I’d rather buy a month’s worth of Starbucks than…pay my doctor bill Wednesday, Jul 6 2011 

One of the biggest frustrations we have in the health care industry is due to patients not understanding their own health insurance benefits. Oftentimes, patients think that just because they carry insurance, that means that everything is covered and they don’t have to pay anything. Patients receive health care service and a month later they discover that their insurance doesn’t cover that particular service; however, instead of accepting the responsibility of paying, many patients fight, demand, and threaten the physician’s office staff to make the balance go away.

This phenomenon has gotten worse in the past twenty years or so. I subscribe to the theory that much of this mentality is due to the inception of HMO’s. In the beginning, HMO’s had either zero patient financial responsibility, or an exceptionally low out-of-pocket cost. People have been conditioned in thinking that health care is an entitlement. After about a decade, due to insurance companies (and employer groups) not being able to withstand the expense of higher utilization of “free” health care, they began to make the consumer more responsible by charging higher co-pays and not covering certain services. Unfortunately, most Americans expect the same Cadillac coverage without any additional expense (beyond their insurance premium and co-pay).

A major challenge in physician practices is to help their patient’s understand their insurance company’s reimbursement policies, all the while maintaining good will. Physicians are finding themselves having to develop various financial informed consent forms to assure that the patient understands that they may be responsible for some of the cost. Medicare has required this, in the form of Advanced Beneficiary Notices (ABN), for years.  Even so, we often hear patients state, “I signed it but didn’t read it.”  Or, “I was afraid if I didn’t sign it that I wouldn’t get the service.” Perhaps the days of accountability are long gone.

One of the biggest threats we hear from patients is that they will leave our practice if we don’t write off their balance. Not much that you can do about that. Health care is a business and we cannot pay the bills with altruism. In addition, it is fraud to bill the insurance company for services and write off the patient’s responsibility. Aside from financial hardship cases, routine adjustments of patient responsibility can get a physician excluded and/or fined by the government when it is a government program such as Medicare or Medicaid. Worst case scenario for commercial insurance is the insurance company dropping the physician from their network.

With lower reimbursements, practices really need to devote more energy in collecting all revenues due. The average overhead for a primary care physician practice is reaching 60%. There are no government subsidies for physicians, other than rural health care, community health care centers and native american health centers. More and more physicians are closing their offices, retiring early, selling their practices to hospitals, transitioning to concierge medicine, or going to cash only practices. This is devastating to primary care because of the physician shortage; however, many specialists are also getting hit hard as well.

When to Use an Advanced Beneficiary Notice (ABN) Thursday, Apr 23 2009 

The use of the ABN is required by Medicare to alert patients when a service will not be paid by Medicare and to allow the patient to choose to pay for the service or to refuse the service. If we do not have a signed ABN from the patient and Medicare denies the service, we have to write off the charge and cannot request the patient to pay for it. The only exception is for statutorily excluded services (those that Medicare never covers like cosmetic surgery and complete physicals for example). In this case, we can still bill the patient for the non-covered service regardless of having a signed ABN. It is, however, a good idea to have the ABN signed for non-covered services so the patient still is aware that they are responsible and we have proof that they knew. Typically, the patient will call our office when they receive our bill and state that “they were never told”, “they weren’t aware”, or a similar complaint. With a signed ABN, we have proof that we have their informed consent to provide the service and their agreement to be financially responsible for the service. In the past, Medicare had a “Notice of Exclusion of Medicare Benefits” (NEMB) that we could provide to the patient (no signature required) to alert them of Medicare’s non-covered services. The ABN has replaced the NEMB.

The typical reasons that Medicare will not cover certain services and that would be applicable to our office are:

  1. Statutorily Excluded service/procedure (non-covered service)
  2. Frequency Limitations
  3. Not Medically Necessary

Statutorily Excluded items are services that Medicare will never cover, such as (not a complete list):

  • Complete physicals (excluding Welcome to Medicare Screenings, with caveats)
  • Most immunizations (Hepatitis A, Td)
  • DME supplies (splints, personal comfort items)
  • Cosmetic surgery

For these items, it is a good idea (not a requirement) to complete the ABN and have the patient check the appropriate box under options and sign the ABN. For the sake of our billing department, I strongly encourage the use of ABN’s for statutorily excluded items.

Frequency Limitations are for services that have a specific time frame between services. For example, for normal pap smears Medicare allows one every 24 months. If the patient wants one every 12 months for their piece of mind, Medicare will pay for year one and the patient will pay for year two and that pattern continues. The ABN needs to be on file for the year that the patient is responsible for paying. If the patient fits Medicare’s guidelines for “high risk” they are allowed to have the pap every 12 months and no ABN is required.

Services that are not considered Medically Necessary are those that do not have a covered diagnosis code based on Local Coverage Determinations. One example is for excision of a lesion. If the lesion is being removed because the patient just doesn’t like how it looks, that is considered cosmetic surgery. If the lesion is showing some changes (i.e. bleeding, growing, changing color, etc), then it is considered medically necessary because it potentially can be malignant. The removal needs to have diagnosis coding to substantiate the medical necessity and Medicare has Local Coverage Determinations that lists all the codes/coding combinations that Medicare will approve for payment.

A rule of thumb in trying to discern the necessity of ABN’s is to discern whether or not Medicare ever will cover the service and if there may be some times that the service isn’t covered. The times the service isn’t covered, an ABN is required. To illustrate this point, I will use two examples:

·EKG’s are covered for certain cardiac and respiratory conditions. The only time an EKG is covered for preventive screening is during the patient’s first year enrolled in the Medicare program and when being doing during the Welcome to Medicare screening. After that time, Medicare will never cover an EKG for preventive screening. To notify the patient of this and to show that the patient agrees to be financially responsible for the EKG, an ABN will need to be completed.

·Another example is for the Tetanus immunization. Medicare will cover tetanus when medically necessary; basically if the patient has cut themselves and the tetanus is provided due to that injury. If the tetanus is provided to the patient because it has been ten years since the last tetanus and the tetanus is not in response to a recent injury, then it will be non-covered because it is not “medically necessary” and the ABN will need to be on file.

ABN’s need to be completely in entirety. The “Options” box can only be completed by the patient and it states that “We cannot choose a box for you”. That would appear to be coercion.  A “blanket” ABN, one that is signed by the patient for all services provided within a certain time period, is not acceptable and is illegal.

In addition, there is a small area to provide additional information that can be used by either the patient or the provider’s office. This could be anything pertinent to the information that the ABN covers. The bottom of the form is where the patient signs and dates. We keep the original ABN in the chart behind the progress note for that day. We MUST provide a copy of the signed ABN to the patient.

The current ABN form with instructions can be found at:


If a procedure is denied by Medicare and the physician does not have a signed ABN prior to the service being rendered, the service can not be billed to the patient and will need to be written off the physician’s books.  Sometimes a patient may refuse to sign the ABN, if this is the case it is appropriate for the physician to document the refusal and sign, along with having a witness sign.  Medicare will accept this and the patient can be billed for the service if denied by Medicare.

There are some additional billing requirements in the form of modifiers.  The modifiers are applied to the service that the ABN was utilized:

GA:  The ABN is signed, but the service may not be covered.

GY:  A “statutorily excluded” service.

GZ:  The service is expected to be denied as not reasonable or necessary.  This is typically used when there is a secondary payer that requires the Medicare denial before they pay benefits.

The use of the ABN is often misunderstood; however, it is the only way a patient can be informed about their financial responsibility prior to agreeing to a service being rendered.  This is an issue that the OIG has reportedly been interested in investigating for fraud and abuse.