Knowledge Base Article

In our modern texting, emailing, and messaging world, numerous acronyms have become common in order to allow us to communicate faster. One example is “LOL” which in texting lingo means “laugh out loud.” But to a Medicare patient or provider, LOL can mean “limitation on liability.” Limitation on Liability is one of the Financial Liability Protection provisions of the Social Security Act which protects beneficiaries, health care providers and suppliers under certain circumstances from unexpected liability for charges associated with claims that Medicare does not pay. Specifically, the LOL protections apply only when a provider believes that a Medicare covered item or service may be denied in a particular instance because it is not reasonable and necessary under §1862(a)(1) of the Act or because the item or service constitutes custodial care under §1862(a)(9) of the Act. If a provider believes a service will not be covered by Medicare because it is not medically necessary, they must give advance notice to the patient in order to shift the financial costs to the patient.

The Advance Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131, is a form given to Fee-for-Service Medicare beneficiaries in situations where Medicare payment is expected to be denied. There are no substantive changes to the form for the latest approval but there is a new expiration date and the form has been revised to include language informing beneficiaries of their rights to CMS nondiscrimination practices and how to request the ABN in an alternative format if needed.  The effective date for use of this ABN form is 6/21/2017.

As a reminder, hospitals may issue an ABN for services that are not medically necessary, for therapy services that exceed the therapy cap amount and do not qualify for an exception, for experimental/investigational services, and since 2011 for preventive services when frequency limitations are exceeded. An ABN is mandatory in order to shift liability to the patient for these types of services. ABNs may also be used voluntarily for services that are not a Medicare benefit or are excluded from coverage. The ABN form is also used in certain situations by suppliers, physicians, hospices, home health agencies, CORFs, and SNFs (Part B only).

An ABN may be issued at the initiation of a service such as the beginning of a new patient encounter, start of a plan of care, or beginning of treatment - for example, diagnostic tests that are not medically necessary such as laboratory tests. A notice can also be given when services are reduced or terminated. Examples of this would be when a patient’s progression in rehabilitative therapy supports fewer visits per week but the patient wants to continue at the same frequency or when therapy services are no longer medically necessary but the patient wishes to continue.

Medicare has a number of resources with information about the Advance Beneficiary Notice.

• Medicare Claims Processing Manual, Chapter 30, Section 40.3
• MLN Booklet – Medicare Advance Beneficiary Notices
• ABN Form Instructions
• Medicare FFS ABN webpage with links to the ABN form (English and Spanish)

So be prepared to use the new ABN form in June; you wouldn’t want anyone to laugh at you for using the wrong form – LOL!