S. Ct. 841 (2013). LCDs account for a large portion of medical necessity determinations. In October 2011, over half of Part B procedure codes were subject to an LCD in one or more States. See OFFICE OF INSPECTOR GEN., OEI-01-11-00500, LOCAL COVERAGE DETERMINATIONS CREATE INCONSISTENCY IN MEDICARE COVERAGE (Jan. 2014), http://oig.hhs.gov/oei/reports/oei-01-11-00500.pdf.

4 See, e.g., Medicare Benefit Policy Manual, CTRS. FOR MEDICARE & MEDICAID SERVS., http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS012673.html?DLPage=1&DLSort=0&DLSortDir=ascending (last visited Jan. 30, 2013).

5 No. 5:11-cv-17, 2011 WL 5104355 (D. Vt. Oct. 25, 2011).

6 Id. at *1-2.

7 Id.; see also 42 U.S.C. § 1395hh(a)(2). Except for NCDs, this provision prohibits CMS from issuing a rule that “establishes or changes a substantive legal standard governing the scope of benefits, the payment of services, or the eligibility of individuals … [to] receive benefits under this subchapter … unless it is promulgated by the Secretary” under notice and comment rulemaking.

8 5 U.S.C. § 553 (2012); see also infra Part III.

9 See, e.g., Jacqueline Fox, , Medicare Should, But Cannot, Consider Cost: Legal Impediments to a Sound Policy, 53 BUFF. L. REV. 577 (2005)Google Scholar. In the 1980s, the introduction of end-stage renal disease coverage led to exploding costs to Medicare. In response, the agency issued a policy guidance requiring beneficiaries seeking heart transplants to meet certain criteria. One of those criteria was an age requirement: no beneficiary over sixty-five would be eligible for a heart transplant. The agency deemed the benefit of a new heart to someone over sixty-five would not outweigh the cost. This change was administered through policy guidance, rather than the rulemaking process. This acted as a covert way for the agency to consider costs in its coverage decision while not explicitly saying it was doing so. Id.

10 The Medicare program reimburses healthcare claims under Part A (primarily for inpatient care, such as hospital and SNF stays), and Part B (for professional care, such as services provided by physicians, therapists, and skilled nurses, which are generally outpatient services). This distinction is important because separate reimbursement schemes exist for each part. Notably, Part A is financed through a payroll tax on American workers which goes into a trust fund. Part B is financed by about twenty-five percent of Medicare beneficiaries’ premiums, and seventy-five percent by general tax revenues. In 2012, Medicare had 50.7 million beneficiaries and total annual expenditures of $574 billion dollars. See THE BDS. OF TRS. OF THE FED. HOSP. INS. & FED. SUPPLEMENTARY MED. INS. TR. FUNDS, 2013 ANNUAL REPORT 6 (2013), http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2013.pdf.

11 See, e.g., Medicare Benefit Policy Manual: Chapter 7—Home Health Services, CTRS. FOR MEDICARE & MEDICAID SERVS. (last updated Oct. 18, 2013) [hereinafter Medicare Benefit Policy Manual: Chapter 7], http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c07.pdf.

12 This inconsistency in the policy guidance could prevent a court from giving deference to the agency's interpretation in light of the regulations. See infra notes 84-88.

13 42 C.F.R. § 409.31 (2013). SNFs generally provide services incident to a hospital stay and bill under Part A. See id. § 409.20; Medicare Benefit Policy Manual: Chapter 8—Coverage of Extended Care (SNF) Services, CTRS. FOR MEDICARE & MEDICAID SERVS., § 10.2 (last updated Oct. 26, 2012) [hereinafter Medicare Benefit Policy Manual: Chapter 8], http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c08.pdf. Outpatient services are provided under Part B, but sometimes a physician will refer a patient to an SNF when the skilled services needed cannot be provided in-office or in the patient's home. See, e.g., Transferring to a Nursing Facility for Kaiser Members, SAN DIEGO CONTINUING CARE SERVS. DEP't (last updated Apr. 2009), http://xnet.kp.org/sandiego/ccs/PDFs/Transferring%20to%20a%20Nursing%20Facility.pdf (noting that, under a Kaiser plan, one factor of SNF skilled care eligibility is that care “cannot be provided reasonably safely at a lower level of care, such as through Home Health Services or in an Outpatient Clinic”).

14 42 C.F.R. § 409.32(a). For an example demonstrating that the need for a therapist's skills determines whether a service is skilled, rather than the patient's diagnosis, see Medicare Benefit Policy Manual: Chapter 8, supra note 13.

15 42 C.F.R. § 409.32(c).

16 See id. § 484.4.

17 See Medicare Benefit Policy Manual: Chapter 8, supra note 13, § 30.2.2 (emphasis added).

18 CTRS. FOR MEDICARE & MEDICAID SERVS., L26884, LOCAL COVERAGE DETERMINATION (LCD): PHYSICAL THERAPY—HOME HEALTH (2011), available at http://www.cms.gov/medicare-coverage-database/search/advanced-search.aspx (enter L26884 into the document ID search bar; then leave date blank and click search; then select document from results).

19 Id.

20 Id. at 5.

21 Id. at 5.

22 42 C.F.R. § 409.44(a) (2013).

23 Id.

24 Id. § 409.44(c)(2)(F)(2).

25 Id. § 409.44(c)(2)(iii)(A)(2).

26 Id. § 409.44(a) (“A coverage denial … is based upon objective clinical evidence regarding the beneficiary's individual need for care.”).

27 Medicare Benefit Policy Manual: Chapter 7, supra note 11 § 20.3.

28 Id. § 40.2.1.a-b.

29 Id. § 40.2.1.d. These three conditions include that a therapist's skills must be needed to restore patient function, a therapist is needed to set a maintenance program, and limited situations exist where skilled services are needed to perform maintenance. Id.

30 See CTRS. FOR MEDICARE & MEDICAID SERVS., L32016, LOCAL COVERAGE DETERMINATION (LCD): PHYSICAL THERAPY—HOME HEALTH (2011), available at http://www.cms.gov/medicare-coverage-database/search/advanced-search.aspx (enter L32016 into the document ID search bar; then leave date blank and click search; then select document from results).

31 Medicare Benefit Policy Manual: Chapter 15—Covered Medical and Other Health Services, CTRS. FOR MEDICARE & MEDICAID SERVS., § 220.1.2.B (last updated Jan. 14, 2014) [hereinafter Medicare Benefit Policy Manual: Chapter 15], http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.

32 Id.

33 Id.

34 Id. § 220.2.B.

35 Id.

36 See CTRS. FOR MEDICARE & MEDICAID SERVS., L30009, LOCAL COVERAGE DETERMINATION (LCD): MEDICINE: PHYSICAL THERAPY—OUTPATIENT (last revised Sept. 19, 2013) (emphasis added), available at http://www.cms.gov/medicare-coverage-database/search/advanced-search.aspx (enter L30009 into the document ID search bar; then leave date blank and click search; then select document from results) (“Physical therapy is not covered when the documentation indicates the patient has not reached the therapy goals and is not making significant improvement or progress, and/or is unable to participate and/or benefit from skilled intervention or refused to participate … . Physical therapy is not covered when the documentation indicates that a patient has attained the therapy goals or has reached the point where no further significant practical improvement can be expected.”).

37 See CTRS. FOR MEDICARE & MEDICAID SERVS., L27513, LOCAL COVERAGE DETERMINATION (LCD): PHYSICAL MEDICINE & REHABILITATION SERVICES, PHYSICAL THERAPY AND OCCUPATIONAL THERAPY (last revised June 13, 2013), available at http://www.cms.gov/medicare-coverage-database/search/advanced-search.aspx (enter L27513 into the document ID search bar; then leave date blank and click search; then select document from results).

38 See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984); Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945).

39 See Jimmo v. Sebelius, No. 5:11–CV–17, 2011 WL 5104355, at *22 (D. Vt. Oct. 25, 2011).

40 Chevron, 467 U.S. at 843-44. For a discussion of legislative and non-legislative rules, see 1 CHARLES H. KOCH, JR., ADMINISTRATIVE LAW & PRACTICE 261-67 (3d ed. 2010).

41 Chevron, 467 U.S. at 842.

42 Id.

43 Id. at 842-43.

44 Id. at 843.

45 See supra note 1 and accompanying text.

46 Chevron, 467 U.S. at 843-44.

47 See id. at 844 (concluding that the regulations control “unless they are arbitrary, capricious, or manifestly contrary to the statute”); see also KOCH, supra note 40, at 263-64 (discussing the requirement of notice and comment for legislative rules and the presumption that rulemaking does “not directly affect individual rights and duties”).

48 MacKenzie Med. Supply, Inc. v. Leavitt, 506 F.3d 341, 346 (4th Cir. 2007) (quoting Chevron, 467 U.S. at 843); see also Regions Hosp. v. Shalala, 522 U.S. 448, 457 (1998).

49 Almy v. Sebelius, 749 F. Supp. 2d 315, 324-25 (D. Md. 2010); see also id. at 322 (quoting MacKenzie, 506 F.3d at 348) (“The Medicare statute provides that judicial review of a final decision of the Secretary ‘is to be based solely on the administrative record, and the Secretary's findings of fact, if supported by substantial evidence, shall be conclusive.’” (emphasis added)).

50 United States v. Mead Corp., 533 U.S. 218, 226-27 (2001).

51 Id.

52 Id. at 234-35.

53 Id.; Skidmore v. Swift & Co., 323 U.S. 133, 140 (1944) (holding that rulings of an agency were not legislative in nature, but did “constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance”). The deference granted depended on “the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Id. at 140.

54 See Lisa Schultz Bressman, How Mead Has Muddled Judicial Review of Agency Action, 58 VAND. L. REV. 1443, 1445-46 (2005).

55 See id. at 1445; Fraser, Thomas J., Interpretative Rules: Can the Amount of Deference Accorded Them Offer Insight into the Procedural Inquiry?, 90 B.U. L. REV. 1303 passim (2010)Google Scholar (discussing the Court's attempts to better define the scope of Chevron).

56 Fraser, supra note 55, at 1325.

57 Bressman, supra note 54, at 1445.

58 See supra Part II.

59 Jimmo v. Sebelius, No. 5:11–CV–17, 2011 WL 5104355, at *20 (D. Vt. Oct. 25, 2011).

60 Id.

61 Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945).

62 Auer v. Robbins, 519 U.S. 452, 461 (1997).

63 Seminole Rock, 325 U.S. at 414.

64 Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (quoting Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 697 (1991)) (internal quotation marks omitted).

65 Seminole Rock, 325 U.S. at 414.

66 See e.g., Exelon Generation Co. v. Local 15, 676 F.3d 566 (7th Cir. 2012), reh’g en banc denied, 682 F.3d 620 (7th Cir. 2012); Clean Ocean Action v. York, 57 F.3d 328 (3d Cir. 1995).

67 Exelon Generation Co., 676 F.3d at 576.

68 Id. at 576-77.

69 Clean Ocean Action, 57 F.3d at 332-33.

70 Id. at 330, 333.

71 Id. at 330.

72 Id. at 333.

73 Id. at 332-33.

74 Kaiser Found. Hosps. v. Sebelius, 708 F.3d 226, 230 (D.C. Cir. 2013).

75 Elgin Nursing & Rehab. Ctr. v. U.S. Dep't of Health & Human Servs., 718 F.3d. 488, 493 (5th Cir. 2013); Castellanos-Contreras v. Decatur Hotels, L.L.C., 622 F.3d 393, 407-08 (5th Cir. 2010) (Dennis, J., dissenting).

76 See Elgin Nursing & Rehab. Ctr., 718 F.3d at 493 (“All of our decisions applying Seminole Rock and Auer, however, have addressed only an agency's direct interpretation of its published regulations.”). According to this standard, an LCD, as an interpretation of an interpretation, would not be entitled deference.

77 Papciak v. Sebelius, 742 F. Supp. 2d 765, 767 (W.D. Pa. 2010); Anderson v. Sebelius, No. 5:09–CV–16, 2010 WL 4273238, at *7 (D. Vt. Oct. 25, 2010).

78 Jimmo v. Sebelius, No. 5:11–CV–17, 2011 WL 5104355, at *2 (D. Vt. Oct. 25, 2011).

79 See Kovvali, Aneil, Rock, Seminole and the Separation of Powers, 36 HARV. J.L. & PUB. POL’Y 849, 849 (2013)Google Scholar (noting that “Seminole Rock deference has … faced significant criticism”).

80 Decker v. Nw. Envtl. Def. Ctr., 133 S. Ct. 1326, 1338 (2012) (Roberts, C.J., concurring).

81 Id. at 1340.

82 Talk Am., Inc. v. Mich. Bell Tel. Co., 131 S. Ct. 2254, 2265-66 (2011) (Scalia, J., dissenting).

83 Elgin Nursing & Rehab. Ctr. v. U.S. Dep't of Health & Human Servs., 718 F.3d 488, 493-94 (5th Cir. 2013); Castellanos-Contreras v. Decatur Hotels, L.L.C., 622 F.3d 393, 407-08 (5th Cir. 2010) (Dennis, J., dissenting).

84 Id. at para. 48. The plaintiffs also included four other beneficiaries as well as a number of national organizations including the National Committee to Preserve Social Security and Medicare, the Multiple Sclerosis Society, the Parkinson's Action Network, and United Cerebral Palsy. See, e.g., id. at paras. 55, 64, 69.

85 Id. at para. 49.

86 Id. at para. 50.

87 Id. at para. 51 (quoting the Quality Improvement Contractor's decision).

88 Id. at para. 52 (quoting the ALJ's decision).

89 Id. at para. 54 (quoting the MAC's decision).

90 Id. at para. 55.

91 Id. at para. 58.

92 Id. at para. 60 (quoting the Quality Improvement Contractor's decision).

93 Id. at para. 62 (quoting the ALJ's decision).

94 Id.

95 Id. at para. 2.

96 See Jimmo v. Sebelius, No. 5:11–CV–17, 2011 WL 5104355, at *22 (D. Vt. Oct. 25, 2011) (finding that some evidence of the Improvement Standard exists in the Plaintiff's Amended Complaint of “illegal presumptions and rules of thumb”). For further discussion of the administrative law provisions possibly underpinning the court's denial of summary judgment, see supra Part III.

97 Settlement Agreement, Jimmo v. Sebelius, No. 5:11–CV–17, 2011 WL 5104355 (D. Vt. Oct. 25, 2011), available at http://www.medicareadvocacy.org/wp-content/uploads/2012/12/Jimmo-Settlement-Agreement-00011764.pdf. For example, therapy caps still apply for outpatient therapy services. See infra note 122.

98 Jimmo v. Sebelius Settlement Agreement Fact Sheet, CTRS. FOR MEDICARE & MEDICAID SERVS. 1, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Jimmo-FactSheet.pdf (last visited Jan. 16, 2013).

99 Id. at 2.

100 For a discussion of these manual provisions, see supra Part II.

101 Settlement Agreement, supra note 97, at 9.

102 Id. at 10-11.

103 Id. at 13 (discussing skilled nursing services at 42 C.F.R. § 409.32 (2013)); see also supra note 14 and accompanying text.

104 CTRS. FOR MEDICARE & MEDICAID SERVS., PUB. 100-02 MEDICARE BENEFIT POLICY TRANSMITTAL R176BP (Dec. 13, 2013) [hereinafter TRANSMITTAL R176BP], available at http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R176BP.pdf. A transmittal is a communication to the MACs to change the Policy Manual.

105 Settlement Agreement, supra note 97, at 15.

106 Id. at 20.

107 Id. at 20-27. This retroactive secondary review process is only for beneficiaries, not providers or state Medicaid agencies.

108 See Manual Updates to Clarify Skilled Nursing Facility (SNF), Inpatient Rehabilitation Facility (IRF), Home Health (HH), and Outpatient (OPT) Coverage Pursuant to Jimmo v. Sebelius, CTRS. FOR MEDICARE & MEDICAID SERVS. (last revised Jan. 15, 2014), http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM8458.pdf.

109 Id. at 2 (quoting TRANSMITTAL R176BP, supra note 104).

110 Id. (quoting TRANSMITTAL R176BP, supra note 104).

111 See Presentation, Medicare Learning Network (MLN), Jimmo v. Sebelius Settlement Agreement 10 (Dec. 19, 2013), available at http://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/121913-Jimmo-Slideshow.pdf.

112 See Transcript, MLN Connects National Provider Call, Ctrs. for Medicare & Medicaid Servs., Program Manual Updates to Clarify SNF, IRF, HH, and OPT Coverage Pursuant to Jimmo v. Sebelius 8-9 (Dec. 19, 2013), available at http://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/JIMMO-12-19-13-Edited-Transcript.pdf.

113 Michelle M. Stein, End of Medicare Improvement Standard Could Benefit Medicaid Budgets, INSIDE HEALTH POL’Y (Nov. 21, 2012), http://insidehealthpolicy.com/Inside-Health-General/Public-Content/end-of-medicare-improvement-standard-could-benefit-medicaid-budgets/menu-id-869.html.

114 Robert Pear, Settlement Eases Rules for Some Medicare Patients, N.Y. TIMES (Oct. 22, 2012), http://www.nytimes.com/2012/10/23/us/politics/settlement-eases-rules-for-some-medicare-patients.html?_r=0; see also Brett Norman, Broader Therapies Could Further Strain Medicare, POLITICO (Feb. 13, 2013), http://www.politico.com/story/2013/02/broader-therapies-could-further-strain-medicare-87529.html (noting that while CMS says there will be no budgetary impact because coverage has not changed, patient advocates say such a position is “naive”).

115 Pear, supra note 114.

116 See Norman, supra note 114.

117 Id.

118 After finding a rising trend in outpatient therapy services payments in the early 2000s, the Medicare Payment Advisory Commission (MedPAC) estimated that Medicare spent about $5.7 billion on outpatient therapy services in 2011, with 37% in the SNF setting and 30% in the private practice of physical therapy. See MEDICARE PAYMENT ADVISORY COMM’N, REPORT TO THE CONGRESS: MEDICARE AND THE HEALTH CARE DELIVERY SYSTEM 241 (2013), http://www.medpac.gov/documents/Jun13_EntireReport.pdf; Outpatient Therapy Services Payment System, MEDICARE PAYMENT ADVISORY COMM’N (2012), http://www.medpac.gov/documents/MedPAC_Payment_Basics_12_OPT.pdf; Outpatient Therapy Services, MEDICARE PAYMENT ADVISORY COMM’N (2005), http://www.medpac.gov/documents/Dec05_Medicare_Basics_OPT.pdf.

119 Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 454.

120 Budgetary Implications of the Balanced Budget Act of 1997, CONG. BUDGET OFFICE 24 (Dec. 1997), http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/3xx/doc302/bba-97.pdf.

121 See MEDICARE PAYMENT ADVISORY COMM’N (2013), supra note 118.

122 Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 5107, 120 Stat. 42. The hard cap for therapy services was later divided into one cap for Physical Therapy/Speech-Language Pathology and one cap for Occupational Therapy, both indexed to inflation. Each cap is set at $1,920 in allowed charges for 2014.

123 S. 1932 Deficit Reduction Act of 2005, CONG. BUDGET OFFICE 28 (Jan. 27, 2006), http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/70xx/doc7028/s1932conf.pdf.

124 American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, 126 Stat. 2347 (2013). The Affordable Care Act extended the exceptions to therapy caps through December 31, 2010; the Medicare and Medicaid Extenders Act (MMEA) of 2010 extended the therapy caps exceptions through December 31, 2011; and the Middle Class Tax Relief And Job Creation Act (MCTRJCA) of 2012 extended the therapy caps exceptions through December 31, 2012.

125 Detail on Estimated Budgetary Effects of Title VI (Medicare and Other Health Extensions) of H.R. 8, the American Taxpayer Relief Act of 2012, CONG. BUDGET OFFICE 1 (Jan. 9, 2013), http://www.cbo.gov/sites/default/files/cbofiles/attachments/SenateHR8-TitleVI_0.pdf.

126 Continuing Appropriations Resolution, Pub. L. No. 113-67, 127 Stat. 1165 (2013). The Bipartisan Budget Act of 2013 contains the Pathway for SGR Reform Act of 2013, which extends the therapy caps exceptions process in section 103.

127 Estimate for Amendment to H.J. Res. 59, Pathway for SGR Reform Act of 2013, CONG. BUDGET OFFICE 1 (Dec. 11, 2013), http://www.cbo.gov/sites/default/files/cbofiles/attachments/Extenders_RevisedAmd_to_HJRes59.pdf. MedPAC estimates “that about 20 percent of beneficiaries receiving outpatient therapy would have their therapy truncated at the cap” without this legislation. See Temporary Payment Policies in Medicare: Hearing Before the Subcomm. on Health, Comm. on Energy and Commerce, 113th Cong. 9 (2014) (testimony of Glenn M. Hackbarth, Chairman of MedPAC), http://docs.house.gov/meetings/IF/IF14/20140109/101627/HHRG-113-IF14-Wstate-HackbarthG-20140109.pdf.

128 See Transcript of Public Meeting, Medicare Payment Advisory Comm’n 133 (Nov. 1, 2012), available at http://www.medpac.gov/transcripts/Nov2012Transcript.pdf.

129 MEDICARE PAYMENT ADVISORY COMM’N (2013), supra note 118, at 245.

130 Id.

131 See Description of the Chairman's Mark: The SGR Repeal and Medicare Beneficiary Access Improvement Act of 2013, U.S. SENATE COMM. ON FINANCE 39-42 (Dec. 10, 2013), http://www.finance.senate.gov/legislation/details/?id=a275e061-5056-a032-5209-f4613a18da1b.

132 Id. The legislation would look to other situations as well including newly enrolled therapy providers, treatment of a specific type of medical conditions, or excessive services furnished by a single therapy provider or group.

133 MedPAC agrees with this approach to balancing program integrity against individualization of therapy decisions. Hard caps “impede access to necessary and useful care for Medicare beneficiaries. For the right clinical indications, outpatient therapy services provide significant benefits.” Hackbarth, supra note 127, at 9. Conversely, an automatic exceptions process does not control the volume of therapy services provided. This is evidenced by MedPAC's finding of wide geographic variation in outpatient therapy services. Id. at 10. Another problem is that “Medicare lacks basic information to evaluate the medical necessity of therapy services, such as patients’ functional status and the outcomes of therapy services.” Id. MedPAC makes three recommendations to Congress on reforming outpatient therapy services: (1) improve physician oversight and program integrity; (2) ensure access to care while managing Medicare's costs; and (3) strengthen management of the therapy benefit in the long-term. Id.

134 See Michelle M. Stein, Finance SGR Package Replaces Therapy Caps with Prior Authorization, INSIDE HEALTH POL’Y (Dec. 12, 2013), http://insidehealthpolicy.com/201312102455425/Health-Daily-News/Daily-News/finance-sgr-package-replaces-therapy-caps-with-prior-authorization/menu-id-212.html?s=dn.

135 The latest Medicare Trustee's Report estimates that the Medicare Part A trust fund will be depleted in 2026. BDS. OF TRS. OF THE FED. HOSP. INS. & FED. SUPPLEMENTARY MED. INS. TR. FUNDS, 2013 ANNUAL REPORT 6 (2013), available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2013.pdf.