June 2007
The following article is being published as a reminder to providers, suppliers and laboratories about the Advance Beneficiary Notice (ABN) requirements.
Both Medicare beneficiaries and providers have certain rights and protections related to financial liability under the Fee-for-Service (FFS) Medicare and the Medicare Advantage (MA) Programs. These financial liability and appeal rights and protections are communicated to beneficiaries through notices given by providers.
For items and/or services furnished on or after January 1, 2003:
The Advance Beneficiary Notice - General Use (ABN-G) shall be used by providers, physicians, practitioners, and suppliers for all situations where Medicare payment is expected to be denied including laboratory tests. Any other ABN form shall be considered to be defective notice.
The Advance Beneficiary Notice - Laboratory Use (ABN-L) is specifically for use when only laboratory services are being delivered. Any other ABN form shall be considered to be defective notice.
Advance Beneficiary Notice Standards
The purpose of the ABN is to inform a Medicare beneficiary, before he or she receives specified items or services that otherwise might be paid for, that Medicare certainly or probably will not pay for them on that particular occasion. The ABN, also, allows the beneficiary to make an informed consumer decision whether or not to receive the items or services for which he or she may have to pay out of pocket or through other insurance. In addition, the ABN allows the beneficiary to better participate in his/her own health care treatment decisions by making informed consumer decisions. If the provider, practitioner, or supplier expects payment for the items or services to be denied by Medicare, the provider, practitioner, or supplier must advise the beneficiary before items or services are furnished that, in its opinion, the beneficiary will be personally and fully responsible for payment. To be “personally and fully responsible for payment” means that the beneficiary will be liable to make payment “out-of-pocket,” through other insurance coverage (e.g., employer group health plan coverage), or through Medicaid or other Federal or non-Federal payment source.
The provider, practitioner, or supplier must issue an ABN each time, and as soon as, it makes the assessment that Medicare payment certainly or probably will not be made. A provider, practitioner, or supplier (that is, a qualified notifier as defined in §40.3.2), shall notify a beneficiary by means of timely (as defined in §40.3.3) and effective (as defined in §40.3.4) delivery of a proper notice document (as defined in §40.3.1) to a qualified recipient, to the individual beneficiary or to the beneficiary's authorized representative (as defined in §40.3.5). Any Advance Beneficiary Notice (ABN) must meet the following notice standards in order to be acceptable as evidence of the beneficiary's knowledge for the purposes of the FLP provisions, LOL and RR, except as otherwise explicitly specified. A notification which does not meet the following ABN standards may be ruled defective and may not serve to protect the interests of the notifier (provider, practitioner, or supplier). Any requirement to furnish a notice to a beneficiary is not met by delivery of a defective notice.
An ABN must:
An ABN is not acceptable evidence if:
NOTE: A previously furnished ABN is acceptable evidence of notice for current items or services if the previous ABN cites similar or reasonably comparable items or services for which denial is expected on the same basis in both the earlier and the later cases. A written denial (on the same basis in both the earlier and the later cases) of payment from a Medicare contractor for a claim for the same or similar items or services received by the beneficiary not more than one year previously is acceptable evidence of notice for current items or services.
Timeliness
A beneficiary must be notified far enough in advance of an event about which a decision must be made by the beneficiary (e.g., receiving a medical service) so that the beneficiary can make a rational, informed consumer decision without undue pressure. Last minute notification can be coercive, and a coercive notice is a defective notice. ABN delivery should take place before a procedure is initiated and before physical preparation of the patient (e.g., disrobing, placement in or attachment of diagnostic or treatment equipment) begins. This standard does not constitute a blanket prohibition on delivery of notice after a beneficiary has entered an examination room, a draw station, a sales room, and is ready to receive services or items. If a situation arises during an encounter when a notifier sees a need for a previously unforeseen service and expects that Medicare will not pay for it, delivery of a notice is permissible, provided that the beneficiary is capable of receiving notice and has a meaningful opportunity to act on it (e.g., the beneficiary is not under general anesthesia). Where it is foreseeable that the need for service for which Medicare likely would not pay may arise during the course of an encounter, and the beneficiary is either certain or likely not to be capable of receiving notice during the initial service (e.g., the beneficiary will be under anesthesia), it is permissible to give notice before any service is initiated.
Qualified Notifiers
An ABN must be delivered to the beneficiary (or authorized representative) by a qualified notifier such that the beneficiary (or authorized representative) may have confidence in and rely upon the accuracy and credibility of the notice. A Qualified Improvement Organization (QIO), intermediary, or carrier, group or committee responsible for utilization review for the provider that furnished the services, or provider, practitioner, or supplier that furnished or ordered the items and/or services (including their staff and employees) is a qualified notifier for delivery of ABNs for the purposes of the limitation on liability provision and the refund requirements provisions. In this section, when explaining the “notifier's” liability risks, etc., it is generally the provider, practitioner, or supplier that furnished or ordered the items and/or services to which reference is made.
Basic Delivery Requirements
The notifier should hand-deliver the ABN to the beneficiary or authorized representative. (Where hand-delivery is impossible, e.g., in furnishing items and services by telephone order, mail order, over the internet, etc., ABNs still need to be executed in advance of furnishing the item or service, e.g., by mail, fax, using an online form). Delivery is the notifier's responsibility. The contractor will consider delivery of an ABN by a notifier's staff or employees to be delivery by the notifier. If the beneficiary alleges non-receipt of notice and the notifier cannot show that notice was received by the beneficiary, the contractor will not find that the beneficiary knew or could reasonably have been expected to know that Medicare would not pay; i.e., it will hold the notifier liable and the beneficiary not liable.
The ABN must be prepared with an original and at least one copy. The notifier must retain the original and give the copy to the beneficiary or authorized representative. In a case where the notifier that gives an ABN is not the entity which ultimately bills Medicare for the item or service, e.g., when a physician draws a test specimen and sends it to a laboratory for testing, the notifier should give a copy of the signed ABN to the entity which ultimately bills Medicare. The copy is given to the beneficiary immediately after the beneficiary signs it. Legible duplicates (carbons, etc.), fax copies, electronically scanned copies, or photocopies will suffice. This is a fraud and abuse prevention measure. If a beneficiary is not given a copy of the ABN and if the beneficiary later alleges that the ABN presented to the contractor by the notifier is different in any material respect from the ABN he/she signed, the contractor will give credence to the beneficiary's allegations.
Authorized Representatives
An authorized representative is a person who is acting on the beneficiary's behalf and in the beneficiary's best interests, and who does not have a conflict of interests with the beneficiary, when the beneficiary is temporarily or permanently unable to act for himself or herself. A notifier's inability to give notice to a beneficiary directly or through an authorized representative does not allow the notifier to shift liability to the beneficiary. An individual authorized under state law to make health care decisions, e.g., a legally appointed representative or guardian of the beneficiary (if, for example, the beneficiary has been legally declared incompetent by a court), or an individual exercising explicit legal authority on the beneficiary's behalf (e.g., in accordance with a properly executed “durable medical power of attorney” statement or similar document), may be the authorized representative of the beneficiary with respect to receiving notice.
An authorized representative should have the beneficiary's best interests at heart and should be reasonably expected to act in a manner which is protective of the person and the rights of the beneficiary. In the absence of some more compelling consideration, the order of priority of authorized representatives is:
Routine Notice Prohibition
In general, the “routine” use of ABNs is not effective. By “routine” use, CMS means giving ABNs to beneficiaries where there is no specific, identifiable reason to believe Medicare will not pay. Notifiers should not give ABNs to beneficiaries unless the notifier has some genuine doubt that Medicare will make payment as evidenced by their stated reasons. Giving routine notices for all claims or services is not an acceptable practice. If the contractor identifies a pattern of routine notices in situations where such notices clearly are not effective, it will write to the notifier and remind it of these standards. In general, routinely given ABNs are defective notices and will not protect the notifier from liability. However, ABNs may be routinely given to beneficiaries when all or virtually all beneficiaries may be at risk of having their claims denied.
Generic ABNs
“Generic ABNs” are routine ABNs to beneficiaries which do no more than state that Medicare denial of payment is possible, or that the notifier never knows whether Medicare will deny payment. Such “generic ABNs” are not considered to be acceptable evidence of advance beneficiary notice. The ABN must specify the service and a genuine reason that denial by Medicare is expected. ABN standards likewise are not satisfied by a generic document that is little more than a signed statement by the beneficiary to the effect that, should Medicare deny payment for anything, the beneficiary agrees to pay for the service. “Generic ABNs” are defective notices and will not protect the notifier from liability.
Blanket ABNs
A notifier should not give an ABN to a beneficiary unless the notifier has some genuine doubt regarding the likelihood of Medicare payment as evidenced by its stated reasons. Giving ABNs for all claims or items or services (i.e., “blanket ABNs”) is not an acceptable practice. Notice must be given to a beneficiary on the basis of a genuine judgment about the likelihood of Medicare payment for that individual's claim.
Signed Blank ABNs
A notifier is prohibited from obtaining beneficiary signatures on blank ABNs and then completing the ABNs later. An ABN, to be effective, must be completed before delivery to the beneficiary. The contractor will hold any ABN that was blank when it was signed to be defective notice that will not protect the notifier from liability.
Receiving ABNs From Different Entities
When an ABN was given to a beneficiary for a service for which Medicare pays in more than one part to different entities, e.g., for a radiological test with a technical component and a professional component, if the specification of the service on the ABN reasonably includes both components, that ABN, from either party, will serve as evidence of knowledge for LOL and RR. It is not necessary that both parties to the service give separate ABNs. If the beneficiary asks for a cost estimate, the estimate should include both parts of the service.
Laboratory Issues with ABNs
Laboratories may use either the form ABN-G or ABN-L for laboratory tests. The following are some frequently asked questions (FAQs) about particular laboratory issues with ABNs.
Q.1. A physician orders a laboratory test, and the laboratory does both the specimen collection and laboratory test/processing. Is the laboratory or physician responsible for executing the ABN?
A.1. Because the laboratory has the risk of financial liability in the case of a denial, it is the laboratory's responsibility to execute the ABN. The physician may execute the ABN but it is not a requirement. If the physician had executed an ABN, the laboratory need not repeat it.
Q.2. A physician orders a laboratory test; the specimen collection is done in the physician office, and is sent to the laboratory for processing. Is the laboratory or physician responsible for executing the ABN?
A.2. Whether the physician or the laboratory collects the specimen, it is still the laboratory's responsibility to execute the ABN because the laboratory has the risk of financial liability in the case of a denial. However, physicians are encouraged to execute ABNs in these situations, since the physician has the better opportunity to give notice.
Q.3. If a physician is “not responsible” to execute an ABN when a laboratory will bill Medicare for the test, why does Medicare encourage the physician to execute an ABN in these situations?
A.3. By “not responsible” is meant that the physician is “not required by law” to execute an ABN for a test for which payment to the laboratory is likely to be denied. Nevertheless, a physician endeavoring to provide the best care to patients may wish to deliver an ABN in such a case. In this situation, the physician has immediate contact with the patient during the office visit or specimen collection, and is thus in the best position to have a meaningful dialogue with her/him regarding the choices to be made in going forward with the test or declining it. By delivering the ABN, the physician also is working in partnership with the laboratory that serves the practice (since the laboratory may not even encounter the patient), and this will help the laboratory to remain financially solvent and available to the patients of the practice. While Medicare does not mandate this partnering between physicians and their affiliated laboratories, it is certainly encouraged by Medicare. The best practice in this situation is for the patient to receive any necessary ABN at the physician's office.
Q.4. If the physician does not execute the ABN, what recourse does the laboratory have?
A.4. The laboratory may contact the beneficiary in order to execute an ABN in person or by telephone (with immediate mail notice follow up). If the beneficiary: (i) cannot be reached, or (ii) refuses to sign an ABN or (iii) initially agrees via telephone and then refuses to sign, the laboratory has two options. The laboratory may either perform the test with the likelihood that it may not be able to collect from the beneficiary, or may choose not to perform the test (this may be a State law violation in some States).
Q.5. In the scenarios in Q.4, if the beneficiary does not sign an ABN, what is the financial liability of the laboratory when it must perform the test?
A.5. In scenario (i), since the beneficiary was not reached before the test was performed, the beneficiary cannot be collected from; the laboratory is financially liable. In scenario (ii), since the beneficiary was given an ABN in person but refused to sign, the beneficiary will be held financially liable in case of a denial. (The laboratory should keep the following documentation in its files at the time the beneficiary refuses to sign as evidence that the beneficiary was notified of possible denial should he/she later appeal on the basis an ABN was not given: A signed document by two laboratory personnel witnessing the provision of the ABN and the beneficiary's refusal to sign. Where there is only one person on site (e.g., in a “draw station”), the second witness may be immediately contacted by telephone to witness the beneficiary's refusal to sign the ABN and may sign the note for the file at a later time.) In scenario (iii), since the beneficiary was contacted by telephone and agreed to sign the ABN but later refused to sign, the beneficiary is not liable because disputed telephone notice is not acceptable; the laboratory will be financially liable. It is possible that, on appeal, an ALJ may determine that the beneficiary is liable under the Limitation On Liability provision if the ALJ finds some evidence that the beneficiary was advised of possible denial to be convincing.
Q.6. Many times the fee schedule is not available. How can a cost estimate be made and how would this affect the beneficiary in terms of liability if actual costs were substantially higher than what was estimated on the ABN?
A.6. The physician should estimate cost as she or he would if a private pay patient asked for cost information. If she or he is unable to give even a reasonable estimate, then the consequences are the same as with any other patient - namely, due to the inability to provide an estimate, the patient might decide to decline the service. For a grossly underestimated cost estimate and the beneficiary refuses to pay the bill, the beneficiary's liability may be up to an ALJ or a court. Medicare does not require a physician to provide an estimated cost of the service, but Medicare does suggest that he/she provide one so that the beneficiary has sufficient information to make an informed decision about whether he/she wishes to receive the service.
Medicare Claims Processing Manual
Chapter 30 - Financial Liability Protections 40.3
http://www.cms.hhs.gov/manuals/downloads/clm104c30.pdf