In our Medicare world, there seldom is encouraging or positive news. The new Medicare Advance Beneficiary Notice for Upgrades policy, however, is different. One of the few Medicare policies that benefit both consumers and home medical equipment providers, the ABN upgrades policy is a tool you can use to help your customers get features and functions that exceed their medical needs yet meet their personal and lifestyle needs more completely.

Before offering consumers the upgrade option, HME providers should do two important things. First, you should develop a procedure specific to the upgrade policy and train your employees on this procedure. Second, you should develop a formulary of standard Medicare items and possible upgrade items (details below). The upgrade instructions issued by the Centers for Medicare and Medicaid Services on Oct. 22, 2001, (Transmittal B-01-64) are available online at: www.hcfa.gov/medicare/bni/default.htm.

The Basics

The ABN is a written agreement between the provider and beneficiary that documents the beneficiary's decision to be financially liable for any amount Medicare does not pay.

CMS has defined an upgrade as “an item with features that go beyond what the physician ordered.” An upgrade may include an “excess component,” which is an “item, feature or service, and/or the extent of, number of, duration of, or expense for an item, feature or service, which is in addition to, or is more extensive and/or more expensive,” CMS says.

The new ABN upgrade policy became effective on Jan. 1, 2002, and the new ABN form became effective June 25, 2001.

Now the beneficiary can assume financial liability for the difference between Medicare's allowable reimbursement and the “reasonable price” of the upgraded item.

An upgrade must be consistent with the physician's prescription and must meet the purpose of the physician's order. For example, an upgrade from a lightweight to an ultra-lightweight wheelchair (standard K0011 to high-end K0011) would be appropriate, but an upgrade from a cane to a wheelchair would not be appropriate.

The Forms and the Codes

When offering your customers the choice to upgrade, you must use the government-approved form, CMS R-131-G, which is available online. Keep in mind the following guidelines:

• You can expand the form to legal-size paper, but the form must remain on one page.
• In the “Items or Services” box on the form, you must identify clearly the upgraded item or service.
• In the “Because” box on the form, you must provide detailed reasons why you believe Medicare is likely to deny payment.
• The objective is to provide the beneficiary with sufficient information to make an informed decision.

Some upgrades may require a Medicare code change, while some may require only an item change within one Medicare code. “In-code” upgrades will require a change from a standard Medicare item to a deluxe or more expensive item.

When choosing an item code, remember the government says an upgrade must be “medically appropriate” and must meet “the purpose of the attending physician's order.” Additionally, when you provide a beneficiary an upgrade, remember that the coverage and payment rules of the non-upgraded item will apply. Finally, remember there are new modifiers to use when billing for upgraded items.

Delivering the Form

The government intends the ABN policy to ensure that beneficiaries understand and agree to be financially liable for the amount that Medicare does not pay. Therefore, you must take certain steps to ensure delivery of the ABN to the beneficiary is effective.

Ideally, you should hand-deliver the form. However, if you provide notice via telephone, you must follow-up with the beneficiary in person as soon as possible to gain his or her assent and signature on the ABN form.

Additionally, you must ensure that the beneficiary understands the form. To that end, you can find a Spanish version of the form at CMS' Web site. If there is a language barrier, you must provide an interpreter.

Finally, you must provide the ABN long before the beneficiary receives the item.

Drafting an Upgrade Procedure

Use these 11 steps to draft a company procedure on how to provide Medicare consumers with the option to upgrade to equipment that better fits their lifestyle.

1. Review the physician's orders to determine what medically necessary or standard item you could provide to be consistent with the intent and the desired clinical outcome. Then, show or fully describe that standard item to your customer. Next, tell the customer that this is the item that Medicare normally reimburses. At that point, if the customer is interested, you can introduce products with more features and functions.

2. Explain to the customer that Medicare will pay only the amount allowed for the standard item (minus a standard co-payment). Consequently, the customer must pay out-of-pocket for the difference between the standard item and the upgraded item, plus a co-payment for the standard item.

3. Once you have established that the beneficiary is willing to pay the difference out-of-pocket, begin the process of filling out an ABN form.

4. On the ABN form, identify the items susceptible to full or partial denial, and fully describe those items in the “Items and Services” box.

5. In the “Because” box, explain to the customer in detail why denial is likely.

6. Calculate the difference between the Medicare-allowed amount for the standard item and the suggested retail price for the upgraded item, and write this figure on the “estimated cost” line on the ABN form.

7. Ask the beneficiary to review and sign the form, and make sure the beneficiary marks the box beside Option 1. You can provide the upgraded item ONLY if the beneficiary chooses Option 1.

8. Keep the signed original form in the patient's file, and give the customer a clear, clean and complete copy of the signed ABN.

9. In Section 19 of the CMS-1500 claim form, fully describe the item(s) provided and make sure this language clearly establishes the features and functions that make the product an upgrade from the standard item.

10. Also on the CMS-1500 claim form, insert the “GA” modifier after the item provided in Section 24D. Then, on the next line, list the standard item, followed by the “GK” modifier.

11. Collect the difference between standard and upgraded items from the beneficiaries. If Medicare classifies the standard item as a “rental item,” then you must also provide the upgraded item on a rental basis and bill according to Medicare's payment methodology for rental items.

For More Information

The ABN form, form instructions, a copy of CMS R-131-G and general information are available on CMS' Web site in downloadable PDF and Word formats. Go to www.hcfa.gov/medicare/bni/default.htm.

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.

Upgrade Dos and Don'ts

DO

• Develop a formulary of standard Medicare products.
• Develop a procedure for the ABN upgrade process.
• Stock the standard or basic items.
• Educate referral sources on the ABN process and how an upgrade could improve the quality of life for their patients.

DON'T

• Use standard language on the ABN form.
• Make it easier to provide the upgraded item than the basic item or provide incentives for patients to upgrade.

NOTE: The step described in Item 10 will not be necessary until sometime after April 1, 2002. Until then, you should list only the upgraded item, followed by the “GA” modifier.

NOTE: The information presented in this article is not intended to be, nor should it be considered legal advice. Readers should consult with an attorney to discuss specific situations in further detail.