What is an (ABN) Advance Beneficiary Notice? How does it function with Medicare?

what is an abn advance beneficiary notice

By now I am sure you have all heard the term ABN (Advance Beneficiary Notice). And even though they’ve been around for years, in our dealings with clients and therapists across the country there still seems to be a lot of confusion and misinformation about how and when it is appropriate to have your patient sign one. To help clear the fog we’ve decided to go over the do’s and don’ts of ABNs and provide you with an easy tool to help your office make the right decision about having your patients sign an ABN form.

 

In January 2013 The American Taxpayer Relief Act (ATRA) resulted in major changes in patient and provider liabilities. You (the healthcare provider) are now responsible for informing your patient when services that are usually covered may not be by Medicare. An Advance Beneficiary Notice (ABN) is a form practitioners show use to notify Medicare patients that therapy services he or she is about to receive may not be covered by Medicare. Issuing an ABN allows your patients to choose whether or not they wish to receive the service despite the possibility of having to pay for those services themselves.

When should I issue an ABN?

You must issue an ABN to a patient before you provide treatment, and you must ask yourself the following questions:

  • Has my patient met their Plan of Care goals?
  • Is the treatment Medically reasonable and necessary
  • Has my patient exceeded the Medicare Therapy Cap?

Plan of Care Goals Met

If a patient has received medically necessary services and you have recommended discharge but the patient has requested to continue to receive treatment, even though services are not medically necessary, you should provide the patient with an ABN prior to providing any additional treatment. Doing so allows you to continue to treat the patient on a self-pay basis.

Medically Reasonable and Necessary

At this point you may be asking yourself how do I determine if treatment is “reasonable and necessary”? Well, it varies and it is up to you to know both the National Coverage Determinations (NCD) and Local Coverage Determinations (LCD) guidelines in your geographic area. Here are a couple links where you can find and download your NCD and LCD:

Medicare Therapy Cap

Prior to January 2013, beneficiaries were held liable for charges that were denied for exceeding the therapy cap. The American Taxpayer Relief Act (ATRA) in 2012 changed all that and now providers are held liable for denied charges exceeding the cap. You must issue a valid ABN to collect payment from Medicare beneficiaries for services above the therapy cap that Medicare deems not reasonable and necessary.

What about the KX Modifier?

KX modifiers should only be used on charges that are above the therapy cap and the therapist is attesting that he or she believes that services are reasonable and necessary. If you attach a KX modifier to charges, you do not need to have the patient also sign an ABN. The KX modifier is your signal to Medicare that services are medically necessary. One you use a KX, you cannot retroactively issue an ABN. If Medicare denied your claim that includes a KX modifier, you the provider-not the patient- is responsible for the cost of the charges.

Option 1 or Option 2

If you don’t already have a copy of an ABN in your office you can download a copy directly from Medicare here. At first glance the ABN form looks pretty straightforward until you get to box G, Options 1 & 2. This section is very important because it impacts how and if you bill Medicare for services.

  • Option 1: If your patient decided to select Option 1, you may collect payment directly from the patient at the time of service, but the patient would also like you to submit a claim to Medicare on his or her behalf. When you submit a claim, you must add a GA modifier to charges. If you’re not familiar with GA modifiers keep reading, we’ll go over them in the next section.
  • Option 2: if you patient picks Option 2, this means you may collect payment directly from the patient at the time of service, but different from Option 1, you do not need to submit any claims to Medicare.

GA Modifier

So you’ve answered all the questions laid out above and you’ve determined you should issue an ABN to your patient and they’ve selected Option 1. Now what? Now you need to add a GA modifier to charges to indicate to Medicare that you have a signed ABN on file. Adding a GA modifier to all subsequent claims will trigger Medicare to deny the claims. After you receive Medicare’s denial, you can then attempt to bill the patient’s supplemental insurance or then collect payment from the patient.

Should I issue ABNs to all my Medicare patients?

Although that sounds tempting, issuing “blanket” ABNs in order to guarantee payment is a No-No. Medicare strictly prohibits this practice.

Phew! That was a lot of information about one form! Still unsure how or when you should have your patient sign an ABN? To make this decision making process easier, I sat down with our CEO John Wallace PT, MS and asked him to boil down all this information and help create something we can all actually use (and understand), and voila! I present to you our ABN Branching Chart. We think it’s pretty nifty and hope you do too!