What is the Advanced Beneficiary Notice & When Does it Need to be Used?
AUG 30, 2012
What is an Advanced Beneficiary Notice (ABN)?
An Advance Beneficiary Notice (ABN) is a notice that a provider (e.g. skilled nursing facility or hospice agency) or supplier (e.g. doctor or supplier of durable medical equipment) gives a beneficiary when the provider or supplier believes that Medicare will not pay for a certain service or item. The ABN is issued only to beneficiaries in Original Medicare, not to those in Medicare Advantage plans. The provider or supplier must provide a current ABN (Form CMS-R-131) before providing the service or item. The purpose of the ABN is to help beneficiaries make informed decisions. With signing an ABN, the beneficiary indicates that they know the item or service may not be covered, and if not, that they are liable for payment.
Recently, the Centers for Medicare and Medicaid Services (CMS) released updated instructions on when to issue ABNs.* Some situations when a provider or supplier must issue an ABN are when:
- A service or item is not medically reasonable or necessary;
- The request is for medical equipment and the supplier number is not provided;
- The request is for custodial care;
- The request is for hospice care but the beneficiary is not terminally ill;
- A non-contract supplier is furnishing an item included in the Durable Medical Equipment, Prosthetic Orthotics and Supplies (DMEPOS) Competitive Bidding Program in a Competitive Bidding Area; or
- A preventive service usually covered by Medicare is performed more frequently than covered and is not medically necessary or reasonable.
The last two situations are new. As part of the Medicare Modernization Act of 2003, a new Competitive Bidding Program for Durable
Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) was established as a way to cut costs and reduce fraud. Under this program, DEMPOS suppliers compete to become a Medicare contracted supplier by submitting bids to provide certain items in designated competitive bidding areas (CBAs). Only those companies chosen as a Medicare contracted supplier can then offer Medicare-covered DMEPOS to beneficiaries in these designated CBAs. DMEPOS suppliers who are NOT chosen can still sell beneficiaries these DMEPOS items, but must use an ABN before completing a sale. This way if a beneficiary receives and signs the ABN, they then know that they are responsible for the cost, that Medicare will not pay for the item and that they agree to pay the supplier. Currently, California’s designated competitive bidding areas are: Bakersfield-Delano, Fresno, Los Angeles-Long Beach-Santa Ana, Oxnard-Thousand Oaks-Ventura, Sacramento-Arden-Arcade-Roseville, San Diego-Carlsbad-San Marcos, San Francisco-Oakland-Fremont, San Jose-Sunnyvale-Santa Clara, Stockton, and Visalia-Porterville.
Also, an example of the last situation regarding preventive services is if a beneficiary receives two flu shots in one year. Medicare only covers one flu shot annually, so the second one within a 12-month period would not be covered if it is not medically necessary. A provider administering the shot would be required to give the beneficiary an ABN before the second shot was given.* Some situations when a provider or supplier may issue an ABN are when:
- An item or service that is never covered by Medicare is provided. In this case, the provider or supplier is not required to issue an ABN, but may do so as a courtesy to the beneficiary. The beneficiary is not required to sign a voluntary ABN.
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