Beneficiary notices get closer attention from feds

Here’s a primer to keep out of trouble

A longtime point of contention between physicians and Medicare — the advance beneficiary notice (ABN) that practices must ask patients to sign — has moved to a front regulatory burner.

Last April, Medicare issued a proposed revised standard ABN form that should receive final approval soon. Additionally, the Office of the Inspector General’s (OIG) work plan for 2002 includes an investigation into whether doctors are properly notifying Medicare patients about coverage and use of the ABN.

The following series of common ABN-related questions and answers developed with the help of the Center for Medicare and Medicaid Services (CMS) will help you sort out what’s what when it comes to ABNs.

Q: What is an ABN?

A: The purpose of the ABN is to give the patient an opportunity to refuse to receive the service or item in question. The ABN itself is a written notice (government form CMS-R-131) that physicians, providers, or suppliers must give to patients to sign before they furnish a service or item. The documents tells patients:

— that Medicare will probably deny payment for the specific service or item in this particular instance;

— the reason the physician, provider, or supplier expects Medicare to deny payment;

— that the patient will be personally and fully responsible for payment if Medicare denies payment.

Q: Are there one or two standard ABN forms?

A: The CMS-R-131 came into use in June 2001 and is expected to be the only ABN in use by September 2002. In the meantime, you may use ABNs containing the old approved model language, which reads:

"Physician/Supplier notice: Medicare will only pay for services that it determines to be reasonable and necessary’ under section 1862(a)(1) of the Medicare law. If Medicare determines that a particular service, although it would otherwise be covered, is not reasonable and necessary’ under Medicare program standards, Medicare will deny payment for that service. I believe that, in your case, Medicare is likely to deny payment for (particular services) for the following reasons: (reasons for predicting denial).

"Beneficiary agreement: I have been notified by my physician/supplier that he or she believes that, in my case, Medicare is likely to deny payment for the services identified above, for the reasons stated. If Medicare denies payment, I agree to be personally and fully responsible for payment.

"Signed, (Beneficiary Signature)."

Under the rules for using the older ABNs, some physicians modified the above notice language for their own use. The new ABN, however, is a standard form. If a patient receives one of the older ABNs, signing it is the same as choosing "Option 1. YES" on the new ABN. If a patient refuses to sign, it is the same as choosing "Option 2. NO" on the new ABN.

Q: How does an ABN protect the patient?

A: The ABN protects senior citizens from unexpected financial liability in cases where Medicare will probably deny payment. That allows consumers to decide whether to obtain the service or item and be prepared to pay for it (that is, either out of their own pocket or by their other insurance coverage) or to choose not to receive it.

Q: What information must be included in an ABN for a Part B service or item?

A: The ABN must identify the service or item for which denial is expected, and it must clearly state the reason a Medicare denial is expected.It may include an estimate of the cost for the service or item.

Q: What options are patients given?

A: Patients may choose to receive the service or item and to be responsible for payment if Medicare does not pay ("Option 1. YES") or elect not to receive the service or item ("Option 2. NO"). After checking one, the patient should then sign and date the ABN.

Q: What about payment?

A: Patients who choose "Option 1. YES" receive the service or item, and a claim is sent to Medicare. Meanwhile, the physician may also bill the patient while waiting for Medicare to make its payment decision. Medicare will not decide whether to pay unless it is sure the patient has received the service or item and received the claim. If Medicare does pay, the patient is refunded any payments he or she made. If Medicare denies payment, the patient is personally and fully responsible for payment. The patient also has the right to appeal Medicare’s decision.

Q: What if a patient chooses "Option 2. NO" to not receive the service or item?

A: No claim is sent to Medicare.

Q: What if the patient refuses to sign the ABN but still wants to receive the service or item?

A: If the patient refuses to sign, the physician who takes assignment of their Medicare claim can elect not to provide the service or item, or the physician can have a second person witness the patient’s refusal to sign the agreement and then furnish the service or item anyway.

Once an ABN is witnessed, the patient may be held liable, because he or she has been notified of the likelihood of a Medicare denial.

Q: Are there any exceptions?

A: Patients cannot be held liable if they do not sign an ABN when items and services are furnished and assignment of the claim is not accepted by the physician or supplier. Senior citizens cannot be held liable if they do not sign an ABN when certain medical equipment and supplies are furnished (even on an assignment basis) as a result of unsolicited telephone contacts; when there is failure to obtain advance determination of coverage; and when the supplier does not have a Medicare supplier number.

Q: Are there any limits to how much a patient who signs the ABN can be charged?

A: Once the patient signs the ABN and becomes liable for payment, there are no Medicare limits on how much a physician can charge for that service, as Medicare fee schedule amounts and balance-billing limits do not apply.

Q: What if the patient does not receive an ABN, or something is wrong with the ABN he or she signed?

A: If a physician, provider, or supplier fails to give the patient an ABN or gives the patient a defective form, he or she probably won’t have to pay for the service or item he or she received.

However, in cases where the physician takes assignment of the Medicare claim, if there is any proof that the patient knew or should have known that Medicare would not pay, for the services or items before they were furnished, then they may still be held liable for payment.

The most likely case in which this could happen is if a patient received the same (or closely similar) services or items before, and Medicare denied payment for them. In such a case, the earlier denial from Medicare could be considered a "notice" to the patient that Medicare will not pay. However, this does not apply to claims that are not assigned. In that situation, the patient must receive an ABN and sign it to be protected from financial liability.