Will Medicare Pay,

Will You Pay, or

Will the Provider of Services Be Left Holding The Bill?

By Janet Schroeder

Introduction

For many elderly people today, the main insurance plan for health care is Medicare, the federally funded primary insurance plan.  Medicare is administered through the Centers for Medicare and Medicaid Services (CMS) as allowed under The Social Security Act, Title XVIII, Health Insurance for the Aged and Disabled.[1] 

Coverage determinations are made at the national level and known as national coverage determinations.  Those determinations often provide the answer as to whether Medicare will make payments on specific treatments.[2]  Determinations may also be made by Medicare carriers at the local level that cover Medicare coverage for medical services, procedures, and technology that are not specifically listed under national coverage determinations.[3]

If a provider of medical services, knows that Medicare will not cover specific testing, treatment or other procedures, the provider of medical services is obligated to let the patient (beneficiary) know that the services will not be covered.  CMS has established specific procedures for service providers to follow for informing the patient that services will not be covered.  If those procedures are not followed, the patient will no longer be responsible for paying for the specific services that Medicare did not cover. 

             This paper will give a brief overview of coverage determinations specific for Part B Medicare patients, and then focus on the Advance Beneficiary Notice procedure that service providers use to inform the patient that coverage of specific services will not be paid by Medicare.  If an Advanced Beneficiary Notice is used and Medicare will not pay for services, the patient is agreeing that payment is the responsibility of the patient if the patient has signed an Advanced Beneficiary Notice.

Coverage Determinations

The Social Security Act requires that rules with substantive legal standards and related to Medicare benefits or payments for services shall be promulgated by regulations.[4]  However, the Social Security Act allows national coverage determinations to be made without promulgation by regulation.[5]  The national coverage determinations are made by the Centers for Medicare and Medicaid Services departments and determine whether a service is “reasonable and necessary” in accordance with the Social Security Act.[6]  Coverage determinations consider with the method or service is supported by evidence of clinical utility and can satisfy the “reasonable and necessary” standard.[7] 

The “reasonable and necessary” standard requires that payment will be made under Medicare Part A or Part B only for services that are “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”[8]  Coverage is also extended to hospice care only for care which is “reasonable and necessary for the palliation or management of terminal illness.”[9]  Some testing may be allowed, but is limited to specific frequency as to how often the test may be performed.  For instance, screening mammography, screening pap smear and screening pelvic exam, screening for glaucoma, prostate cancer screening, and colorectal cancer screening tests all have a specific limitation as to how often the testing may be done and still be covered under Medicare.[10]  Limitations and exclusions from coverage are imposed on research and experimentation, home health services, routine physical checkups, eyeglasses, hearing aids, custodial care, cosmetic surgery, foot care, skilled nursing care, dental, and many other services or treatment.[11] 

On the local level, local coverage determinations are made by the Medicare contractor, typically known as the Medicare carriers under Part B.[12]  The Medicare carrier, as a contractor for the Center of Medicare and Medicaid Services (CMS), is given the discretion to make determinations as to which services will be allowed as “reasonable and necessary.”  In Heckler v. Ringer, the court recognized the broad discretion of the agency’s decision making authority for determinations of “reasonable and necessary” as a general rule or through individual adjudication.[13]  Such discretionary actions by CMS carriers are often referred to as Local Coverage Determinations (LCDs) and indicate whether or not specific testing or services are covered on a carrier-wide basis.[14]

 What is reasonable and necessary testing?

At the local level, reasonable and necessary testing is based on what CMS determines to be reasonable and necessary.  A health care provider may believe that a certain form of treatment is medically necessary, but the health care provider’s determination is not dispositive in the determination that Medicare will have to cover the services.  Deference to the health care provider’s judgment is only considered where there is not a “policy barring coverage.”[15] 

In Goodman v. Sullivan, the court indicated that reasonable and necessary does not depend on what the physician says may be necessary.[16]  Under the direction of Goodman’s provider, Goodman underwent an MRI that was believed to be medically necessary to determine the cause of a speech impediment, even though he knew the MRI would not be covered by Medicare.  The court held that the statute does not expressly require coverage “for all medically necessary services.”[17]  It is worth noting that at the time that Goodman underwent the MRI, MRI and diagnostic imaging techniques where considered experimental.  In November of 1985, the MRI and diagnostic imaging techniques were extended to the coverage under Medicare in some situations.[18]

However, the statute does state that it is not to be construed as authorizing CMS, as “federal officers or employees [,] to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided…”[19]  The statute seems to be saying that Congress does not want CMS to be in the practice of medicine, yet to some extent, CMS is making the determinations as to what is necessary for the practice of medicine and leaves the patient hanging in the lurch as to who to believe.  For a patient, it becomes confusing to sort out what services or testing is really necessary and what is not. 

Thus with conflicting information as to a test being medically necessary in the eyes of the health care provider, but not necessary under the Medicare health care scheme, it is important for a patient to understand why specific health care services may not be covered and why a health care provider is recommending the testing.  A patient must listen carefully to the health care provider and make a personal determination as to whether to proceed with those health care services at the risk of having to foot the bill for that test.   Information provided by the CMS calls the patient decision making process an informed consumer decision.[20]

The Department of Health and Human Services (DHHS) has attempted to force the health care providers into awareness as to what is covered and what is not covered by Medicare.  CMS issued a program memorandum describing the use of Advanced Beneficiary Notices (ABNs).[21]  The ABN is intended to let the patient know prior to services what Medicare will likely not cover and allow the patient to make an informed decision as to whether to proceed with the testing that the health care provider is stating as “necessary.”[22]

The Advanced Beneficiary Notice

As a patient goes to see a health care provider, the provider makes a determination of what services and tests are needed to make a diagnosis.  Along with the determination of which tests should be done, the health care provider has the responsibility to inform the patient if those ordered services or tests will be covered by Medicare. 

When a health care provider believes that the test will not be covered by Medicare, the patient (Medicare beneficiary) should be given an ABN to sign that will allow the patient to know what services or testing may not be covered by Medicare.  On July 31, 2002, CMS issued basic forms to be used as ABNs.[23]  The basic forms to be used by the health care provider are the responsibility of the health care provider to complete and present to the patient.  The form allows the health care provider to list the tests that will not be covered by Medicare and give explanation as to why the health care provider believes that Medicare will not pay for the services or testing.   The form is intended to allow the patient to “make an informed consumer decision.”[24]  The determination by the patient in regards to making an informed consumer decision allows the patient to consider whether to proceed with the services or testing that may not be covered by Medicare.  The ABN also gives the patient the cost of the testing to which the patient will be “personally and fully responsible for” through out-of-pocket funds or other sources.[25]  If a health care provider fails to issue an ABN, the health care provider will be held liable for covering the services or testing.[26] 

The ABN is expected to provide the patient with information that will allow an informed consumer decision based on knowledge of what the patient should expect upon Medicare review for payment.  There may be a limitation on liability for the patient in cases where the patient could not have known that services or testing may not be covered by Medicare.  The limitation on liability also extends to the health care provider where the physician did not know nor had reason to know that Medicare would not cover specific services or testing.[27]  In cases where the health care provider and the patient “did not know, and could not reasonably have been expected to know,” payment by Medicare shall occur as if the denial of payment had not occurred.[28]  Such a limitation on liability indemnifies both parties.[29] 

The use and delivery of the ABN is to occur prior to the patient receiving services or testing or initiation of services or testing.  Delivery of the ABN is to be presented to the patient in advance of the medical services or testing “so that the patient can make a rational, informed consumer decision without due pressure.”[30]  The ABN should be hand-delivered to the patient.   A telephone notification is not considered to be “sufficient evidence of proper notice for limiting any potential liability [to the health care provider], unless the content of the telephone contact can be verified and is not disputed by the beneficiary [patient or authorized representative.][31]  Here it is recommended that anyone who receives a telephone call from a health care provider regarding such a statement that Medicare may not cover some specific services or testing regarding an upcoming physician visit, the patient should request an ABN in writing without accepting liability prior to the written notice.

The intent of the timely delivery of the ABN to prevent the situation of the patient feeling obligated to continue with the service or testing that may not be covered by Medicare.[32]  Coercing or forcing the patient to sign the ABN will result in violation of the “timely delivery rule” and the patient will not be liable for paying for such services and testing (providing that the facts support coercion.)[33]

In the case of a medical emergency or a situation where the patient is under great duress, the patient or his representative is believed to be incapable of making an “informed consumer decision” and is not responsible for signing an ABN.  “If the beneficiary [patient] is not capable of receiving the notice, then the beneficiary has not received proper notice and cannot be held liable…, and the physician or supplier may be held liable.”[34]
            In completing the ABN, health care providers may have numerous reasons to believe that Medicare will not cover services or testing.  The ABN should give a detailed explanation to explain the reason why the health care provider is predicting Medicare to deny payment.  “To be acceptable, the ABN must give the beneficiary a reasonable idea of why the physician or supplier is predicting the likelihood of Medicare denial, so that the beneficiary can make an informed consumer decision whether or not to receive services and pay for it personally. … Listing several reasons which apply in different situations without indicating which reason is applicable in the beneficiary’s particular situation generally is not an acceptable practice, and such an ABN may be defective and may not protect the physician or supplier from liability.”[35]

Generic or blanket notices are not considered to be effective ABNs.  Generic ABNs are those forms that do not give the patient any information other than stating that the services or testing may not be covered by Medicare and that Medicare denial of payment is possible.  The reasons on the form must be genuine as to the reasoning why the health care provider believes that Medicare will deny payment.  “’Generic ABNs’ are defective notices and will not protect the physician or supplier from liability.”[36]

Blanket ABNs are also considered ineffective.  Blanket ABNs refer to the use of the ABN which includes a number of claims, or items or services that Medicare may not cover.  Listing all the services or testing that is being performed without genuine cause for listing is considered a blanket ABN.[37]

In cases where treatment will require repetitive services, a single ABN may be used to provide notice to the patient.  However, any services or additional testing that is to be done at a later time will not be covered by the existing ABN.   A standing order for repetitive services should indicate that the intent of the services is for a specified time period with a limitation of one year.  If the repetitive services extend beyond one year, a new ABN should be completed.[38]

Attached is an ABN which has been approved by the Office of Management and Budget and is commonly used. 

Refusal to sign an ABN will not necessarily relieve a patient’s liability.  If a patient demands that the services or testing under question be provide and refuses to sign the ABN, the health care provider can explain the ABN to the patient and sign the ABN noting that the patient refused to sign the ABN.  In cases where the person is covered under the limitation of liability (that is all Part A claims and all assigned Part B claims), the patient can still be held liable.   CMS recommends that a second person be notified to witness the patient’s refusal to sign the ABN.  A notation by two health care providers of the refusal to sign the ABN will likely be viewed as the patient had knowledge that services may not be covered by Medicare.[39]  The presumption will be that the patient had knowledge and will be held liable for payment to the health care provider.[40]

Refusal to sign an ABN for cases where the person is covered under the refund requirements (that is assigned medical claims for medical equipment and supplies[41], unassigned claims for medical equipment and supplies[42], and for unassigned claims for physicians’ services[43]), the beneficiary must sign the ABN.  “All of the RR [refund requirements] provisions require, not only that the beneficiary [patient] be notified, but also that the beneficiary agree to pay in order for the beneficiary to be held liable.”[44]  In such cases, the health care provider will then be forced to determine whether to provide the service or testing that will not be covered by Medicare, because the beneficiary [patient] will not be held liable for payment of services or testing. 

Conclusion

Medicare is a very complex set of statutes, rules and regulations, and guidelines which the medical community struggles to comply.  One can expect that a lay person will not fully understand what procedures the medical community is trying to follow and the reasons behind those decisions.

Anyone who is hesitant about signing an ABN should ask the health care provider for additional information.  The intent is to allow the patient to make an informed consumer decision as to whether to proceed with a test at his or her own expense, or make the decision not to do the test.  It may be a matter of asking what other alternatives are available that may be covered by Medicare. 

The intent of many of the Medicare revisions appears to focus on more patient and public input.  From national coverage issues to individual ABNs, the patient should feel free to ask questions of his or her health care provider.

Patient's Name:                                                  Medicare # (HICN): advance beneficiary notice (ABN) NOTE: You need to make a choice about receiving these health care items or services. We expect that Medicare will not pay for the item(s) or service(s) that are described below. Medicare does not pay for all of your health care costs. Medicare only pays for covered items and services when Medicare rules are met. The fact that Medicare may not pay for a particular item or service does not mean that you should not receive it. There may be a good reason your doctor recommended it. Right now, in your case, Medicare probably will not pay for -   Items or Services:     Because:     The purpose of this form is to help you make an informed choice about whether or not you want to receive these items or services, knowing that you might have to pay for them yourself. Before you make a decision about your options, you should read this entire notice carefully. •   Ask us to explain, if you don't understand why Medicare probably won't pay. •   Ask us how much these items or services will cost you (Estimated Cost: $                           ), in case you have to pay for them yourself or through other insurance. PLEASE CHOOSE ONE OPTION. CHECK ONE BOX.  SIGN & DATE YOUR CHOICE. ____    Option 1. YES.    I want to receive these items or services. I understand that Medicare will not decide whether to pay unless I receive these items or services. Please submit my claim to Medicare. I understand that you may bill me for items or services and that I may have to pay the bill while Medicare is making its decision. If Medicare does pay, you will refund to me any payments I made to you that are due to me. If Medicare denies payment, I agree to be personally and fully responsible for payment. That is, I will pay personally, either out of pocket or through any other insurance that I have. I understand I can appeal Medicare's decision. ____    Option 2.  NO.     I have decided not to receive these items or services. I will not receive these items or services. I understand that you will not be able to submit a claim to Medicare and that I will not be able to appeal your opinion that Medicare won't pay. __________________   __________________________________________ Date                               Signature of patient or person acting on patient's behalf  NOTE: Your health information will be kept confidential. Any information that we collect about you on this form will be kept confidential in our offices. If a claim is submitted to Medicare, your health information on this form may be shared with Medicare. Your health information which Medicare sees will be kept confidential by Medicare. 0MB Approval No. 0938-0566     Form No. CMS-R-131 -G     (June 2002)