Billing Procedures Related to Advance Beneficiary Notice (ABN)

40.11 - Billing Procedures Related to Advance Beneficiary Notice (ABN) Upgrades under the Competitive Bidding Program (Rev. 1532, Issued: 06-11-08, Effective: 07-01-08, Implementation: 07-07-08) In general, an item included in a competitive bidding program must be furnished by a contract supplier for Medicare to make payment. This requirement applies to situations where the item is furnished directly or indirectly as an upgrade. An upgrade is an item with features that go beyond what is medically necessary. An upgrade may include an excess component. An excess component may be an item feature or service, which is in addition to, or is more extensive than, the item that is reasonable and necessary under Medicare coverage requirements. An item is indirectly furnished if Medicare makes payment for it because it is medically necessary and is furnished as part of an upgraded item. The billing instructions for upgraded equipment found in section 120 of chapter 20 of the Medicare Claims Processing Manual (Pub. 100-04) continue to apply under the DMEPOS Competitive Bidding Program. The following scenarios and chart describe situations where a beneficiary, residing in a competitive bidding area, elects to upgrade to an item with features or upgrades that are not medically necessary. • Upgrades from a bid item to a non-bid item In this situation, Medicare payment will only be made to a contract supplier on an assignment-related basis. Medicare payment will be equal to 80 percent of the single payment amount for the medically necessary bid item. • Upgrades from a non-bid item to a bid item When upgrading from a non-bid to a bid item, Medicare payment is made to a contract supplier on either an assigned or unassigned basis. Medicare payment will be equal to 80 percent of the lower of the actual charge or the fee schedule amount for the medically necessary non-bid item. • Upgrades from a bid item in one product category (category “S”) to a bid item in another product category (category “U”) In this case, Medicare payment is only made to a contract supplier for the product category “U” on an assignment-related basis. Medicare payment would be equal to 80 percent of the single payment amount for the medically necessary bid item in product category “S”. Upgrade Scenarios for Beneficiaries Residing in a Competitive Bidding Area (CBA) From the Medically Necessary Item To the Upgraded Item Must be Furnished by Assignment Mandatory (Y/N) Medicare Payment Based Upon Bid Item Non-Bid Item Contract Supplier Y Single Payment Amount for the Medically Necessary Item Non-Bid Item Bid Item Contract Supplier N Lower of the Actual Charge or Fee Schedule Amount for the Medically Necessary Item Bid Item in Product Category “S” Bid Item in Product Category “U” Contract Supplier for Category “U” Y Single Payment Amount for Category “S” for the Medically Necessary Item The following scenarios and chart describe situations where a beneficiary, who does not reside in a competitive bidding area, but travels to a competitive bidding area, elects to upgrade to an item with features that are not medically necessary. • Upgrades from a bid item to a non-bid item In this situation, Medicare payment is only made to a contract supplier on an assignment- related basis. Medicare payment will be equal to 80 percent of the lower of the actual charge or the fee schedule amount for the medically necessary bid item. • Upgrades from a non-bid item to a bid item When upgrading from a non-bid to a bid item, Medicare payment is made to a contract supplier on either an assigned or unassigned basis. Medicare payment will be equal to 80 percent of the lower of the actual charge or the fee schedule amount for the medically necessary non-bid item. • Upgrades from a bid item in one product category (category “S”) to a bid item in another product category (category “U”) In this case, Medicare payment is only made to a contract supplier for the product category “U” on an assignment-related basis. Medicare payment would be equal to 80 percent of lower of the actual charge or the fee schedule amount for the medically necessary bid item in product category “S”. Upgrade Scenarios for Beneficiaries Who Do Not Reside In a CBA, But Travel to a CBA From the Medically Necessary Item To the Upgraded Item Must be Furnished by Assignment Mandatory (Y/N) Medicare Payment Based Upon Bid Item Non-Bid Item Contract Supplier Y Lower of the Actual Charge or Fee Schedule Amount for the Medically Necessary Item Non-Bid Item Bid Item Contract Supplier N Lower of the Actual Charge or Fee Schedule Amount for the Medically Necessary Item Bid Item in Product Category “S” Bid Item in Product Category “U” Contract Supplier for Category “U” Y Lower of the Actual Charge or Fee Schedule Amount for the Medically Necessary Item Beneficiary Liability under the Competitive Bidding Program Under the competitive bidding program, a beneficiary has no financial liability to a non contract supplier that furnishes an item included in the competitive bidding program for a competitive bidding area, unless, prior to receiving the item, the beneficiary selects Option 1 on the ABN and signs the notice. Similarly, beneficiaries who receive an upgraded item from a non-contract supplier in a competitive bidding area are not financially liable for the item unless, prior to giving the beneficiary the upgraded item, the supplier obtains a valid ABN on which the enrollee has selected Option 1 and signed the notice. In the case of upgrades, for a beneficiary to be liable for the extra cost of an item that exceeds their medical needs, the beneficiary must, select Option 1 and sign a valid ABN prior to receiving the item. See Chapter 20, section 120 of the Medicare Claims Processing Manual for additional information on ABN upgrades.