CMS Pub. 100-04, ch. 20, § 120

Beneficiary Notice (ABN) Upgrades

(Rev. 2993, Effective: ASC X12 - 01-01-12, ICD-10 - Upon Implementation of ICD- 10; Implementation: ASC X12 - 08-25-14, ICD-10 - Upon Implementation of ICD- 10)

This section provides the DME MACs billing instructions regarding the use of ABNs and

claims modifiers for upgrades for items of DMEPOS.

Federal Regulations at 42 CFR 411.408 and Chapter 30 of this manual establishes the

basis for a supplier to issue an ABN to a beneficiary. The purpose of the ABN is to

inform a Medicare beneficiary, before he or she receives an item that Medicare will

probably not pay for that particular item on that particular occasion. The ABN allows the

beneficiary to make an informed consumer decision on whether to accept an item for

which he or she may have to pay out of pocket or through supplementary insurance.

Under existing policy, suppliers may collect from a beneficiary a payment amount greater

than Medicare’s allowed payment amount if the beneficiary, by signing an ABN, agrees

to pay extra for a DMEPOS item because the beneficiary prefers an item with features or

upgrades that are not medically necessary. This policy applies to both assigned and

unassigned claims. When a beneficiary does not sign an ABN, a supplier that accepts

assignment cannot hold the beneficiary liable for the cost of medically unnecessary

equipment or upgrades unless there is other acceptable evidence that the beneficiary

knew or could reasonably have been expected to know that Medicare would not pay for

the medically unnecessary equipment or upgrades. With respect to unassigned claims, a

signed ABN is necessary to hold the beneficiary liable.

The instructions in this section apply to situations where the ABN is being used for

upgrades and applies to both assigned and unassigned claims. 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 and/or more expensive than the item that is reasonable and

necessary under Medicare’s coverage requirements. When a DMEPOS supplier knows

or believes that the DMEPOS item does or may not meet Medicare’s reasonable and

necessary rules under specific circumstances, it is the responsibility of the supplier to

notify the beneficiary in writing via an ABN if the supplier wants to collect money from a

beneficiary if an item is denied.

When a supplier furnishes an upgraded item of DMEPOS and the supplier expects

Medicare to reduce the level of payment based on a medical necessity partial denial of

coverage for additional expenses attributable to the upgrade, the supplier must give an

ABN to the beneficiary for signature for holding the beneficiary liable for the additional

expense. Optional ABN forms are available at:

http://www.cms.gov/Medicare/Medicare-General-Information/BNI/ABN.html.

A. General Instructions for the Use of ABNs for Upgrading DMEPOS Items

Instruction Description

1. An upgrade may be from one item to another within a single Heath

Insurance Common Procedure Coding System (HCPCS) code, or may be

from one HCPCS code to another. When an upgrade is within a single

code the upgraded item must include features that exceed the official code

descriptor for that item.

2. The upgrade must be within the range of items or services that are

medically appropriate for the beneficiary’s medical condition and the

purpose of the physician’s order. ABNs may not be used to substitute a

different item or service that is not medically appropriate for the

beneficiary’s medical condition for the original item or service. The

upgraded item must still meet the intended medical purpose of the item

the physician ordered.

3. Use of an ABN to furnish an upgraded item or service, with the

beneficiary being personally responsible for the difference between the

costs of the standard and upgraded item or service, does not change

coverage or payment rules, statutory provisions, or manual instructions for

the particular benefit involved.

4. In cases where the DME MACs would make payment for the item the

physician ordered on a rental basis, the supplier must furnish the upgrade

on a rental basis.

5. A supplier furnishing an upgrade and using an ABN must submit a claim

and include information on the claim that identifies the upgrade features.

Suppliers must submit a claim for upgraded items and services using the

GA modifier on the upgraded line item to indicate that the beneficiary

signed an ABN. Suppliers must list upgrade features using the ASC X12

837 professional claim format or on the paper Form CMS-1500 in Item 19

or as an attachment to the claim for paper claims.

6. Denials should be based on medical necessity.

B. Billing Instructions:

Suppliers must bill 2 line items for upgraded DMEPOS items where the beneficiary

requests an upgrade. Suppliers must bill both lines on the same claim in the following

order:

Line Instruction

Line 1: Bill the appropriate HCPCS code for the upgraded item the supplier actually

provided to the beneficiary with the dollar amount of the upgraded item. If

the supplier has a properly obtained ABN on file signed by the beneficiary,

use the GA modifier. If the supplier did not properly obtain an ABN signed

by the beneficiary, use the GZ modifier.

Line 2: Bill the appropriate HCPCS code for the reasonable and necessary item with

the actual charge for the item. Use the GK modifier.

Suppliers should bill their full submitted charge on the claim line for the upgraded item

(Line 1) and the full amount for the reasonable and necessary item (Line 2). If the

upgrade is within a code, suppliers still bill 2 line items, using the same code on both

lines, but Line 1 would have the higher dollar amount.

Suppliers must bill both lines on the same claim in sequential order. Line 1 and the

associated Line 2 should follow each other.

DME MACs must return/reject applicable assigned claims that have invalid ABN

upgrade information using appropriate messages. If the claim is unassigned, DME

MACs must issue a denial.

C. Definitions of Modifiers that May be Associated with ABNs

Modifier Description

GA - Waiver of Liability (expected to be denied as not reasonable and necessary,

ABN on file)

GZ - Item or Service not Reasonable and Necessary (expected to be denied as not

reasonable and necessary, no ABN on file)

GK - Reasonable and necessary item/service associated with GA or GZ modifier

D. Medicare Summary Notice (MSN) and Remittance Advice (RA)

MSN Detailed text

36.01:

Our records show that you were informed in writing, before receiving

the service that Medicare would not pay. You are liable for this charge.

If you do not agree with this statement, you may ask for a review. ASC

X12 835, remittance advice remark code M38

36.02:

It appears that you did not know that we would not pay for this service

so you are not liable. Do not pay your provider for this service. If you

have paid your provider for this service, you should submit to this

office three things 1) A copy of this notice, 2) Your provider’s bill, and

3) A receipt or proof that you have paid the bill. You must file your

written request for payment within 6 months of the date of this notice.

Future services of this type provided to you will be your responsibility.

ASC X12 835 remittance advice remark code M25)

8.51:

You signed an Advanced Beneficiary Notice (ABN). You are

responsible for the difference between the upgrade amount and the

Medicare payment.

Use the following messages when denying claims due to invalid ABN upgrade

information:

MSN Detailed text

8.53: This item or service was denied because the upgrade information was

invalid.

N108: This item/service was denied because the upgrade information was

invalid.