Harder than It Looks: Appropriate Use of the CMS Advanced Beneficiary Notice (ABN)

Of all the acronyms that Medicare patients become familiar with, the “ABN” is certainly not one of the favorites. An ABN, or “Advance Beneficiary Notice” is a waiver form that alerts a patient that a test or procedure will likely not be covered by Medicare, usually due to CMS medical necessity requirements regarding required diagnoses for coverage or the frequency with which a procedure can occur. By checking one of three boxes and signing the form, a patient can inform his provider that he would like to go forward with the non-covered procedure (accepting potential financial responsibility) or opt not to have the service. However, the process to complete this relatively short form can take many wrong turns and may put providers at risk for patient dissatisfaction, compliance errors, and lost reimbursement.

The first wrong turn in the process begins when the hospital representative must decide if an ABN form should be used at all.  Providers must issue ABN forms for specific procedures which CMS has deemed “not medically necessary” based on the combination of the procedure and associated diagnosis, Medicare’s frequency requirements, or the procedure being experimental. Issuing ABNs outside of these conditions is referred to as using a “blanket ABN”. If an organization issues blanket ABNs, patients are accepting financial responsibility for services Medicare may cover, which is against CMS regulations.

For example, some practices have patients sign ABNs prior to even seeing a provider just in case a procedure is ordered during the visit that violates Medicare’s medical necessity requirements. Other providers require an ABN for every occurrence of a specific procedure without regard to the individual patient’s situation. The frequency of a test or procedure as well as the patient’s individual diagnoses affect whether Medicare determines if a service is medically necessary. Failing to take these factors into account can lead to unnecessary paperwork and patient dissatisfaction.  It is important to note that for items that are never covered by Medicare regardless of the patient’s situation (“non-covered services”) you may show a patient the ABN form as courtesy.

When determining whether or not to issue an ABN, it is also important to know which type of patients need ABNs.  ABN waivers are applicable to Medicare patients in both inpatient and outpatient setting. However, organizations may be incorrectly using ABN forms when providing services for Medicare Advantage patients or patients on other health plans. This is not compliant with CMS guidelines and payor rules. ABN forms are only applicable to traditional Medicare patients. Medicare Advantage plans and other payors have alternative rules and processes for informing a patient that a service may not be covered.

A second potential misstep for providers may occur when discussing the ABN form with the patient. ABN forms combine the clinical considerations about a patient’s care along with the financial realities of a patient’s life. For providers and patients alike, this is a sensitive junction. EMR systems may flag an account for medical necessity and even provide information about potential financial patient liability.  These are excellent tools to make the conversation easier, especially if they offer the provider an opportunity to review and potentially avoid the need for the ABN through an appropriate addition or modification of a diagnosis code; but effective policies and training are essential to supporting staff’s comfort with the process and their likelihood to use the ABN form properly. A staff member  lacking confidence or uncomfortable with the ABN conversation may not ask for the patient to sign an ABN form, resulting in services being provided that neither Medicare nor the patient are required to pay. Conversations regarding the ABN must occur prior to services being performed and should occur in a private setting where the patient and the clinician are able to review the form and discuss the impact of not receiving treatment. Attempting to have this conversation without proper training, outside of a suitable environment, or at the wrong time may hurt patient provider relationships and even risk patient privacy.

A third area for confusion related to ABNs involves accurately completing the form. Many healthcare providers fail to list the provider’s name, address, and phone number at the top of the form. Additionally, the form must document the specific procedure (i.e. description and CPT), as well as, an estimate of the full price for the procedure. Missing any of these critical data elements or not completing the form on the approved, authorized notice format has the potential to invalidate the ABN form, rendering it useless.

After an ABN has been properly issued, discussed, and completed, the process can still veer off track. With many organizations streamlining check out operations, it is important to have a process in place to guide completed forms into the right hands. Two copies of the ABN form are necessary: one for the patient, and one for the provider to store in practice records. Patients who complete the form with their provider team may walk out with the ABN form in their pockets or purses, leaving the practice with no record that the patient accepted financial liability for their services. Alternatively, collecting the ABN form without providing a copy to the patient is a compliance violation. Especially for lab services, it’s important to have processes and controls in place to validate all necessary parties have adequate ABN documentation prior to services being rendered.

With compliant policies and procedures, adequate training, and thoughtful controls to guide an ABN from patient discussion and execution to the permanent patient record, providers can minimize their risks of potential financial loss due to services not covered by Medicare. For a simple form with three boxes and a space for a signature, there’s a lot at stake. But with these considerations, organizations can protect reimbursement, mitigate compliance risk, and turn a delicate conversation into an opportunity to build trust with, rather than damage, patient relationships. For official CMS guidance regarding the ABN form as well as the current update of the ABN, please refer to the CMS website.

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Author: Emily Anne Nolte, FHFMA and Catherine Hood, CRCR

Emily Anne Nolte is a Manager at PwC and a member of the MA-RI chapter of HFMA. Catherine Hood is a Senior Associate with PwC and a member of the NY Metro chapter of HFMA.