Pathology/Lab Coding Alert

Effective March 1, 2009, labs must use the new combined ABN/NEMB.

You may have breathed a sigh of relief when Medicare postponed the Sept. 1, 2008, deadline for implementing the new advance beneficiary notice (ABN), but you can't put it off forever.

Here's why: Medicare says you-ll have to be ready March 1 to use the form. Without a valid ABN, you cannot hold a Medicare patient responsible for the denied charges, says Kara Hawes, CPC-A, with Advanced Professional Billing in Tulsa, Okla.

You should use the new ABN whenever you think that Medicare will deny a claim, whether for lack of medical necessity or because the service is non-covered. That's because the new ABN (form CMS-R-131) not only replaces both the previous ABN-G (for physicians) and ABN-L (for laboratories), but also incorporates the notice of exclusions from the Medicare benefits (NEMB) form.

Medicare carriers began accepting the new ABN form in March 2008, but CMS extended the transition period beyond the original Sept. 1 deadline that many providers thought was too soon.

"I know that a few physicians I work with told me that their speciality societies were fighting the Sept. 1 deadline," says Randall Karpf of East Billing in East Hartford, Conn. "Changing forms like that is time-consuming and expensive," Karpf says.

According to CMS direction, the new ABN replaces the NEMB, so you-ll start using it in "voluntary" situations in addition to how you-ve always used an ABN.

What this means: You must issue an ABN in certain circumstances -- for instance, if you-re performing care that isn't reasonable and necessary and you think Medicare may not cover the service. However, ABN use is voluntary in other cases; for instance, if Medicare statutorily excludes the service (such as many screening lab tests ordered in the absence of signs or symptoms of disease).

In addition to the general form CMS-R-131, CMS provides a customized version for clinical laboratory use.

Do this: As long as you comply with required language and formatting, such as keeping the form to one page, your lab can pre-print information such as company logo and common reasons that a service won't be covered.

Because more than one provider might be involved in a service that requires an ABN, CMS clarifies that only one party needs to notify the patient by providing an ABN.

For instance: Either of two parties could deliver the ABN if a physician orders a lab test and an independent lab performs the service.

Caution: No matter who obtains the signed ABN, the billing entity is "responsible" for a valid, signed form. That means that even if your lab doesn't give the ABN to the patient, you need to be sure that a valid form is on file if you want to get paid.

Are you using the ABN correctly? Many labs or physician's offices partially fill out the ABN. They do not require the patient to indicate whether they want the test, or they fail to get a signature, or they have the patient sign a blank or undated form. An incomplete form is of no value because you cannot bill the patient unless you have a "valid" ABN.

Labs have been concerned about the new ABN requirement to include a cost estimate. CMS clarifies what it considers a "reasonable estimate" to "be within $100 or 25 percent of the actual costs, whichever is greater."

CMS goes on to say that an estimate that substantially exceeds the actual cost might be acceptable because "the beneficiary would not be harmed if the actual costs were less than predicted." For example, CMS states that you could use "No more than $500," as an acceptable estimate for a service that costs $250, even though the difference is more than $100 or 25 percent of the cost.

To read more about the new ABN, look to these official CMS sources:

MLN Matters article: www.cms.hhs.gov/MLNMattersArticles/downloads/MM6136.pdf

CMS Transmittal 1587: www.cms.hhs.gov/transmittals/downloads/R1587CP.pdf.