What is an ABN?

These three little letters may save you a lot of money and headache.  ABN stands for Advance Beneficiary Notice.  We often get the following question, "My doctor told me that since Medicare did not cover my procedure I have to pay for it out of my pocket.  Is that true?"  The answer to that question has everything to do with an Advance Beneficiary Notice. 

There are thousands of medical procedures that Medicare covers.  There are also some that they don't.  These might include elective procedures or experimental procedures for example.  When obtaining service from a provider, it is always a good idea to ask if the service is covered by Medicare.  Your doctor or service provider is the best person to ask about what Medicare covers.  Since they depend on getting paid from Medicare, they must know what Medicare will and will not pay for.  However, at times a provider can make a mistake and provide you with a service that, once billed to Medicare, is not covered.  If this happens you are generally not liable for those charges.  There are two exceptions to this rule: 1) if it is a procedure that Medicare never covers, or 2) if you signed an Advance Beneficiary Notice (ABN). 

An ABN says, in short, that you are aware that the procedure you are getting ready to have may not be covered by Medicare but that you want to go ahead with it anyway.  This releases the provider from the liability of the charge in the event that Medicare doesn't approve the service.  However, if you don't sign an ABN and Medicare denies the claim, you are not liable for those charges.

There are some providers out there, however, who try to circumvent this problem by having you sign an ABN upon arriving at their office.  Not so fast...  Here are a few things you need to know about an ABN.

1. The ABN must describe the service.  That is, you cannot sign an all-inclusive ABN that would cover a whole list of services.  The ABN must detail precisely which service may not be covered.  
2. The ABN must include the estimated cost of the service.  Never sign an ABN that doesn't tell you how much you will be liable for if Medicare denies the claim.
3. The ABN must be provided in advance.  If a provider wants you to sign an ABN after you have already received the service, do not sign.

In short, be aware of what you are signing when a provider gives you a stack of paperwork.  If you see an ABN form, read it carefully and don't hesitate to ask questions.  One final note; an ABN only applies to persons covered under Original Medicare (Parts A & B).  If you are covered by a Medicare Advantage Plan, you generally have to pay for services that the plan doesn't approve. 

Click here to see a sample ABN form, or here to read a detailed Medicare publication regarding ABN forms.

Hospital Admission vs. Observation

If you're looking at this title and thinking, "What the heck is this all about?" just hang in there for a quick minute - this might save you tens of thousands of dollars some day.  Let me ask you a question, when you spend the night in the hospital you're considered an inpatient, right?  Not necessarily.  Increased pressure from Medicare is causing some hospitals to keep patients under "observation" status rather than "inpatient" status.  Okay, so what's the big deal?  Well, should you need skilled care after you leave the hospital it's going to be a HUGE deal! 

But, you ask, doesn't Medicare cover skilled nursing care?  Yes, but with a qualification.  Medicare requires that you have a 3-day inpatient hospital stay prior to being admitted to the skilled nursing facility.  So, if you spend four days in a hospital, but were only classified under "observation" status, your skilled nursing stay will not be covered by Medicare.  And this is nothing to sniff at, as the 100 days of coverage that Medicare may have approved may cost you between $25,000 and $30,000. 

Well, you may, wonder, is this common?  Yes, and it is becoming more so.  From 2006 to 2009 the number of observation stays increased almost 27%, and the number of observation stays that lasted more than 48 hours nearly tripled (Clark "Hospitals...").  There have even been reports of "observation" stays that lasted as long as 13 days and have even included surgery (Clark "CMS...").

So what can you do?  Here are a couple of suggestions.  First, be aware of your admission status.  If you receive care from a hospital make sure that you ask them exactly how you are being admitted.  It may effect your decision regarding the type of care you elect to receive when you leave the facility.  Second, make your voice heard to your congressional representatives and to Medicare.  It is Medicare, not the hospitals that are encouraging this practice.  In fact, the hospital is actually on your side as they are losing money over this too.  Even though they have to treat you the same way regardless of your admission status, they are reimbursed approximately 66% less if your stay is classified as an "observation" admission.  To that end, here are some helpful links.

Contact your Senator:  http://www.senate.gov/general/contact_information/senators_cfm.cfm

Contact your Representative:  https://writerep.house.gov/writerep/welcome.shtml

Contact a Medicare Regional Office:  http://www.cms.gov/regionaloffices/

Sources

Clark, Cheryl. "Hospitals Caught Between A Rock And A Hard Place Over 'Observation'." Health Leaders Media. n.p., 15 Sep 2011. Web. 12 Apr 2012.

Clark, Cheryl. "CMS Hears Providers Concerns Over 'Observation' Status." Health Leaders Media. n.p., 1 Sep 2011. Web. 12 Apr 2012.

Can my doctor bill me up front?

There are two types of doctors who accept Original Medicare: those who accept assignment (participating providers) and those who don’t accept assignment (non-participating providers). Participating providers are doctors who take Medicare and agree to accept the Medicare-approved amount for a service as payment in full. Most of these providers will bill Medicare first, and then allow you to pay any difference between what Medicare approved and what Medicare paid.

Non-participating providers are doctors who take Medicare, but do not necessarily agree to accept the Medicare-approved amount for a service as payment in full. However, these doctors are only able to charge you 15 percent more than the Medicare-approved amount for a service. In many cases these doctors will require you to pay the entire bill up front. They will then submit the claim to Medicare and have Medicare reimburse you directly for the bill you paid.

In short the answer to this question is "yes", however, you are more likely be billed up front by a non-participating provider. This is one of the reasons we recommend using a participating provider whenever possible.

If you have coverage through a Medicare Advantage Plan, the above information does not apply to you. You will pay the coinsurance and/or copayments that your plan requires, and these will likely vary depending on whether or not they are a network provider. For more information on the difference between Original Medicare and Medicare Advantage Plans, please see the following information pages: Medicare Overview, Medicare Advantage.