IT'S FINALLY REAL. The Centers for Medicare and Medicaid now allows consumers to choose an upgraded item and pay to the provider at the time of the transaction only the difference between the Medicare-covered item and the upgraded item. Whether upgrading to an item that is superior technologically, easier to use or is simply more aesthetically pleasing, your Medicare beneficiaries will now have more choices than ever before. Beneficiaries will likely want to upgrade items such as a semi-electric bed to a full-electric bed; a high-strength, lightweight wheelchair to an ultra lightweight wheelchair; and reusable ostomy pouches to disposable ones.

About the New ABN Form

SUPPLIERS SIMPLY use the new federal Advance Beneficiary Notice form that the federal government approved in late June. They give the form to a Medicare beneficiary before furnishing items and services when they believe that Medicare will not pay for some or all of those items and services.

If you as the supplier expect that Medicare will deny payment in whole or in part for the item and services, you must advise the beneficiary before you furnish them, and the beneficiary will be fully responsible for the amounts that Medicare will not pay. The beneficiary may pay out of pocket, through other insurance coverage (e.g., employer group health plan coverage) or through Medicaid.

As a supplier, you are required to issue the notice using the standard federal form each time, as soon as you determine that Medicare is unlikely to pay. When you properly use an ABN, it protects you from financial liability. So when used to provide a beneficiary with an upgraded item, the ABN effectively notifies the beneficiary that Medicare is not likely to pay for the item, and you may bill them for the difference between the Medicare-covered item and the non-covered item.

However, should you fail to provide a beneficiary with a proper ABN when one is required, you may be liable for the amount for items and services unless you can show that you did not and could not reasonably have been expected to know that Medicare would deny payment.

Providing an Upgraded Item

THE UPGRADE process is designed to be used within the same product categories. For example, a beneficiary may want a wheelchair that is more lightweight or has more deluxe features than the standard Medicare-covered wheelchair. In contrast, the ABN process cannot be used to upgrade from a walker to a wheelchair.

While CMS issued a proposed rule over a year ago to implement the durable medical equipment upgrade provision, it will not issue a final rule and instead has said that suppliers should use the new ABN form to provide beneficiaries with upgraded items.

CMS has said in its draft carrier instructions that in the case of upgraded medical equipment, the ABN form must identify the expected partial denial, and must clearly identify in the “Items and Services” box the item with a specific description of the “excess component(s)” for which the supplier expects denial. It must also state in the “Because” box the reason that the supplier expects Medicare to deny payment for the specified “excess component(s).”

When a beneficiary selects Option 1 on the ABN, indicating that he or she wants to receive the services, use the GA modifier on the 1500 claim form in item 24d. The GA modifier indicates that the supplier furnished an ABN and is on file in the supplier's office. The GA modifier also documents the supplier's expectation that Medicare will not pay the claim either in whole or in part.

Finally, remember that you should use the ABN process to provide beneficiaries with an upgraded item when the beneficiary desires the upgraded item. You should not engage in any tactics that would be deemed to be coercive.

Using the Form

YOU CAN download a copy of the approved form at www.hcfa.gov/medlearn/refabn.htm. You cannot modify the approved form except for the two customizable boxes in which you are to insert (1) the description of items or services and (2) the reasons for expected denial. You must use a readable font such as 12-point Arial or Arial Narrow.

In general, you should follow the rule that you submit a claim to the durable medical equipment regional carrier for the item actually delivered to the beneficiary. The GA modifier on the 1500 claim form tells the DMERC that you have a signed ABN form on file in which the beneficiary has acknowledged that Medicare is likely not to pay in whole or in part for the item/services, and you may bill the beneficiary the amount that Medicare does not pay.

An Acceptable ABN:

TO TURN in an acceptable ABN, make sure it:

• is on the approved form CMS-R-131;

• clearly identifies the item or service in the customizable box (You may insert a description of items which you frequently furnish, with check-off boxes to identify the particular item that may be denied);

• gives the detailed reason you believe that Medicare is likely to deny payment for the item. Simply stating “medically unnecessary” or something similar will not be sufficient.

You should insert your company name, address and telephone number at the top of the form. Include your logo if you like. Insert the patient's name and Medicare health insurance claim number.

The Patient's Responsibility

THE BENEFICIARY must read the notice and choose either Option 1 (deciding to receive the items or services and be financially responsible for any amount Medicare does not pay for) or Option 2 (deciding not to receive the items or services); and sign and date the form. Remember, it is the patient's choice.

No Routine Notices

YOU SHOULD not give notices routinely to beneficiaries. You should have some genuine doubt that Medicare will not make payment because of the reason you identify in the “Because” box. Similarly, you must identify specifically the items and services for which you believe Medicare will not pay. While giving beneficiaries ABN notice routinely will be considered defective ABNs, there are limited exceptions to this rule:

• services that are always denied for medical necessity

• certain frequency limited items in which Medicare has an established frequency limitation on coverage.

In these cases, you must accurately state the actual frequency limitation in the “Because” box when the beneficiary has reached the frequency limit.

Delivery of ABNs

TO EFFECTIVELY deliver an ABN to a beneficiary:

• you should hand deliver it. If you provide notice by telephone and immediately follow-up with a mailed notice or personal visit during which the written notice is delivered in person, the telephone notice time will be the time of delivery;

• the beneficiary must be able to understand it. You are responsible for overcoming any hurdles, such as providing the notice in Spanish, Braille or to an authorized representative if the beneficiary is not competent;

• you must notify the beneficiary sufficiently in advance of receiving the item/service so the beneficiary can make a rational, informed consumer decision. Otherwise, carriers may conclude that the beneficiary was coerced into accepting the item.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is an attorney with the law firm of Epstein, Becker & Green in Washington. Bachenheimer previously worked at the American Association for Homecare and the Health Industry Distributors Association. You can reach her by phone at 202/861-1825 or e-mail at cbachenheimer@ebglaw.com.

ABN Backgrounder

On June 25, 2001, the Office of Management and Budget approved a new federal form (developed by CMS) that all Medicare Part B physicians and suppliers, including those who provide durable medical equipment, prosthetics, orthotics and supplies, must use to inform beneficiaries when Medicare is unlikely to pay for an item or service.

There is one general form for all Part B physicians and suppliers (CMS-R-131-G); laboratories have the option of using a lab-specific form (CMS-R-131-L).

CMS is drafting implementation instructions to the durable medical equipment regional carriers and other Part B carriers. It expects to issue these instructions as a new chapter, Section 7310, of the Medicare Carriers Manual by the end of 2001. Nevertheless, Part B suppliers and physicians can now use the new form.