Medicare Bulletin - September/October 1998

All States, GR 98-5, September/October, Inside This Issue

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Advance Beneficiary Notices - Questions and Answers

1. What is an "ABN" and what does it mean to a Medicare beneficiary who signs it?

An Advance Beneficiary Notice (ABN) is a written notice given by a supplier, physician, or provider to a Medicare beneficiary before a service is furnished, which indicates that the service likely (or certainly) will not be paid for by Medicare, indicates why Medicare denial is expected, and asks the beneficiary to sign an agreement to pay personally for the service. A beneficiary who signs an ABN agreement to pay will likely be held responsible for payment of the bill if Medicare denies payment. The beneficiary is also on notice of the likelihood of denial of the Medicare claim, which makes the beneficiary liable under law. NOTE: Inpatient hospital ABNs are called "Hospital-Issued Notices of Noncoverage" (HINNs) or "Notices of Non-Coverage" (NONCs).

2. What information must be included in an ABN for a Part B service?

The ABN must clearly identify the service(s) for which denial is being predicted, and it must clearly state the reason(s) for that prediction. It must include a section for the beneficiary's agreement to pay, specifying that the beneficiary has been notified that Medicare probably will not pay for the service(s) and that the beneficiary agrees to be personally or fully responsible for payment. The beneficiary may sign the agreement to pay or choose not to receive the service.

3. What does it mean to be "personally and fully responsible" for payment?

This means that the beneficiary will have to pay for the service either out-of-pocket or by some other insurance coverage which he/she has in addition to Medicare.

4. In what circumstances should an ABN be given to a beneficiary?

ABNs should be given to beneficiaries whenever the supplier, physician, or provider believes that a claim for the services is likely to be denied payment by Medicare for:

o Medical Necessity Denials--denials of otherwise covered services that were found to be not "reasonable and necessary," that is, so-called "medical necessity denials" under section 1862(a)(1). In these instances, the supplier, physician, or provider generally is liable unless the beneficiary received an ABN.

5. In what circumstances are ABNs not needed?

ABNs to beneficiaries do not have to be given whenever a service is believed likely to be denied payment by Medicare for:

o statutory exclusions (statutorily excluded services, sometimes referred to as "categorically noncovered services," such as cosmetic surgery, hearing aids, and routine physicals and screening tests).

6. Should a physician or a laboratory give an ABN to a beneficiary in the case of screening tests?

No. As indicated above, screening tests are statutorily excluded (under §1862(a)(7) of the Act) and Medicare never pays for them. Therefore, no ABN is necessary for screening tests, and no Medicare charge limits apply to such tests.

Exceptions: For those few screening tests included in §1862(a)(1) of the Act, Medicare coverage and payment is possible, so ABNs should be given if denial is expected. These tests include mammograms, Pap smears and pelvic exams, and colorectal tests.

7. Does an ABN include a cost estimate for the service? If no, why not?

No, there is no cost estimate on an ABN. The primary purpose of the ABN is to document that the beneficiary is on notice that a service likely will not be paid for by Medicare, a fact which makes the beneficiary financially liable. It is expected that a beneficiary, having been notified of the fact that he or she will be financially liable, would ask the supplier, physician, or provider how much the service would cost and, if no answer is given, that the beneficiary could refuse to receive the service. The law does not require the inclusion of cost estimates on ABNs.

8. When a beneficiary is liable for payment because of receiving an ABN, how much can the beneficiary be charged for the services?

When a service is not covered by Medicare and the beneficiary is liable for payment, as in the case where an ABN was properly given, there are no Medicare charge limits which apply to the supplier's, physician's, or provider's charges to the beneficiary. Medicare balance billing limits do not apply. The amount of the bill in such cases, therefore, is a matter between the supplier, physician, or provider and the beneficiary.

9. What is the difference between an ABN and a Private Contract?

They are entirely different. An ABN is not a private contract within the meaning of the BBA §4507 provision.

o An ABN is furnished by a physician or practitioner who has not opted out of the Medicare program.
o Private contracts are used by a physician or practitioner who has opted out of Medicare.
o An ABN pertains to noncoverage of services, that is, services for which the physician or practitioner believes Medicare likely will not make payment.
o Private contracts are pertinent to services that usually are covered by Medicare, that is, services for which Medicare likely would have made payment.
o An ABN affects only those specific services listed on the ABN and allows the physician to charge the beneficiary only if Medicare actually denies payment for those particular services.
o When a physician enters into a private contract, it affects all of his or her services to Medicare beneficiaries for a period of two years.

10. Where can I get a standard HCFA ABN form for use with Part B services?

There is no standard Part B ABN form. Each supplier, physician, or provider is free to design its own form, consistent with the standards for ABNs provided in the Medicare Carriers Manual. A model ABN can be found in Appendix 1 on page 33. This model has been printed in many previous Medicare Bulletins.

11. Why is there no standard ABN form for Part B services?

There are too many variables for different suppliers, physicians, and providers for one form, or even a few forms, to accommodate them all. For example, laboratory ABNs may include long lists of laboratory tests, while a physician specialist may use an ABN with a blank space to write in the procedure.

12. What is a "defective ABN" and what implications does it have for beneficiaries and for suppliers, physicians, and providers?

A "defective ABN" is one which fails to meet Medicare standards (see above) in a material way, such that the beneficiary does not receive proper notice of why a particular claim is likely to be denied, or does not receive it in a manner allowing the beneficiary to make an informed consumer decision. Examples of defective notices include ABNs which:

o Are just statements signed by the beneficiary to the effect that, should Medicare deny payment under §1862(a)(1), the beneficiary agrees to pay for the service (that is, the ABN is used to cover the contingency of denial);
o Are routine notices to beneficiaries which do little more than state that Medicare denial of payment is possible, or that the supplier, physician, or provider never knows whether Medicare will deny payment;
o Are given to beneficiaries even when the supplier, physician, or provider has no reason to doubt the likelihood of Medicare payment;
o Are given for all claims and services.

13. May a supplier, physician, or provider routinely give ABNs to all beneficiaries?

Generally, no. Such routine ABNs are considered defective notices since they do not provide adequate notice as to why that particular claim is likely to be denied and since they do not allow the beneficiary to make an informed consumer decision. Such a defective notice leaves the supplier, physician, or provider liable for denied charges.

Exceptions:

a. For those screening tests with statutory frequency limits included in §1862(a)(1) of the Act, e.g., mammograms and Pap smears, ABNs may be routinely given to beneficiaries due to the supplier's, physician's, or provider's great difficulty in establishing when a beneficiary's last test actually occurred.

b. For services which are always denied under §1862(a)(1) of the Act, e.g., acupuncture services or experimental services, ABNs may be routinely given to all beneficiaries due to the certainty of Medicare payment denial.

14. Are there severe sanctions for suppliers, physicians, and providers which routinely and improperly give ABNs to all beneficiaries?

Sanctions may be applied only for failure to make a refund [§1842(l)], failure to submit claims [§1848(g)(4)], and other violations for which sanctions are provided by law. For improperly giving out routine ABNs, the likely penalty is that the ABNs will be considered defective by Medicare, which leaves the supplier, physician, or provider liable for denied charges and unable to charge and collect from the beneficiaries.

15. Are there circumstances where one ABN will serve for a series of services?

Yes. When there is an extended course of treatment for which the likelihood of denial of payment by Medicare can be predicted in advance, a single ABN for the whole course of treatment will suffice (e.g., a series of visits for chiropractic manipulation services that may exceed the number that Medicare would determine to be reasonable and necessary). An ABN for an extended course of treatment must make it clear that it applies to the whole course of treatment (include beginning and reasonable ending dates, not to exceed six months). If the course of treatment is changed substantively (e.g., additional services are added to the course of treatment or there is a new condition), it is necessary to give a new ABN to the beneficiary which specifies the changes in the course of treatment and the likelihood of denial for those services.

16. If an ABN was given to a beneficiary, must a claim be submitted to Medicare?

Yes, a claim must be submitted whenever it is at all possible that the claim may be paid. For Part B services, the mandatory claims submission provision of the Act (§1848(g)(4)) requires submission of a claim for a "service for which payment may be made under this part" (Part B), and provides sanctions for failure to submit claims. For all services for which payment generally may be made, but a medical necessity denial is expected in the particular case, a claim must be submitted so that a Medicare determination can be made. When and if the claim is denied as not reasonable and necessary (and an ABN has been signed), the beneficiary is liable to pay for the service. Failing to submit such claims is a violation of the mandatory claims submission provision and is an abuse because it disenfranchises beneficiaries by denying them a Medicare coverage determination (and subsequent appeal rights).

17. Does Medicare require that an ABN be given in any particular case?

No. Suppliers, physicians, and providers are never required by Medicare to give an ABN. Their compelling reason for giving ABNs is self-protection from liability. In the case of the various claims denials at issue, if the beneficiary receives a proper ABN, the beneficiary is held liable and may be charged for the services. If the beneficiary (1) is not given an ABN or (2) is given a defective ABN, then (in virtually all cases*) the supplier, physician, or provider will be held liable and will not be able to collect from the beneficiary.

* The beneficiary may be held liable in any case where it can be demonstrated that the beneficiary, before receiving the service for which payment was denied, knew or could reasonably have been expected to know that Medicare would not make payment. In practice, without either an ABN or a previous denial for the same service, it is usually difficult to demonstrate beneficiary foreknowledge.

18. How can the use of an ABN allow a beneficiary to pay privately for additional services at his or her own discretion, without going outside of Medicare to a private contract physician?

First, for all services for which Medicare does not pay at all, beneficiaries and physicians are free to deal privately without any Medicare involvement. For example, for routine physicals and most screening tests, routine foot care, and cosmetic surgery, Medicare does not insert itself into the physician-patient relationship at all. Second, for Medicare-covered services in excess of the amount, number, duration, etc. for which Medicare will pay, since payment is denied under §1862(a)(1) for lack of medical necessity, the physician can give an ABN to the beneficiary who, when he or she signs the ABN, will then be liable for payment. Thus, the physician and the beneficiary can use an ABN to facilitate the private payment for additional services which the beneficiary wants and for which Medicare will not pay.

19. Is it true that giving an ABN to a beneficiary on or after January 1, 1998, is tantamount to a private contract and that a physician or practitioner who gives even one ABN in 1998 will be involuntarily opted out of Medicare?

No, it is not at all true. The rumors to that effect are erroneous. Giving an ABN does not force the physician or practitioner to opt out of Medicare. An ABN is not a "private contract" under section 4507 of the Balanced Budget Act of 1997. Failing to give an ABN when it properly ought to be given will have one effect on a physician or practitioner: he or she will be liable if the claim is denied as not medically necessary and will not be able to collect from the beneficiary. Giving the ABN in such a case will allow the beneficiary to make an informed consumer decision about receiving the service and will allow the physician or practitioner to collect from the beneficiary if the service is furnished and Medicare does deny payment.