Reimbursement rates for identical products can vary wildly depending on who is picking up the tab, and sometimes those rates are not enough to cover supplier costs. In those cases, DME suppliers often wonder:
“Can we use advance beneficiary notices, or ABNs, to charge customers more and make up the difference?”
Not exactly.
ABNs Are No Cure-All for Low Reimbursement Rates
ABNs are a device exclusively for Medicare Fee-For-Service (FFS) patients, and they have limited applicability even within that population. Suppliers can use ABNs to:
- Protect against medical necessity denials, and
- Pass additional fees for product upgrades to the patient.
At first glance, that second option seems like a perfect fit if the Medicare FFS rate is undesirable, but it is not a license to adjust the price on a single product. Instead, suppliers must offer at least two products to the customer:
- The basic model that meets the needs of the customer, and
- An upgraded model with additional features the customer wants.
The customer must consider both and choose the upgraded model. Suppliers can then obtain an ABN and charge the customer their customary charge amount - or price - for the upgraded model and submit a claim to Medicare on a non-assigned basis. Medicare will reimburse the customer directly for the allowed amount of the basic item, and the supplier is not tethered to Medicare’s fee schedule.
On the other hand, if the supplier chooses to accept claim assignment, the ABN permits them to charge the customer the difference between the supplier’s price for the upgraded model and the supplier’s price for the basic model. The difference between the price and the allowable amount for the basic item must be written off as a contractual adjustment.
Medicare Advantage Plans (MAPs) Do Not Honor ABNs
ABNs don’t work with MAPs. Instead, Medicare Advantage Plans have organizational determinations, their own process for authorizing suppliers to pass additional costs to the customer. Like ABNs, organizational determinations are limited to medical necessity denials or upgrades.
Suppliers typically submit a request to the MAP explaining why the stated reimbursement rate should not apply to a specific customer transaction. Doing so petitions the MAP to deny the service or additional features before the supplier delivers equipment.
Medicaid and Medicaid MCOs
Medicaid and Medicaid Managed Care Organizations (MCOs) do not typically permit suppliers to collect additional amounts for their beneficiaries. Individuals qualify for benefits because they have limited financial means, and as such, they are considered financially vulnerable. Medicaid programs are very strict in this regard, and billing Medicaid patients without explicit permission from the plan is likely to cost an offending supplier their billing privileges.
Commercial Payers are a Mixed Bag
The supplier’s obligation to a commercial plan’s fee schedule depends largely the type of plan and their contract status. Suppliers should read any contracts carefully and contact payers directly for information before delivering equipment.