Health Information Management

Tip: Know when limits on liability apply

APCs Insider, December 23, 2011

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A facility must provide patients an ABN when limits on liability (LOL) apply. LOL specifically applies when a facility believes the service does not meet Medicare's definition of medically necessary for a particular patient's condition. However, the services might be medically necessary for other patients with other conditions.

LOL also applies when a facility believes Medicare will deny a service because the patient is undergoing a screening service outside the normal frequency parameters. For example, Medicare will pay for an annual screening mammogram for women over age 40. This means that if a physician orders a screening mammogram twice annually for a 45-year-old woman, Medicare will likely not pay for the service.

A lack of medical necessity occurs when diagnosis codes on an outpatient order fail to support the CPT® codes that describe the services ordered.

One of the biggest challenges in implementing an effective ABN process is identifying Medicare's medical necessity guidelines. Generally, the guidelines are based on coverage criteria included in various CMS manuals, national coverage determinations (NCD), and local coverage determinations (LCD). NCDs apply to every facility nationwide, but LCDs are specific to local FIs/MACs. LCDs can vary among FIs/MACs as well

The tip is adapted from “Unscramble the complexities of ABNs” in the December issue of  Briefings on APCs.

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