Medicare’s Advance Beneficiary Notice Form: Pitfalls and Landmines

By Matthew Agnew

The Centers for Medicare & Medicaid Services (CMS) requires Medicare health care providers and suppliers to provide Medicare beneficiaries with an Advance Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131, if the provider thinks Medicare probably (or certainly) will not pay for the items or services because they are not medically necessary. A provider that fails to deliver an ABN when required may not bill the beneficiary for the noncovered items or services. The requirement to provide an ABN to a Medicare beneficiary is limited to certain Medicare Part B services (outpatient only) and Medicare Part A items and services (limited to hospice services, home health agencies, and Religious Nonmedical Healthcare Institutions only). However, providers are not required to provide Medicare beneficiaries an ABN for items or services Medicare never covers. On its face, the ABN is a simple tool to provide Medicare beneficiaries with notice of noncoverage. Below the surface, proper utilization of the ABN form can be difficult and improper utilization of the ABN form can result in thousands of dollars of nonbillable medical costs. This article will furnish providers with guidance to prevent some of the common ABN pitfalls and landmines, and help providers ensure proper liability is established prior to the provision of items or services to Medicare beneficiaries.

 

When should an ABN be issued?

An ABN should be issued when: (1) the provider believes Medicare may not pay for an item or service; (2) Medicare usually covers the item or service; and (3) Medicare may not consider the item or service reasonable and necessary for this particular patient in this particular circumstance.[1] CMS has established additional requirements for durable medical equipment (DME) suppliers. DME suppliers are required to issue an ABN before providing a Medicare beneficiary with items or services if: (1) the provider violated the prohibition against unsolicited telephone contacts; (2) the supplier has not met the supplier number requirements; (3) the supplier is a noncontract supplier providing an item listed in a competitive bidding area; or (4) Medicare requires an advance coverage determination.[2] In a competitive bidding area, a DME supplier that is not a contract supplier must issue an ABN to a Medicare beneficiary if the supplier is offering an item or service that is provided under the Medicare Competitive Bidding Progra

 

CMS prohibits the use of ABNs on a routine basis and requires providers to maintain proper evidence supporting the issuance of each ABN. There are a few exceptions to the routine basis requirement, such as the provision of experimental items or services, services that are always denied for medical necessity, or items and services with frequency limitations for coverage (e.g., contacts and glasses). A provider’s issuance of an ABN can be voluntary or mandatory. A voluntary ABN may, and should, be used by cautious practitioners in situations in which CMS may deny services, such as for services furnished by a supplier for an immediate member of his or her household, personal comfort items and supportive devices for the feet. CMS makes it mandatory to issue an ABN when the provider expects Medicare to deny payment for an item or service because it is not reasonable and necessary under Medicare program standards.[3] ABNs may not be used under duress (in compelling or coercive circumstances); therefore, CMS recommends providers not issue an ABN to a Medicare beneficiary with immediate health issues.

 

A provider’s requirement to issue an ABN is triggered by three different events: initiations, reductions and terminations. At initiation of treatment, a provider may determine Medicare may not cover an item or service because the item or service is not reasonable and necessary, and the provider must issue an ABN to the Medicare beneficiary prior to the receipt of noncovered care. A reduction in care (when a component of care decreases) typically occurs because the care is no longer considered medically reasonable and necessary. In these instances, a provider must always issue an ABN if the Medicare beneficiary wants to continue to receive services that are no longer medically reasonable and necessary. Similarly, a provider must issue an ABN if a Medicare beneficiary wishes to continue to receive care after the provider has terminated services that are no longer medically reasonable and necessary. An ABN must be issued on CMS’s ABN form, Form CMS-R-131, or on a form meeting CMS’s requirements. It is highly recommended providers utilize CMS’s form when issuing an ABN to a Medicare beneficiary.[4]

 

When is an ABN effectively issued?

 

To determine if an ABN is effectively issued, CMS has set forth several standards and requirements. CMS considers an ABN effectively issued when the notice is: (1) issued to and comprehended by the Medicare beneficiary or the beneficiary’s representative; (2) completed on the approved, standardized CMS ABN form with all required blanks completed; (3) provided far enough in advance to the beneficiary to allow it to consider available options; (4) fully explained and all questions about the ABN are answered; and (5) signed and dated by the beneficiary or the beneficiary’s representative after he or she selected one option box on the ABN.[5] CMS encourages, but does not require, providers to issue an ABN in person. If an in-person issuance is not possible, then CMS permits the issuance of an ABN by email, mail or secured fax machine, if done in accordance with HIPAA policies and procedures.[6] Notice by telephone is not considered sufficient unless the content of the telephone contact can be verified and is not disputed by the beneficiary. Telephone contact must be followed immediately by either a hand-delivered, mailed, emailed or faxed notice.

 

How does a provider properly fill out Blanks D, E, and F on the ABN form?

To complete the ABN form, a provider must pay particular attention to Blanks D, E, and F.

 

Blank D

Blank D requires providers to list the specific items or services the provider believes will not be covered by Medicare. CMS encourages providers to use one of the following descriptors in Blank D: item, service, laboratory test, test, procedure, care, or equipment.[7] For expected partial denials, the provider is required to list the excess components of item or service for which denial is expected. Similarly, a provider must also list the specific components of any upgrades that may be, are expected to be, or will be denied. If an item or service that is offered — but expected to be denied — is repetitive or continuous, then the provider must specify the frequency or duration of the item or service to be provided on ABN form. When a provider reduces services, Blank D must specify with enough additional information to put the Medicare beneficiary on notice of the nature of the reduction. For example, “wound care supplies decreased from weekly to monthly” is sufficient, but “wound care supplies decreased” is insufficient. 

 

Blank E: Reason Medicare May Not Pay

Blank E requires providers to explain in “beneficiary-friendly” language the reason the provider believes the item or service will not be covered by Medicare. A valid and effective ABN requires the provider to supply at least one reason for noncoverage. CMS has provided the following commonly used reasons for noncoverage: Medicare does not pay for the test for this particular condition, Medicare does not pay for this test as often as patient requests (denied as too frequent), and Medicare does not pay for experimental or research use tests.

 

Blank F: Estimated Costs

In order for Medicare beneficiaries to receive all information and make an informed decision, Blank F requires providers to disclose to beneficiaries an estimated cost for the item or service Medicare is not likely to cover. In making an estimate, providers must make a good faith effort to determine a reasonable estimate for the items or services listed. Generally, CMS expects the provider’s estimate to fall within the greater of $100 or 25 percent of the actual cost.

 

What record retention requirements does CMS place on ABN forms?

CMS requires providers to retain all ABN forms for five years from the date of service, but only if state law has not established requirements for medical record retention. If a beneficiary declines care, refuses to choose an option, or refuses to sign the ABN, the provider must retain (either in hard or electronic format) a record of the ABN. If a Medicare beneficiary signs the ABN and thereafter changes his or her mind, then the Medicare beneficiary must annotate the ABN to reflect a clear indication of his or her decisions. The provider or the beneficiary may annotate the ABN, but the beneficiary must sign, date and return a copy of the ABN to the provider for its records.

 

When can a provider collect funds from a Medicare beneficiary for an item or service, and when must it return those funds?

Once a Medicare beneficiary signs an ABN, the provider is entitled to immediately collect payment for the items or services prior to providing them. If CMS denies payment for the item or service, the provider retains the funds. However, if CMS pays all or part of the claim, or if CMS finds the issuance of the provider’s ABN ineffective, then the provider must refund beneficiary the proper amount in a timely manner. CMS has determined a “timely manner” to mean within 30 days after receipt of CMS’s Remittance Advice or within 15 days if an appeal is brought by the provider and funds are still due to the beneficiary at the conclusion of the appeal. If a provider fails to issue a mandatory ABN or if it issues a defective ABN, then the provider is liable for the costs of the items and/or services, and the provider is not permitted to collect or retain funds from the beneficiary. CMS’s “Advanced Beneficiary Notice of Noncoverage” guidance booklet provides claim reporting modifiers for filing Medicare claims associate with an ABN.[8] Detailed information and instructions on filing claims with ABNs are located in the Medicare Claims Processing Manual, Chapter 30.[9]

 

What are the common issues DME suppliers must address with ABN forms?

Two of the situations in which DME suppliers face ABN difficulties are: (1) the physician has failed to provide enough documentation to substantiate reasonable medical necessity; and (2) a provider supplies a Medicare beneficiary with a DME rental and Medicare subsequently terminates coverage for the item or service. When a physician fails to provide enough documentation to substantiate reasonable medical necessity, then it is incumbent upon a DME supplier to get the Medicare beneficiary to sign and execute CMS’s ABN form. Failure to receive an executed ABN form places the supplier’s likelihood for Medicare approval at risk when a physician fails to substantiate reasonable medical necessity. To prevent this error from occurring, DME suppliers must review physician documentation closely to determine if the physician has established and provided adequate justification to demonstrate reasonable medical necessity. If a DME supplier believes the documentation provided by the physician is insufficient, then it should require the client to execute an ABN form as a precautionary measure. 

Rentals also present complications for DME suppliers. Often, a Medicare beneficiary is entitled to a rental device due to reasonable medical necessity but the rental is initially limited by CMS or CMS determines that the beneficiary’s underutilization of the medical device results in a determination that the device is not medically necessary (e.g., CPAP machines that are initially limited to a 12 week period). Nevertheless, CMS’s termination of services triggers the requirement for the Medicare beneficiary to execute an ABN if the beneficiary elects to keep a rental after Medicare coverage for the rental has been terminated. Frequently, Medicare beneficiaries decline to voluntarily execute an ABN that makes them liable for the costs associated with the rental equipment. In these instances, it is incumbent upon a DME supplier to issue a letter to the beneficiary explaining that these services have been terminated and informing the beneficiary that it can return the device or incur personal responsibilities for the cost of the device if it is not returned. This letter should be accompanied with an ABN form with a request that the beneficiary sign the form. As always, a copy of this documentation should be retained if the DME supplier desires to collect any rental costs from the beneficiary.

 

Conclusion

Providers often struggle with ABNs due to their highly technical requirements, but these struggles can be generally addressed by making a few simple internal changes. Providers should ensure that their regulatory compliance officer and any staff members issuing ABNs fully understand CMS’s requirements and general guidance regarding ABNs. This article and the reference links herein should provide a solid foundation for any staff member to follow when filling out ABNs. Furthermore, maintaining adequate documentation to establish the need for a Medicare beneficiary to fill out an ABN is important. Maintaining proper documentation helps establish that the provider is not requiring all patients to sign ABNs as a condition of service and is instead providing all beneficiaries in need of an ABN proper and adequate notice of noncoverage for a particular item or service. Finally, providers should strive to provide good faith adequate notice of the cost of service to ensure the ABN is effective. This requires providers to work diligently in determining an adequate and accurate estimate for the cost of service. Generally, Medicare beneficiaries are not required to pay for services in excess of CMS’s “$100 or 25 percent cost of service” estimate requirement.

 

If CMS denies a claim and a provider has not completed an effective ABN, then the provider is not automatically disqualified from seeking to recoup those costs from a Medicare beneficiary. In 2011, the Fifth Circuit Court of Appeals concluded that written notice is not required to rebut the presumption that a patient did not receive proper notice, which entitled the provider the opportunity to demonstrate that the client received advanced oral notice of Medicare’s noncoverage of the service provided.[10] Therefore, in some circumstances, oral notice meeting CMS’s requirements for disclosure, coupled with the Medicare beneficiary’s understanding of the disclosure and informed consent to initiate or continue care, can be considered sufficient to establish a Medicare beneficiary’s liability for the costs of items or services. For legal advice consistent with your particular circumstances, please consult an attorney who specializes in the area of healthcare regulation. 

This material is provided for informational purposes only and is not legal advice. You should contact your own counsel to obtain legal advice with respect to any specific issue.

Contact the Author:

Matthew may be reached at magnew@bf-law.com or 806.345-6332

 

References:



[1] Department of Health and Human Services, Advance Beneficiary Notice of Noncoverage (ABN) (November 2013) https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/ABN_Booklet_ICN006266.pdf.

[2] Id.

[3] 42 U.S.C.A. § 1395pp(a)(1) (West 2014).

[4] CMS’s ABN form and ABN form instructions may be downloaded here: http://www.cms.gov/Medicare/Medicare-General-Information/BNI/Downloads/ABNFormInstructions.zip.

[5] Department of Health and Human Services, Advance Beneficiary Notice of Noncoverage (ABN) (November 2013) https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/ABN_Booklet_ICN006266.pdf.

[6] For more information on issuing ABNs off site, see Department of Health and Human Services, Advance Beneficiary Notice of Noncoverage (ABN) (November 2013) https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/ABN_Booklet_ICN006266.pdf.

[7] CMS states that “Items/Services” is a common and sufficient descriptor most of the time.

[8] Department of Health and Human Services, Advance Beneficiary Notice of Noncoverage (ABN) (November 2013) https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/ABN_Booklet_ICN006266.pdf.

[9] The Centers for Medicare & Medicaid Services, Medicare Claims Processing Manual (April 2014) http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c01.pdf.

[10] See Mississippi Care Ctr. of Morton, L.L.C. v. Sebelius, 449 F. App’x 341 (5th Cir. 2011) (finding that a nursing home operator was not required to show written notice to a beneficiary or its representative to meet the burden of persuasion that the beneficiary or representative received advance notice of Medicare’s noncoverage; however, in this case, the operator was unable to overcome the burden of persuasion).