Getting Paid

Using Advance Beneficiary Notices to Maximize Your Medicare Collections

The rules enable you to bill Medicare patients when Medicare will not pay because it determines a service is not medically necessary.

Todd A. Rodriguez, JD

Tool inside

With physicians everywhere feeling the pinch of rising operating costs and shrinking reimbursement, collecting every possible dollar for services rendered is critical. Yet many physicians are unaware of or simply ignore payment rules that can help increase their earnings. One such example is Medicare's Advance Beneficiary Notice (ABN) rules, which permit physicians to bill Medicare patients when Medicare will not pay because it determines a service is not medically necessary. The Centers for Medicare & Medicaid Services (CMS) Physician Issues Project, initiated in early 2001 to "find workable solutions" to issues of high importance to physicians, made streamlining and clarification of the ABN rules one of its top priorities. CMS approved new ABN forms in June, and revised rules governing their use take effect Oct. 1. Here's how to use them to your advantage:

What does an ABN do?

A properly drafted and given ABN form shifts financial liability from you to the patient in situations where Medicare does not cover services for lack of medical necessity. The form notifies the patient in advance of receiving the service of the likelihood of non-coverage.

When must an ABN be given?

ABNs are mandatory only if you want to bill the patient for a service you think may not be covered by Medicare. Then ABNs are necessary only for services typically covered by Medicare, but which, in a particular case, are likely to be denied for lack of medical necessity. (See the list of examples.)

ABNs are not required for services that are never covered by Medicare. You can consult the list of examples of statutorily excluded services at cms.hhs.gov/medlearn/flplaw.pdf (see page 14 of the document).

Ultimately, if you are unsure as to whether an ABN is needed in a particular case, the safest course is to obtain one. ABNs are not prohibited in situations where the service is never covered, either, so obtaining the patient's written acknowledgement of liability can help at billing time.

How must an ABN be given?

As with any informed consent notice, how and when an ABN is given to a patient will affect its validity. ABNs are intended to allow patients to make an informed choice about their treatment, so they should be given only when the patient is in a position to understand the implications of the notice. In fact, ABNs will not be valid if given when the patient is under duress, such as where he or she is already hooked up to testing equipment or prepped for a surgical procedure. In addition, an ABN cannot be given in an emergency situation unless and until the patient has received screening and/or stabilizing care required by the Emergency Medical Treatment and Active Labor Act (EMTALA).

The ABN form includes a patient signature line, though technically a patient signature is not required in every case for an ABN to be valid. Specifically, for physician services billed on an unassigned basis (where the patient bills Medicare directly and reimburses the physician), the patient's signature is required for the ABN to be effective. For physician services billed on an assigned basis (where the physician bills and is paid directly by Medicare), lack of a patient signature will not make the ABN invalid. The safest policy, however, is to always try to obtain the patient's signature, since this will clearly show that the patient received the ABN and agreed to be financially responsible for the services in question.

Where the patient is incapable of signing, for example because of mental or physical incapacity, an authorized representative can sign on the patient's behalf. In deciding who can sign as an authorized representative, give priority to individuals who can show, by a power of attorney or other legal authorization, that they have legal authority to make medical decisions for the patient. Absent a formal authorization, an immediate family member or someone who has the patient's best interests at heart can sign the ABN. Deciding who may serve as an authorized representative can be tricky. Given the legal and financial ramifications of this determination, you may find it helpful to work with your attorney to develop a protocol that can be used by you and your office staff when making the determination.

An ABN can be given by you, your staff or even another provider involved in the patient's treatment. However, you are ultimately responsible for ensuring that the ABN is correctly drafted and given to the patient if you want to bill. So, if you rely on others to give ABNs, it is a good idea to coordinate and monitor the process, including approving the form to be used and checking records prior to performing services, to be sure ABNs are on file when required.

Finally, you must give the patient a copy of the executed ABN and keep one on file in your office. You do not have to submit the ABN with your claims, but claims must include the modifier "-GA." This shows that an ABN is on file and that you do not expect payment from the carrier. Of course, if the carrier requests, you must produce the executed ABN.

What form must an ABN take?

Physicians must use the ABN form approved by CMS. Printable versions in both English and Spanish are available online at cms.hhs.gov/medicare/bni/. The English version is available on page 22.

The following three sections of the form may be customized:

• The header. Your form must clearly identify you and your practice by listing your name, address and telephone number at the top.
• The "Items or Services" box. You must identify the service or services to which the ABN applies in sufficient detail so that the patient can understand which items and services are likely to be denied.
• The "Because" box. You must give a specific reason why you believe the service will not be covered in sufficient detail so that the patient can understand why you expect Medicare will deny payment. For example, "Your case does not support the need for this injection," or "Your case does not support the need for more than one screening Pap smear in three years."

You can list multiple services and explanations in a check-box format where appropriate. Be aware, however, that your insertions cannot extend the length of the form beyond one page (legal size is acceptable) and that the text should be readable (legible handwriting or at least 10-point type, the rules suggest).

ABNs and compliance

While ABNs can have significant financial implications for your practice, they also serve an important fraud and abuse compliance function. Under Medicare law, routinely billing for medically unnecessary services could result in civil money penalties, treble damages and exclusion from the Medicare program. Though they will not legitimize otherwise fraudulent claims, ABNs can help rebut an argument that claims were submitted with fraudulent intent. Specifically, they create a record of the patient's acknowledgement that the services may be found to be medically unnecessary, and their decision to have the service anyway.

A PDF version of this document is available. Download PDF now (1 pages/ 68 KB). More information on using PDF files. Physicians may photocopy or adapt for use in their practices. "Using Advance Beneficiary Notices to Maximize Your Medicare Collections." Family Practice Management. September 2002:19-21, www.aafp.org/fpm/20020900/19usin.html.

The bottom line

ABNs offer a valuable opportunity to improve your revenue. With new rules and CMS-approved forms available for use, there is no better time than now to get acquainted with the new rules and begin incorporating them into your practice. For more information, visit the CMS Web site at www.cms.gov/medlearn/refabn.asp.

Send comments to fpmedit@aafp.org.

Todd Rodriguez is an attorney with Alice G. Gosfield and Associates in Philadelphia, Pa. Conflicts of interest: none reported.