Outpatient Therapy Services and ABN Use

Section 50202 of the BBA of 2018 did not change provider liability procedures, which first became effective January 1, 2013. Section 1833(g)(8) of the Social Security Act (as redesignated by the Bipartisan Budget Act of 2018) continues to provide limitation of liability (LOL) protections to beneficiaries receiving outpatient therapy services on/after January 1, 2013. Physical therapy (PT), occupational therapy (OT), and speech language pathology (SLP) services that do not meet skilled rehabilitation criteria and Medicare coverage requirements are not covered by Medicare.

Financial Responsibility

The therapist and therapy providers (outpatient facility/clinics) are financially responsible when Medicare denies payment for therapy services above the threshold amount for failure to use the KX modifier, which indicates services are medically reasonable and necessary as justified by information in the medical record. For the therapist or therapy providers to transfer liability to the beneficiary, he/she must issue a valid Advance Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131.

When the therapy coverage is not medically reasonable and necessary, the provider must issue a valid mandatory ABN to the beneficiary before providing services above the threshold. ABN issuance allows the provider to charge the beneficiary if Medicare does not pay. If the ABN is not issued when it is required, and Medicare does not pay the claim, the therapist and therapy provider are liable for the charges.

Therapy Threshold

Therapy Threshold Not Met

ABN Mandatory Example

Beneficiary has been receiving PT three times per week and has achieved all his/her PT goals established in the Plan of Care (POC). The total amount applied to incurred PT expenses this year is $630; no SLP services were performed. Although PT is no longer medically reasonable and necessary, he/she requests continued PT services two times per week.

In this example, the ABN must be issued prior to providing services that will not be covered by Medicare because they are no longer medically reasonable and necessary.

Therapy Threshold Met

ABN Mandatory Example

Beneficiary has been receiving PT three times per week and has achieved all his/her PT goals established in the POC. The total yearly incurred amount has been applied. Although PT is no longer medically reasonable and necessary, he/she requests continued PT services two times a week.

In this example, the ABN must be issued prior to providing not medically reasonable and necessary services in order to transfer liability from provider to beneficiary. In cases such as this, if Medicare denies the claim and a valid ABN was issued, financial liability shifts to the beneficiary; however, if the provider fails to issue an ABN for therapy that is not medically reasonable and necessary, the provider will be held financially liable if the claim denies.

ABN Not Required Example

Beneficiary has been receiving PT three times a week and has not met his/her PT goals. He/she met the total yearly incurred limitation, but additional PT, above the threshold, is medically reasonable and necessary. When the incurred expenses for OT services or the combined PT and SLP services are reached, the therapist submits claims for the necessary therapy that exceeds the threshold amount. The KX modifier confirms that the services are medically reasonable and necessary as justified by appropriate documentation in the medical record.

In this example, an ABN is not issued to the beneficiary since the ABN is only issued for skilled services that are not medically reasonable and necessary

Tips

  • Providers/suppliers must not issue an ABN to all beneficiaries who receive services exceeding yearly threshold amount
  • When services rendered were not medically reasonable and necessary and a valid ABN was issued, it is appropriate to append GA modifier to claim to indicate that an ABN has been issued as required per payer policy. Submit line(S) item as covered and Medicare will make determination for payment.
  • KX and GA modifiers cannot be added to same claim line of service because they convey opposing payer policy
  • Medicare covers therapy services that are above KX modifier threshold that are medically reasonable and necessary. Providers cannot transfer liability to a beneficiary. Beneficiary is liable for applicable co-pays and deductibles for covered therapy services
  • If provider/supplier did not issue an ABN for therapy services above KX modifier threshold that are not medically reasonable and necessary, GZ modifier is used on claim. Item or service expected to be denied as not reasonable and necessary. Cannot be used when ABN is given. Lines submitted as non-covered will be denied as provider-liable
  • When a provider/supplier provides a service that Medicare never covers, such as a service that fails to meet a Medicare benefit definition or a service that is explicitly excluded from coverage under §1862 of the Act, limitation of liability protections in §1879 of the Act do not apply. So, there is no requirement for suppliers/providers to alert beneficiaries to forthcoming financial liability prior to providing a never covered service; however, suppliers/providers may issue the ABN, Form CMS-R-131 as an optional notice to alert beneficiary to liability. When ABN is used as an optional notice, it is called a voluntary ABN. Requirements for valid completion of mandatory ABN don't apply to voluntary ABN

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Last Updated Nov 22 , 2024