Pathology/Lab Coding Alert

Unless youre diligent about seeing that you have a signed waiver of liability statement from Medicare outpatients, you are forfeiting your ability to collect for non-covered pathology and lab services and procedures. Labs are losing revenues because theyre running tests not considered reasonable and necessary, and they dont have a signed advance beneficiary notice (ABN), claims Laurie Castillo, MA, CPC, CPC-H, CCS-P, member of the National Advisory Board of the American Academy of Professional Coders and president of its Northern Virginia Chapter.

For example, suppose a blood sample is sent to the lab for an iron test (CPT 83540 , iron) with the ordering physicians notation to rule out iron deficiency anemia. If the physician doesnt document a diagnosis or signs and symptoms that are listed as medically necessary in either a national policy or local medical review policy (LMRP), Medicare will deny the claim. Without a signed ABN, Medicare would send the lab an explanation of benefits (EOB) denying the non-covered charge, as well as one to the patient stating that the lab may not bill the patient for the charges.

Because Medicare limits a patients liability for services that are denied as not reasonable and necessary (Omnibus Budget Reconciliation Act of 1988), you lose the right to collect for those charges if you dont have a waiver of liability on file, says Castillo. Absent a payable diagnosis, which only the treating physician can give, you must have an ABN signed before the procedure is provided, or you cant bill the patient for non-covered services.

Additionally, labs should be aware that ABNs are a required part of the OIGs laboratory compliance program. Many labs have paid dearly for failure to use waivers of liability appropriately, reports Castillo. They have paid through lost revenues because they cant collect from the patient, and they have paid through fines levied for non-compliance.

Guidelines for ABNs

1. Who should use ABNs? Any physician, provider or supplier furnishing and billing for Medicare services to outpatients (Part B) should procure an ABN when necessary. This is true whether the claim is processed by the Medicare carrier or fiscal intermediary, explains Gregory L. Schnitzer, RN, CPC, CPC-H, CCS-P, manager of coding compliance for CodeRyte Inc., a software company in Bethesda, Md., that has developed an artificial intelligence automatic coding software.

Health Care Financing Administration (HCFA) explained the use of ABNs in a recent program memorandum (A-00-43). The notice is important to labs because many of their services encompass both a facility fee processed through Part A, and a physician fee processed through Part B, Schnitzer continues. The memorandum clarifies that ABNs should be used for claims filed on either form, [...]