Pathology/Lab Coding Alert

Unless youre diligent about seeing that you have a signed waiver of liability statement from Medicare outpatients, you are forfeiting your ability to collect for non-covered pathology and lab services and procedures. Labs are losing revenues because theyre running tests not considered reasonable and necessary, and they dont have a signed advance beneficiary notice (ABN), claims Laurie Castillo, MA, CPC, CPC-H, CCS-P, member of the National Advisory Board of the American Academy of Professional Coders and president of its Northern Virginia Chapter.

For example, suppose a blood sample is sent to the lab for an iron test (CPT 83540 , iron) with the ordering physicians notation to rule out iron deficiency anemia. If the physician doesnt document a diagnosis or signs and symptoms that are listed as medically necessary in either a national policy or local medical review policy (LMRP), Medicare will deny the claim. Without a signed ABN, Medicare would send the lab an explanation of benefits (EOB) denying the non-covered charge, as well as one to the patient stating that the lab may not bill the patient for the charges.

Because Medicare limits a patients liability for services that are denied as not reasonable and necessary (Omnibus Budget Reconciliation Act of 1988), you lose the right to collect for those charges if you dont have a waiver of liability on file, says Castillo. Absent a payable diagnosis, which only the treating physician can give, you must have an ABN signed before the procedure is provided, or you cant bill the patient for non-covered services.

Additionally, labs should be aware that ABNs are a required part of the OIGs laboratory compliance program. Many labs have paid dearly for failure to use waivers of liability appropriately, reports Castillo. They have paid through lost revenues because they cant collect from the patient, and they have paid through fines levied for non-compliance.

Guidelines for ABNs

1. Who should use ABNs? Any physician, provider or supplier furnishing and billing for Medicare services to outpatients (Part B) should procure an ABN when necessary. This is true whether the claim is processed by the Medicare carrier or fiscal intermediary, explains Gregory L. Schnitzer, RN, CPC, CPC-H, CCS-P, manager of coding compliance for CodeRyte Inc., a software company in Bethesda, Md., that has developed an artificial intelligence automatic coding software.

Health Care Financing Administration (HCFA) explained the use of ABNs in a recent program memorandum (A-00-43). The notice is important to labs because many of their services encompass both a facility fee processed through Part A, and a physician fee processed through Part B, Schnitzer continues. The memorandum clarifies that ABNs should be used for claims filed on either form, HCFA 1500 or the UB-92. Although some labs had been using hospital inpatient notices of non-coverage (HINNs) rather than ABNs for outpatient services processed by fiscal intermediaries, the memorandum clarifies that only inpatients should be issued HINNs.

HCFA has charged laboratories with the responsibility to produce the ABN (Compliance Program Guidance for Clinical Laboratories). HCFA acknowledges that it may be difficult for labs to obtain an ABN directly from the beneficiary (e.g., when a specimen is sent to the lab without the patient present), and says labs may wish to educate physicians on the appropriate use of ABNs. Whoever issues the ABN, the lab will have to maintain it in the file because the lab is billing for the services, Schnitzer points out.

2. When should an ABN be issued? The ABN should be given to the patient in advance of the service. HCFA says that a patient must be notified well enough in advance of receiving a medical service so that the patient can make a rational, informed consumer decision. The notice must be comprehensible, and patient questions (e.g., regarding cost) must be answered or the ABN is not considered to be delivered to the patient in advance.

The patient must sign before the procedure, indicating that he or she understands he or she will be responsible for payment, explains Castillo. If the specimen is taken by the physician and sent to the lab, then the physician needs to acquire the ABN. The lab cant have the patient sign after the procedure. The lab is caught in the middle if a specimen is taken from a patient and sent to the lab without a payable diagnosis or a signed ABN.

To avoid this scenario, laboratories must educate physicians about medical necessity requirements as well as the proper use of ABNs. Labs can also design requisitions to gather this information from the ordering physician. These measures are all part of a laboratory compliance program.

An ABN should be used only when the lab believes that Medicare will not pay for some or all of the services. ABNs should not be used as a blanket solution, just in case a service isnt covered. Giving ABNs for all claims or services, or issuing them to patients for future services, is not acceptable, says Castillo.

Dont issue an ABN to a patient in an emergency room before the individual is stabilized. HCFA states, ABNs given to any individual who is in a medical emergency or otherwise under great duress cannot be considered to be proper notice.

Routine screening tests, which are excluded from Medicare payment by law, do not require ABNs. Although Medicare doesnt require ABNs for screening tests, it may be prudent and good public relations to issue them anyway, advises Schnitzer. Many times patients dont know why a test is ordered, and you dont want them to be surprised to discover that they must pay for the work.

3. What should the ABN say? The ABN should include a statement of the law explaining that Medicare will pay only for services that it deems reasonable and necessary.

Also the ABN should state which service may be denied and why. The form should have blanks for these two statements to be filled out by the physician or laboratory. HCFA is clear that you must give a specific reason why you believe the services will be denied: Simply stating medically unnecessary or the equivalent is not an acceptable reason.

Include an agreement in the ABN to be signed by the beneficiary stating that I agree to be personally and fully responsible for payment. When a beneficiary is incapable of signing the ABN, it may be signed by his or her representative in accordance with Medicare rules.

Note: See sample ABN in the shaded box on this page.

Once the ABN is signed, the physician or lab must receive the it from the beneficiary (in person or by mail) and note the date of receipt. An annotated copy of the ABN must be returned to the beneficiary within 30 days.

If the beneficiary or representative refuses to sign, you should note the refusal on the ABN and then may refuse services to the patient.

4. Continue to bill correctly. Even though Medicare is not expected to reimburse for the procedure or service for which you collected an ABN, you still must bill your carrier or fiscal intermediary for it. On HCFA form 1500, use the modifier -GA (waiver of liability statement on file), which alerts Medicare to note on the explanation of benefits (EOB) that the patient is responsible for payment, says Castillo.

When submitting a claim on the UB-92 form, enter occurrence code 32 in one of the field locators numbered 32-35, indicating to the fiscal intermediary that an ABN has been issued. Also enter condition code 20 in one of the field locators numbered 24-30 to indicate that you realize that the claim probably will not be covered (although Medicare must evaluate the claim to certify that it is not covered). HCFA program memorandum A-00-36 defines code 20 (the beneficiary has requested a formal determination).

Although an ABN is not required for statutorily excluded services (e.g., routine screening tests), you may submit a claim if the beneficiary requests it for the possibility of additional reimbursement from a secondary insurance. In that case, enter condition code 21 (the provider is requesting a genial notice from Medicare to bill Medicaid or other insurers), rather than 20, to indicate that you realize that the furnished services are excluded. Medicare will issue a denial notice so that the patient may seek payment through other insurance.

Note that covered and non-covered services should not be reported on the same claim, says Castillo. Submit a separate claim for additional services that are billed with any service that uses condition codes 20 and 21.

Conclusion

Laboratories must be sure they have signed ABNs for services not covered due to lack of medical necessity, and they probably should have them for excluded services such as screenings, concludes Schnitzer. And although many hospitals and labs have ignored ABNs and failed to collect payments from patients in the past, the Office of Inspector General (OIG) has made it clear that this will no longer be tolerated. Schnitzer says, Just like providers cannot routinely waive co-pays and deductibles, labs can no longer routinely ignore collecting for non-covered services that require an ABN.