Corporate Compliance

Prepare for approaching ABN deadline

Medicare Insider, January 27, 2009

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Editor’s note: Judith Kares, JD, CPC, regulatory specialist for HCPro, Inc., is the author of this week’s note from the instructor.

Medicare has been going through a number of transitions recently. One of these transitions relates to the appropriate form of notice when certain providers, including hospitals and physicians, believe that the outpatient services ordered by the patient’s physician fall under the limitation on liability provisions of the Social Security Act. Under these provisions, the provider must provide advance written notice to the beneficiary (or his or her representative) prior to the performance of the services in order to be able to bill the beneficiary for those services if Medicare denies coverage. 

Limitation on liability is likely to arise in the outpatient setting when the services ordered fail to meet Medicare coverage criteria for one of the following reasons:

  • They fail to meet Medicare’s medical necessity guidelines;
  • They are screening services that are provided more frequently than Medicare provides a benefit for; or
  • They are custodial services.

In order to successfully shift financial liability to the patient, the provider must provide a prescribed form of notice prior to the performance of the services.  Medicare is currently phasing out the prior prescribed forms (ABN-G and ABN-L), which continue to be effective through February 28, 2009. On and after March 1, 2009, however, providers must use the revised ABN form (CMS-R-131) in order for the advance notice to be effective when limitation on liability applies to outpatient services.

The revised form initially became effective for services provided on and after March 3, 2008, which gave providers a year to transition to the revised form. There are a number of technical requirements set out in the Medicare Claims Processing Manual, Chapter 30, that must be met if the ABN is to be effective.  Most of the requirements that apply to the revised form are very similar to those that applied to the prior forms.

In September, 2008, Medicare issued Medicare Claims Processing Manual Transmittal 1587, which contained specific, updated instructions on completion and use of the revised ABN. The most significant change is the requirement that “Notifiers must make a good faith effort to insert a reasonable estimate for all of the items or services listed  . . .” on the ABN. Nevertheless, Medicare permits a great deal of flexibility in meeting this standard. For example, so long as the estimate is within $100 or 25% of the actual costs, whichever is greater, the notifier will be considered compliant.

With just a month left during the ABN transition period, it is essential that providers assure that they are prepared to be fully compliant with the new requirements, including a good faith cost estimate, as set out in the updated sections in Chapter 30 of the Medicare Claims Processing Manual.

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