Understanding Medicare non-covered services and billing practices

There are two main categories of services Medicare does not cover and will not pay a physician for. They include:

In some instances, Medicare rules allow a physician to bill the patient for services in these categories if you follow Medicare’s notice and modifier rule. Understanding these rules and how to use them in your practice increases the likelihood of getting paid for the services your patients need, even if Medicare doesn’t cover them.

In addition to the categories mentioned, Medicare also does not pay for services when:

CMS regularly updates information on the items and services Medicare does not cover through the Medical Learning Network.

A patient may ask for a service Medicare doesn’t consider medically reasonable and necessary under the circumstances. For instance, the patient wants the service more frequently than Medicare allows or for a diagnosis that Medicare does not cover. You can often verify coverage information by researching the service on the payer’s website (e.g., Medicare or a private insurer). If the patient’s policy coverage is unclear, inform the patient that it may result in an out-of-pocket expense before performing the service.

There are two resources to help you determine if Medicare considers services to be medically reasonable and necessary:

These documents define when services are covered and provide information regarding linked CPT and Healthcare Common Procedure Coding System (HCPCS) codes and ICD-10 codes, along with billing details and service delivery requirements.

CMS offers a searchable Medicare Coverage Database (MCD) where you can search NCDs, LCDs and other Medicare coverage documents. The database has quick and advanced search capabilities to search by geography, Medicare contractor, keywords, CPT codes, HCPCS codes and ICD-10 codes.

Commercial insurance companies and some Medicaid payers have similar types of information about coverage guidelines on their websites. Stay up-to-date on these policies for your local payers to ensure claims are processed as medically reasonable and necessary.

In all cases, if the patient’s policy coverage is unclear, inform the patient that they may be responsible for paying for the service. This should be done before you provide the service.

If a Medicare patient wishes to receive services that may not be considered medically reasonable and necessary, or you feel Medicare may deny the service for another reason, obtain the patient’s signature on an Advance Beneficiary Notice (ABN). Medicare requires an ABN to be signed by the patient prior to beginning the procedure, before you can bill the patient for a service Medicare denies as investigational or not medically necessary. Otherwise, Medicare assumes the patient did not know and prohibits the patient from being liable for the service.

If an ABN is obtained, attach modifier -GA (waiver of liability statement issued as required by payer policy, individual case) to the line item(s) within the claim to indicate the patient has been notified. CMS has additional information and downloadable ABNs in several formats.

Medicare never covers certain services. Common primary care examples include preventive medicine evaluation and management (E/M) codes 99381–99397 (Medicare covers the initial preventive physical exam (IPPE) and the annual wellness visit (AWV) instead), and most cosmetic procedures unless a medical necessity exists and is documented. In this instance, document and code it accordingly. Services to immediate relatives and household members are also excluded. Refer to the CMS Medical Learning Network for more information on non-covered services.

Non-covered services do not require an ABN, as they are never covered under Medicare. However, pre-emptive communication through a voluntary ABN can prevent negative patient perceptions of your practice and facilitate collections. The ABN can provide an opportunity to communicate with the patient that Medicare does not cover the service and that the patient will be responsible for paying for it.

There are three modifiers to consider when dealing with non-covered services. Medicare does not require these modifiers, but they do facilitate clean claims processing and billing to the patient.

Using ABNs and corresponding modifiers appropriately assists with compliance reporting.

Because Medicare splits vaccine coverage between Part B and Part D, you can’t assume all vaccines are covered the same way. Part B pays for a short, defined list; most other adult vaccines route to Part D. Coverage has evolved in the last few years (for example, COVID-19 is now under Part B and Part D vaccines have no patient cost-sharing), so verify the benefit and submit through the correct channel to avoid denials and surprise bills. The CMS website has up-to-date information on Medicare coverage for preventive services.

It is essential to code all services provided, even if you think Medicare will not cover the services. Medicare has strict rules when billing for covered and non-covered services on the same date. This is often referred to as the “carve-out rule.” For example, if you perform a covered, problem-oriented E/M and, at the patient’s request, a non-covered preventive exam on the same day, you can bill Medicare for the covered E/M and bill the patient for the non-covered exam. To avoid double-charging for overlapping exam elements, subtract your charge for the covered E/M from the preventive exam fee and bill the net amount to the patient (“carve-out”). Have a brief cost-sharing conversation beforehand.

For example, a 67-year-old established patient presents for a covered service, such as an office visit for a chronic illness (e.g., 99213). At the same encounter, the patient chooses to receive a preventive medicine examination (e.g., 99397), which is a non-covered service under Medicare. The table below breaks down how this would look in terms of billing.

Patients need to be aware of cost sharing when a problem-oriented visit is billed simultaneously with a non-covered preventive visit. An ABN is not required but a conversation with your patient before the services are rendered would be appropriate.

Medicare bundles certain services into a single payment and won’t pay separately for the pieces or allow you to bill the patient for them. When Medicare or another payer designates a service as “bundled,” it does not make a separate payment for the pieces of the bundled service and does not permit you to bill the patient for it since the payer considers payment to already be included in payment for another service that it does cover.

More information on bundled payments is available on the CMS website.

All payers will demand that correct coordination of benefits be followed for claims payment. Medical services are not always the responsibility of a health insurer. Sometimes Medicare isn’t primary. Workers’ compensation, no-fault and liability insurance are typically primary when related to the injury. If a patient has multiple plans (e.g., employer group health and Medicare), one pays first and the other pays after. Verify coordination of benefits in all cases of accident, injury and when multiple insurance policies are involved before you submit the claim.