Now is a good time to review each of these problem areas with your staff and discuss methods you might need to implement to protect your business.

WAIVER LETTERS, ADVANCE NOTICES AND ADVANCE beneficiary notices are all forms of documentation you as a home medical equipment provider might use when you submit a claim but expect the claim to be denied.

But the rules governing those forms are expected to change. The Health Care Financing Administration has proposed new rules under its HCFA Beneficiary Notices Initiative, and while no date has been set for issuing the final rules, now is the time to understand how the rules would change and clarify the terminology so you can continue to benefit from this method of protection.

The acronym ABN (advance beneficiary notice) is the new buzzword that brings together a new form and the proposed updated rules. This form and the corresponding instruction put the emphasis on the beneficiary -- not the provider. While I tend to emphasize the use of ABNs as a form of protection for the provider, Medicare considers it protection for the beneficiary.

Medicare Carriers Manual Section 7300 addresses the limitation of liability and the use of an ABN for Part B services. Providers are very familiar with the use of an ABN when a claim is submitted as assigned but the provider believes it will be denied as not medically necessary.

However, in late 1994, the Social Security Act was amended to state that nonassigned claims submitted to Medicare would become the liability of the provider if they resulted in a medical necessity denial or a denial because the supplier of the item did not have a National Supplier Clearinghouse number. (While this amendment has been in place for years, it has never been formally implemented.) The act cites four denial reasons that cause supplier liability:

1. Claims denied as not medically necessary under Section 1862(a)(1)
2. Claims denied because of a lack of supplier number under Section 1834(j)(1)
3. Claims denied because the claim did not go through advance coverage determination under Section 1834(a)(15)
4. Claims denied because the claim was initiated through unsolicited telephone contact under Section 1834(a)(17)(B)

All of this might sound familiar to providers, but several key differences in the proposed new rules could cause problems for providers, among them:

• Providers would be required to use ABNs for both assigned and nonassigned claims.

• Providers that do not use an ABN would have to refund the patient if a nonassigned claim is denied for any of the cited reasons.

• Providers might have to use a new Office of Management and Budget-approved form in place of all those home-grown waiver letters they have created in the past. While OMB had not given its final blessing on the form as of press time in mid-March, it appears imminent.

As mentioned, these proposed rules could have serious negative consequences for providers. Now is a good time to review each of these problem areas with your staff and discuss methods you might need to implement to protect your business when these new rules, along with the new form, are formally implemented.

Problem: A business that sells or rents durable medical equipment products or supplies might not have an NSC number. If a business does not have a supplier number, how can it be held liable for claims submitted by the beneficiary to a payer that has not certified the supplier? Yet, the act allows the program to deny nonassigned claims because the provider of the product did not have a supplier number. It also allows the program to inform the beneficiary that he or she is entitled to a refund. I would think there could be an issue with state and federal laws that protect commercial transactions.

Problem: The claims of any entity that sells or rents DME products or supplies on a nonassigned basis may be denied for the cited reasons, thus causing a demand for refund from the Medicare program. If the refund demand is presented to the provider, and the provider refunds the beneficiary, does the supplier get back its merchandise? If the product sold to the beneficiary on a nonassigned basis cannot be returned because it is consumable, how could the refund be equitable and fair to all parties involved in the transaction? There is a tremendous opportunity for beneficiaries to obtain products, ultimately get a supplier refund and then be able to retain the product. That is the equivalent to beneficiaries' getting free products with the full endorsement of the Medicare program.

Problem: The current rules regarding the use of a waiver letter or ABN on assigned claims require that the provider obtain a signed ABN from the beneficiary and a certificate of medical necessity or other required documentation. The rationale behind this is that the durable medical equipment regional carrier then receives and processes the claim as normal and makes an independent decision about the coverage of the claim. Then, if the claim is denied, the supplier-submitted GA modifier causes denial language to appear informing the patient that he or she is now liable for the claim. (Assigned claims are generally submitted electronically, so there is no opportunity for the carrier to view the actual ABN. Thus a modifier is used to inform the carrier that an ABN has been executed between the supplier and the beneficiary.)

Nothing in the current or proposed language indicates that the provider's burden for nonassigned claim ABNs will be less than it is on assigned claims. The bottom line is that suppliers will likely be forced to obtain CMNs or other required documentation for nonassigned claims just to protect themselves from claim denials that result in refund notices!

On a separate but related issue, what happens when the provider fulfills the retail (nonassigned) transaction, verbally verifies that the patient meets the medical coverage criteria for the item and then pursues the CMN only to discover that the physician will not complete the CMN?

Possibly the beneficiary decided to obtain the product. A good example is a wheelchair. The supplier has provided the item and is attempting to obtain the required documentation. The documentation is refused, and the supplier has no leverage with the physician to obtain the documentation. If the provider submits the claim without the documentation, it is putting itself in position to be liable for the claim and the issuance of a refund.

Problem: One of the reasons cited in the act that results in supplier liability is a situation in which the beneficiary acquires a product that could be eligible for an advance coverage decision. The products covered in this category are limited, but power-operated vehicles and lift chairs are included. These are often retail products for providers. Thus, it is very likely that they will appear on nonassigned claims. While the products are eligible for a voluntary advance coverage determination, the proposed new rules would obligate a provider to pursue this advance determination (aka "prior authorization") and withhold product from the beneficiary until a decision is made. The frustration is that the beneficiary simply wants to pay cash for a product and be done with it. So much for good ol' cash-n-carry transactions!

Problem: Providers commonly designate part of their business for "walk-in" or retail transactions. Many of the products in a provider's retail inventory are covered under the Medicare program. But the reimbursement for these products may be below the provider's cost, or the documentation requirements might be so severe that the supplier chooses to reduce its "hassle factor" in getting paid for the product by not accepting Medicare assignment or by simply selling it retail.

Medicare beneficiaries look just like anyone else when they come into the showroom, and like other consumers, they privately make decisions to acquire products. In fulfilling a retail transaction, providers might not be aware that the customer is a Medicare beneficiary. If the transaction is completed, the beneficiary may later submit a nonassigned claim for reimbursement.

The first problem this presents is that the provider is legally obligated to submit nonassigned claims or face a civil monetary penalty. That law has never really been enforced, so providers make a best effort at compliance. The second problem is that the beneficiary-submitted nonassigned claim may be processed and denied under 1862(a)1, causing the provider to refund the customer, too. The only time a provider can truly comply with the requirement affecting nonassigned claims is when it knows the customer is a Medicare beneficiary.

Problem: The current language buried in Section 7300 of the MCM specifically states that ABNs cannot be done routinely. This means the provider must have enough knowledge about the patient's condition and the product coverage to genuinely doubt that the claim will be paid.

The proposed expansion of provider liability on nonassigned claims would only increase the use of these forms. This could create blurry definitions of whether these ABNs are being done routinely. In a retail setting, a provider might not always know that it is selling to a Medicare beneficiary and whether the customer medically qualifies. Thus, that provider might use ABNs more frequently.

While establishing a standard form for Part B ABNs is a good thing, the policy language surrounding this form appears to be poorly thought-out. HCFA recently hosted a town-hall meeting on this topic, and many of the issues raised here were brought to its attention. I encourage you to work with your state and national associations to follow up on HCFA's stance on these far-reaching implications.

Lisa Thomas-Payne is a nationally recognized speaker, writer and consultant in the home care industry. She is the founder and president of Medical Reimbursement Systems, Albuquerque, N.M. For more information about Lisa and ABNs, go to www.lisathomaspayne.com