Medicare Payments – LCDs, NCDs, and ABNS

medicare payment

The whole revenue cycle may seem like it is the medical coder who calls the shots on what gets paid and what does not but contrary to that, there is actually a much higher power that will get to say are the services subjected to payments and that is the US government. That alone, there is a hierarchy of who makes the final decision on those claims needing a tough decision.

Local and National Coverage Determination (LCD and NCD)

If a contractor or a fiscal intermediary makes a decision on whether a claim is reimbursable or not, it will be known as an LCD or Local Coverage Determination. A medical necessity is a basis for this decision and this is limited only to the contractor’s area of service. The CPT manual lists those procedural codes that are limited to him and if a provider will submit a procedural or HCPCS code that is deemed under the jurisdiction of an LCD, it is advised, just to be safe, to verify this first prior to submission. Medicare coverage however is on a different level. Certain claims are made directly to Medicare (CMS) if a service or item is to be covered or not. This higher level of decision-making is what we call the National Coverage Determination (NCD). All Medicare contractors are obligated to follow the NCDs.

As much as a coder wants to go by the book and follow to whom should a claim be submitted, there are some cases that a service may be new and not described under the NCD. It will be the local contractor who will decide on this matter for coverage. If a service is neither of the two’s decisions and it’s uncertain who will cover it or if it’s coverable in the first place, the provider will make the decision to bill the service or not. If he decides to bill it, he should make an Advance Beneficiary Notice (ABN) to hold the Medicare patient liable for the charges.

Advance Beneficiary Notice

Advance Beneficiary Notice, also known as a waiver of liability that providers use if they will perform a procedure or render a service that they know Medicare will not consider medically necessary. This allows a patient to decide whether to get the care offered by the provider and accept financial responsibility for the service or product in the event Medicare denies payment. A coder is responsible for making statements that are reimbursable for the medical provider. If he encounters a service that is not billable or reimbursable and there is no LCD, he can bring this issue up to the management office to be discussed or the provider can negotiate with the patient the necessity of the need for this ABN. This is an advanced warning that Medicare may not reimburse a service or a product and that the patient may have to pay for it out of his pocket.

Exceptions that Medicare Considers

There are some procedures that may benefit the patient cosmetically and medically. Usually, cosmetic procedures are not covered by Medicare since only medical and health-implicating conditions are reasonably covered but there are some cases wherein the patient may benefit from a procedure medically with favorable, collateral cosmetic results.

1. Blepharoplasty. Blepharoplasty is a reconstruction of the eyelid by the removal of excess tissues surrounding it. This is a common cosmetic procedure that makes the eyes look younger and more alert. However, due to aging, sagging skin around the eyes can interrupt vision and therefore deemed medically necessary to remove the skin.

2. Aggressive skin lesions. Skin lesions, especially on the face may range from benign to innocent-looking malignant tumors. Medicare will not usually pay for the removal of these lesions if proven to be in a benign condition however if a biopsy came back with unfortunate results, then Medicare will have to cover the removal of these lesions.

These types of scenarios are not limited to Medicare. All private insurance companies have these considerations in their plans but verification should be provided. The provider is still the professional in charge and is in the best position to declare a medical necessity.

Providers can customize their own ABN forms as long as the form is readable, contains the required language, uses a large font size, the provider identity is given, the patient, the service or product being negotiated, and the reason why the payment will be denied. The patient must sign the ABN every time that service is given.

It is also important to know that while an ABN will be a warning that Medicare will take its hands off from payment for a certain procedure that the provider strongly recommends, it is also possible that Medicare might also pay for it. The official decision should come from Medicare first and this is by signing the ABN first agreeing to pay voluntarily if Medicare will not pay, and then receive the care. Also, if you are a patient reading this now, also make sure that the provider will have to bill Medicare FIRST, before billing you.

Scroll to Top