Advance Beneficiary Notice shifts responsibility for payment

December 15, 2007

Based on a physician's knowledge of the risk of non-payment, Medicare's Advance Beneficiary Notice should be used when the physician believes the service is unlikely to be covered since it may not be medically necessary or reasonable. The ABN explains to the patient that even though Medicare does not pay for a certain item or service does not mean that the patient shouldn't have it. The –GA modifier should be used on the ABN. If –GA is not appended, the patient will be informed in the Explanation of Benefits that they are not responsible for payment.

Key Points

The form is available from the Medicare Web site at http://www.cms.hhs.gov/BNI/Downloads/CMSR131G.pdf. This is the "general" ABN, as opposed to the "laboratory" ABN.

The ABN's existence is based on assumptions regarding physicians' knowledge. Physicians are expected to be informed about coverage rules and regulations since this information is available through a variety of Medicare publications. Also, physicians are presumed to be familiar with local practice standards.

The ABN should be obtained when the physician believes the service is unlikely to be covered since it may not be "medically necessary or reasonable." This does not imply the service may not be appropriate medically. Instead, "not medically necessary or reasonable" means the service is unlikely to be covered based on carrier guidelines for appropriate diagnoses, frequency criteria, or the like.

The ABN, through the following language, explains to the patient that the recommended service may be entirely appropriate: "Medicare only pays for covered items and services when Medicare rules are met. The fact that Medicare may not pay for a particular item or service does not mean that you should not receive it."

The patient has the option at this point of accepting or declining the service. The transfer of financial responsibility also results in granting the patient the right to an appeal.

An example may clarify this. This is an excerpt from Florida Medicare's Local Coverage Determination on Scanning Computerized Ophthalmic Diagnostic Imaging (OCT): "Scanning computerized ophthalmic diagnostic imaging is not considered medically reasonable and necessary for patients with "advanced" glaucomatous damage. Instead, visual field testing should be performed."

"Advanced glaucomatous damage" is further defined in the Local Coverage Determination to include diffusely enlarged optic cups with a cup-to-disc ratio exceeding 0.8. If you perform OCT as part of a glaucoma evaluation on such a patient, therefore, you can expect the service will be considered not medically necessary and reasonable. This would be an instance where it would be appropriate to obtain an ABN.

There is a space on the ABN for "estimated cost" that may be filled in with your routine charge for the service. However, the Medicare program does not require this space to be filled in for the ABN to remain valid.

As indicated above, a signed ABN effectively transfers the financial risk of non-payment for a service to the patient. It is therefore acceptable to bill the patient for the service and receive payment at the time the service is rendered.

If you have collected payment from the patient in advance, and Medicare subsequently pays for the service, then you should promptly refund the money to the patient.

The –GA modifier should be used once the ABN has been properly obtained. This modifier indicates to the payer that the beneficiary has accepted the financial liability for the provided service. It is important that this modifier be appended the first time the claim is submitted. Practices may not correct an error by resubmitting a claim with –GA. If –GA is not appended, the patient will be informed in the Explanation of Benefits that they are not responsible for payment.

There are certain services that are never covered by Medicare. The fee for these "excluded services" may always be collected from the patient. These services include refractions, cosmetic surgery, routine lab and x-ray services, and cosmetic surgery.