What do you do when you are presented with a patient who needs treatment but the patient’s insurance company will not pay for the services? Can you provide the services anyway? Who will pay for them? How do you collect payment for such services?
If the patient consents to receive the services in spite of the insurance company’s refusal to pay for such services, you will likely be able to bill the patient directly. However, in order to do so, there are certain requirements that you must satisfy.
Reason for Non-Coverage
Several reasons exist for why a particular service may not be covered by Medicare, Medicaid or a commercial insurance provider. Medicare specifically identifies four categories of items and services that are not covered, which are generally applicable to commercial payers as well. The four categories are:
- Services that are not medically reasonable and necessary;
- Non-covered services;
- Services denied as bundled or included in the basic allowance of another service; and
- Services reimbursable by other organizations or furnished without charge.
With respect to the first category, services that are not medically reasonable and necessary to the patient’s overall diagnosis and treatment are not covered. To be considered medically necessary, the services must meet specific criteria defined by national coverage determinations and local coverage determinations. For each service billed, you must identify the specific patient symptom or complaint that necessitates the service.
Concerning the second category, some services are just not covered by certain payers. These include, but are not limited to, services furnished outside the U.S., certain routine physical checkups, eye examinations, eyeglasses and lenses, hearing aids and examinations, certain immunizations, personal comfort items and services, custodial care, and cosmetic surgery.
Regarding the third category, services that are denied as bundled or included in the basic allowance of another service include fragmented services that are part of the basic allowance of the initial service, in addition to prolonged care, physician standby services, certain case management services and supplies included in the basic allowance of a procedure.
In relation to category four, some services are reimbursable under automobile, no-fault or liability insurance, or workers’ compensation programs and, therefore, are not covered by Medicare. Also, payment will not be made for the following: certain services authorized or paid by a government entity; services for which the patient, another individual or an organization has no legal obligation to pay for or furnish (e.g., X-rays or immunizations gratuitously furnished to patient without regard to patient’s ability to pay and without expectation of payment from any source); defective medical equipment; medical devices under warranty if they are replaced free of charge by the warrantor; or if an acceptable replacement could have been obtained free of charge under the warranty but was purchased instead.
Although the above categories describe services that are generally not covered, exceptions to each category exist that would permit and/or require payment by Medicare or a commercial payer, as applicable. Therefore, it’s recommended that when dealing with a non-covered service, you review the applicable exceptions to determine if the service could actually be covered under an exception to the non-coverage category.
When dealing with a non-covered service … review the applicable exceptions to determine if the service could actually be covered.
Medicare and Advanced Beneficiary Notices
You must give written notice to a fee-for-service patient prior to rendering services that are usually covered by Medicare, but are not expected to be paid in a specific instance. This notice is known as an Advanced Beneficiary Notice of Noncoverage (ABN).
The ABN allows a patient to make an informed decision about whether to receive the service and accept financial responsibility if Medicare does not pay. It also allows the patient to better participate in treatment decisions by making informed decisions. The ABN must list the items or services that Medicare is not expected to pay and the reasons why Medicare may not pay, and include an estimate of costs for the items or services.
If the patient does not receive an ABN when it is required, he or she may not be held financially liable if Medicare denies payment. If the patient is provided an ABN and notified that the service may not be covered, and the patient agrees to pay out of pocket, you may bill the patient for the services. The patient must be provided with a copy of the fully executed ABN and a copy must also be retained in the patient’s medical record.
It is worth noting that you are not required to notify a patient before providing a service that Medicare never covers (i.e., the non-covered services discussed above) or that is not a Medicare benefit. In such instances, however, you may voluntarily provide the patient with an ABN or other written informed notice of non-coverage as a courtesy to alert the patient that he or she will be financially liable for the services. When ABNs are issued on such a voluntary basis, the patient is not required to sign the notice, there is no impact on the patient’s requirement to pay for the services, and you may still bill the patient.
Upon receipt of an ABN, patients always have the right to ask you to submit a claim to Medicare for an official payment decision. However, in order to request a Medicare claim submission, the patient must actually receive the service described in the ABN.
Often, you will be permitted to seek and collect payment from patients for services not covered under the patient’s commercial (i.e., non-government payer) insurance plan if you obtain the patient’s prior written consent to receive such services. Typically, the consent must be signed and dated by the patient prior to rendering the services in question. It should state that the services will not be covered by the patient’s insurance plan and that if the patient chooses to receive the services, he or she will be financially responsible for their cost.
Often, the consent must include an estimate of the charges for the service and the provider’s reason for believing the services will not be covered by the patient’s insurance provider. The content of the patient consent form can vary by payer. Therefore, it is recommended that you confirm the applicable payer’s consent requirements prior to rendering services. Failure to obtain proper patient consent for non-covered services can result in termination of your right to bill the patient for such services and could be considered a breach of the applicable payer agreement.
Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC. Contact him via email at email@example.com.