The ABN demystified

Tuesday, October 31, 2006

Q. With Medicare continuing to decrease reimbursement, I want to learn more about the ABN upgrade provision. Can I use this for any piece of equipment, even respiratory?

A. The ABN can be used for any item of HME--if the beneficiary wants an upgraded item and is willing to pay the difference in price. The upgraded item must have components or features that the lower-priced item does not have. An ABN cannot be used to charge more for an item that is of higher quality but that does not have additional features. The two items may have the same HCPCS codes or different codes, as long as the upgraded item is medically appropriate for the beneficiary's condition.
For example, a beneficiary may want the convenience of a small-volume ultrasonic nebulizer. Medicare reimburses these nebulizers at the compressor nebulizer price, on the grounds that ultrasonic nebulizers do not offer increased clinical benefit. However, if the beneficiary believes that it is worth paying extra for the added convenience, the supplier may provide the ultrasonic nebulizer as an upgrade. The supplier then has the beneficiary execute a standard ABN-G form, available from the CMS Web site. The claim is submitted using two lines, one for the upgraded item (with modifier GA to indicate that an ABN is on file) and one for the item ordered by the physician. The claim must identify the upgrade features. The supplier collects the fee schedule amount for the compressor nebulizer (less co-payment) from Medicare and the balance from the beneficiary.
The applicable coverage and payment rules are those for the non-upgraded item. In particular, if the items are in different DMEPOS payment categories, the upgraded item will be paid for as if it were in the non-upgraded item's category.
For example, a large-volume ultrasonic nebulizer is classified in the "frequent and substantial servicing" category. Items in that category are rental-only items, and rental payments continue for as long as the beneficiary needs the item. If the supplier provided this nebulizer as an upgrade from a compressor nebulizer, however, Medicare would pay according to the capped rental rules that apply to compressor nebulizers.


Tim Webster is a healthcare attorney with the law firm Brown & Fortunato. Reach him at 806-345-6320 or