AMARILLO, TX – CMS requires Medicare health care providers and suppliers to provide Medicare beneficiaries with an Advance Beneficiary Notice of Non-coverage (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 non-covered 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 that Medicare never covers. On its face, the ABN is a simple tool to provide Medicare beneficiaries with notice of non-coverage.

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 non-billable medical costs. This three part article furnishes 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.

Part 1 discussed when an ABN should be issued and when the ABN is “effective.” Part 2 set out how a provider should properly fill out “D,” “E,” and “F” on the ABN form and the record retention requirements that must be followed. Part 3 discusses when a provider can collect funds from a Medicare beneficiary for an item or service and when those funds must be returned. Part 3 also discusses the common issues that DME suppliers must address with ABNs.

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. But, 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 thirty (30) days after receipt of CMS’s Remittance Advice or within fifteen (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 Non-coverage” guidance booklet provides claim reporting modifiers for filing Medicare claims associate with an ABN.1 Detailed information and instructions on filing claims with ABNs are located in the Medicare Claims Processing Manual, Chapter 30.2

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 that 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 twelve (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 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 non-coverage for a particular item or service. Finally, providers should strive to provide good faith adequate notice of the cost of service to ensure that 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 twenty-five (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 non-coverage of the service provided.3

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 that specializes in the area of healthcare regulation.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. Matthew J. Agnew, JD, is an attorney with the Health Care Group of Brown & Fortunato PC. They represent pharmacies, HME companies, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization. Baird can be reached at (806) 345-6320 or [email protected]. Matthew Agnew can be reached at (806) 345-6332 or [email protected].