A landmark Medicare lawsuit has been settled, offering long-term care for chronic or degenerative conditions previously barred from coverage.

The Obama administration has reached a settlement that will for the first time allow Medicare patients whose conditions are not likely to improve to receive nursing and therapy services.

"Under the agreement, which amounts to a significant change in Medicare coverage rules, Medicare will pay for such services if they are needed to 'maintain the patient’s current condition or prevent or slow further deterioration,' regardless of whether the patient’s condition is expected to improve," The New York Times reported.

Although the "improvement standard" had never been written into law, it had become standard practice and was included in the Medicare benefit manual, according to the Los Angeles Times.

"The Health and Human Services Department agreed to revise the manual to make it clear that skilled nursing care and therapy will be covered at home, in an outpatient clinic or in a nursing home. The department also promised to undertake a nationwide educational campaign to make the benefits known to medical providers and beneficiaries," wrote Noam Levey for the Los Angeles Times.

Health care advocates were exultant after the decision.

“Disability frequently accompanies many chronic conditions, and we often have no cures, so people are likely to experience progressive disability,” Dr. Lynn Gerber of the Center for Study of Chronic Illness and Disability at George Mason University told the New York Times. “ Rehabilitation, physical and occupational therapy and skilled care are incredibly important in maintaining a person’s functional ability, performance and quality of life.”

Lacking in any reports was any inkling of how much the program would cost.

"No estimates are yet available on how much additional money the change in policy will cost Medicare, as it could potentially provide coverage for millions of people," noted Healthcare Finance News.

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The New York Times piece said that no one involved "could say how much the settlement might cost the government, but the price of expanding such coverage could be substantial."

Medicare is already highly unstable, heading for an impending fiscal crackup. As Forbes reported earlier this week, cost pressures on the system begin immediately with the ongoing "doc fix" dilemma, as doctors contemplate a 27 percent cut in Medicare fees, imposed as a cost-cutting measure.

Congress must decide how to refund this gap to smooth over the collapse of doctor participation that this would precipitate. Not an easy matter, as an actual "doc fix" would require a whopping $300 billion.

Eric Schulzke writes on national politics for the Deseret News. He can be contacted at