August 10, 2000

Medi -820- 00

TO: ALL MEDICARE PROVIDERS

SUBJECT: ADVANCE BENEFICIARY NOTICES

PRIMARY INTEREST: ADMINISTRATORS, BUSINESS OFFICE MANAGERS, MEDICAL

DIRECTORS, MEDICAL RECORDS DIRECTORS

EFFECTIVE DATE: JULY 1, 2000

The Health Care Financing Administration has instructed all Medicare Intermediaries to publish the attached information concerning Advance Beneficiary Notices.

THIS BULLETIN SHOULD BE SHARED WITH ALL HEALTH CARE PRACTITIONERS AND MANAGERIAL MEMBERS OF THE PROVIDER STAFF. NO COST COPIES ARE ALSO AVAILABLE FROM OUR WEB SITE AT riverbendgba.com

Please refer any questions to our office at (423) 755-5950.

These instructions on the use of Advance Beneficiary Notices (ABNs) for the purposes of the Limitation on Liability (LOL) provision under §1879 of the Social Security Act (the Act), apply equally to all* claims for Part B services furnished by institutional providers and/or processed by fiscal intermediaries (i.e., inclusive of claims submitted by a physician or other supplier for processing by a fiscal intermediary). Utilize ABN procedures for these Part B services; do not give inpatient notices of noncoverage (e.g., NONCs/HINNs) to beneficiaries for Part B services.

* With respect to services furnished in an emergency room, an OIG/HCFA Special Advisory Bulletin published on 11/10/99 advises that "the best practice would be for a hospital not to give financial responsibility forms or notices to an individual, or otherwise attempt to obtain the individual’s agreement to pay for services before the individual is stabilized." This is because the circumstances surrounding the need for such services, and the individual’s limited information about his/her medical condition, may not permit an individual to make a rational, informed consumer decision. The following instructions do not apply to services furnished in an emergency room before a patient is stabilized. Do not give an ABN to a beneficiary in an emergency room who has not been stabilized. ABNs given to any individual who is in a medical emergency or otherwise under great duress cannot be considered to be proper notice.

A. Advance Beneficiary Notices (ABNs) and Liability for Claims for Part B Services.--

1. Basic Requirements for ABNs.--An ABN is a written notice you give to a Medicare beneficiary before Part B services are furnished when you believe that Medicare will not pay for some or all of the services on the basis that they are not reasonable and necessary (i.e., under §1862(a)(1) of the Act). If you expect payment for the services to be denied by Medicare, advise the beneficiary before services are furnished that, in your opinion, the beneficiary will be personally and fully responsible for payment. To be "personally and fully responsible for payment" means that the beneficiary will be liable to make payment "out-of-pocket," through other insurance coverage (e.g., employer group health plan coverage), or through Medicaid or other federal or non-federal payment source. You must issue notices each time, and as soon as, you make the assessment that you believe Medicare payment will not be made for medical necessity reasons. You are not required to give ABNs to beneficiaries for routine screening tests, which are statutorily excluded from Medicare payment under the routine physical exclusion (i.e., under §1862(a)(7) of the Act). If you fail to provide a proper ABN in situations where one is required, you may be held liable under the provisions on LOL, where such provisions apply.

2. Evidence that the Beneficiary is Liable.--In deciding whether the beneficiary or his/her authorized representative knew, or could reasonably have been expected to know, that items and services s/he received were not reasonable and necessary, the beneficiary’s allegation that s/he did not know, in the absence of evidence to the contrary, will be acceptable evidence for LOL. However, there may be evidence that will rebut such an allegation. The most likely reason to find that the beneficiary knew or could reasonably have been expected to know that Medicare would not pay is where, before the item or service was furnished, you notified the beneficiary in writing, using approved ABN language, of the likelihood that Medicare would not pay for the specific service and, after being so informed, the beneficiary agreed to pay you for the service, personally or through other insurance, as evidenced by a signed agreement to pay.

3. Approved Notice Language.--The latest version of the OMB-approved ABN for Part B services (OMB Approval No. 0938-0566, Form No. HCFA-R-131) satisfies these requirements for your ABN and the beneficiary’s agreement to pay. The approved notice language attached to Part 1 of these instructions as Exhibit 1, is the current OMB-approved ABN for Part B services. The ABN in Exhibit 1 may be appropriately modified by replacing the words "physician/supplier" with the word "provider", and by replacing the words "physician/supplier that he or she" with the words "provider that it", and still be acceptable for ABN purposes.

B. Requirements for the Use of ABNs.--

1. Reason for Predicting Denial.-- Statements of reasons for predicting Medicare denial of payment similar to those in Medicare Carriers Manual, Part 3 (MCM) §§7012, Item 15.0ff., "Medical Necessity" are acceptable for ABN purposes. Simply stating "medically unnecessary" or the equivalent is not an acceptable reason, insofar as it does not at all explain why you believe the services will be denied as not reasonable and necessary. To be acceptable, your ABN must give the beneficiary an idea of why you are predicting the likelihood of Medicare denial, so that the beneficiary can make an informed consumer decision, whether or not to receive the service and pay you for it personally.

2. Prohibition of Generic and Blanket Notices.--

a. Generic Notice Prohibition: The requirement for advance beneficiary notice is not satisfied by a signed statement by the beneficiary to the effect that, should Medicare deny payment under §1862(a)(1), the beneficiary agrees to pay for the service. Routine notices to beneficiaries, which do no more than state that Medicare denial of payment is possible, or that you never know whether Medicare will deny payment, are considered not to be acceptable evidence of advance beneficiary notice.

b. Blanket Notice Prohibition: You should not give an ABN to a beneficiary unless you have some genuine doubt regarding the likelihood of Medicare payment as evidenced by your stated reasons; your giving ABN for all claims or services is not an acceptable practice.

3. Format.--You must ensure that the design and readability of your ABN facilitate beneficiary understanding. No body text or heading should use a font size less than 12-point font. Italics or any typeface that is difficult to read should not be used. Put your logo (if any), name, address and telephone number at the top of the ABN form. It must be clear and obvious to the beneficiary that you, rather than the Medicare program, issued the ABN.

4. Delivery of ABN.--Delivery of an ABN occurs when the beneficiary (or authorized representative, i.e., the person acting on the beneficiary’s behalf) both has received the notice and can comprehend its contents. All notices must include a detailed explanation written in lay language as to why you believe the services will be denied payment. An incomprehensible notice, or a notice, which the individual beneficiary or his/her authorized representative is incapable of understanding due to the particular circumstances (even if others may understand), is not sufficient notice.

a. You should hand-deliver the ABN to the beneficiary or authorized representative. Delivery is your responsibility and non-receipt of notice probably will protect the beneficiary from liability and may result in your being held liable under the LOL provisions. For this reason, it is in your own best interest (as well as being in the beneficiary’s best interest) for you to hand-deliver ABNs to beneficiaries.

b. A telephone notice to a beneficiary, or authorized representative, will not constitute sufficient evidence of proper notice for purposes of limiting any potential liability because the content of the telephone contact usually cannot be verified. A telephone notice must be followed up immediately with a mailed notice or a personal visit at which written notice is delivered in person.

c. A requirement for delivery of a notice is that the beneficiary, or authorized representative, must be able to comprehend the notice (i.e., they must be capable of receiving notice). A comatose person, a confused person (e.g., someone who is experiencing confusion due to senility, dementia, Alzheimer’s disease), a legally incompetent person, a person under great duress (for example, in a medical emergency) is not able to understand and act on his/her rights, therefore necessitating the presence of an authorized representative for purposes of notice. A person who does not read the language in which the notice is written, a person who is not able to read at all or who is functionally illiterate to read any notice, a blind person or otherwise visually impaired person who cannot see the words on the printed page, or a deaf person who cannot hear an oral notice being given by phone, or could not ask questions about the printed word without aid of a translator, is a person for whom receipt of the usual written notice in English may not constitute having received notice at all (this is not an exclusive list). This may be remedied when an authorized representative has no such barrier to receiving notice. However, in the absence of an authorized representative, other steps must be taken to overcome the difficulty of notification. These may include providing notice in the language of the beneficiary (or authorized representative), in Braille, in extra large print, or by getting an interpreter to translate the notice, in accordance with the needs of the beneficiary or authorized representative to act in an informed manner. If the beneficiary is not capable of receiving the notice, then the beneficiary has not received proper notice and cannot be held liable where the LOL provisions apply and you may be held liable.

d. You must timely answer inquiries from a beneficiary, or authorized representative, who requests further information and/or assistance in understanding and responding to the notice. You must answer inquiries from a beneficiary, or authorized representative, regarding the basis for your assessment that services may not be covered. You must respond timely, accurately, and completely to a beneficiary, or authorized representative, who requests information about the extent of the beneficiary’s personal financial liability for services for which you expect that Medicare may not pay.

e. A patient must be notified well enough in advance of receiving a medical service so that the patient can make a rational, informed consumer decision. For example, do not give an ABN to a patient as s/he is connected to a test device or after s/he is already on the table for a MRI. Such last moment delivery of notice can be considered to be coercive, regardless of the provider’s intentions. In such a case, the delivery of the ABN may not be considered timely and the beneficiary may not be held liable.

C. Signature of Beneficiary.--

1. The generally applicable rules of the Medicare program with respect to who may sign for a beneficiary apply to signing notices, including ABNs. Whenever you furnish services to a beneficiary who is incapable of signing a notice, his or her representative who signs for other matters in accordance with Medicare rules also may sign a notice.

2. You must obtain the signed ABN from the beneficiary, either in person, or where this is not possible, via return mail from the beneficiary or person acting on the beneficiary’s behalf, as soon as possible after it is signed. The ABN should be annotated with the date of your receipt from the beneficiary. Return a copy of the ABN, including the date of your receipt, within 30 calendar days to the beneficiary for his or her records. You must also retain a copy of the ABN. These copies will be relevant in the case of any future appeal.

3. If the beneficiary or the person acting on the beneficiary’s behalf refuses to sign the ABN, annotate your copy of the ABN, indicating the circumstances and persons involved. If this occurs, you may decide not to furnish services to the beneficiary because the beneficiary has not agreed to be personally responsible for payment for services that are not covered by Medicare.

D. Collection from Beneficiary.--When you properly execute an ABN and give it timely to a beneficiary who agrees to pay in the event of denial by Medicare and, in fact, Medicare denies payment on the related claim, you may bill and collect from the beneficiary for that service. Medicare does not limit the amount, which you may collect from the beneficiary in such a situation.

E. Demand Bills.--You always must submit a claim for an initial determination when you gave an ABN on the basis of the likelihood of denial of payment for a service as "not reasonable and necessary" under Medicare program standards. On such a claim, enter "occurrence" code 32 on the UB-92 in one of the fields numbered 32 through 35. This code indicates the date you gave the ABN to the beneficiary. It is the "occurrence" code, and not the "condition" code that indicates to the fiscal intermediary that an ABN has been issued. In addition to placing the "occurrence" code on the claim, you must also enter "condition" code 20 in one of the fields numbered 24 through 30 to indicate that you realize the services on the claim probably or certainly are at a noncovered level of care or otherwise excluded from coverage, but the

beneficiary wants an initial determination. You may submit claims, for initial determination, for statutorily excluded services (e.g., routine physicals and screening tests, cosmetic surgery, personal comfort items), if the beneficiary requests it. On claims for statutorily excluded services, enter a "condition" code 21 on the UB-92 in one of the fields numbered 24 through 30 to indicate that you realize that the furnished services are excluded, but that you are requesting a denial notice from Medicare in order to bill Medicaid or other insurers. This is also known as a "no-pay" claim.

Signed,

(Beneficiary Signature)

OMB Approval No. 0938-0566. Expiration Date: 8/31/02. Form No. HCFA-R-131