The Centers for Medicare and Medicaid Services (“CMS”) recently issued a new form, the “Advance Beneficiary Notice of Noncoverage,” to replace the general and laboratory-specific Advance Beneficiary Notice (“ABN”) that has been used in recent years.

ABNs document a Medicare beneficiary’s recognition that Medicare is unlikely to pay for an item or service based on medical necessity (and other specified reasons subject to Medicare “limitation of liability” principles), preventing the beneficiary from shifting financial responsibility for the item or service to the health care provider.

The new ABN form can be used at the present time; its use will become mandatory as of September 1, 2008. The new form is for use by physicians, providers, practitioners and suppliers who are paid under Medicare Part B, as well as hospices and religious non-medical health care institutions that are paid under Medicare Part A. It may not be used for inpatient hospital services or by skilled nursing facilities or home health agencies.

The new ABN form continues to require identification of the item or service to which it relates, the reason why Medicare is not expected to pay for the item or service, and the estimated cost of the item or service.

However, the new form provides a Medicare beneficiary with an option that was not reflected on the previous ABN: Obtaining the item or service, but agreeing that a Medicare claim need not be submitted. The beneficiary may also elect to obtain the item or service and require submission of a Medicare claim, or refuse the item or service. A health care provider who offers an ABN to a Medicare beneficiary may not designate the selection of one of the three available options in advance.

A beneficiary who requests that an item or service be provided to him – regardless of whether a Medicare claim will be submitted – may be asked for payment. If a claim is submitted and Medicare unexpectedly pays for the service, any payment received from the patient must be returned, less any applicable copayment or deductible that is due from the patient.

CMS instructions permit the ABN form to be customized in limited respects. Forms for common or high volume items or services may be preprinted, including reasons why Medicare may not pay for the item or service and its cost.

When the health care provider giving the patient the ABN will not directly furnish the service, for example, when laboratory tests ordered by a physician will be performed by an independent clinical laboratory, information regarding both entities can be listed on the top of the form. CMS cautions that the role of each entity must be “clearly conveyed to the beneficiary for purposes of responding to questions.”

Finally, CMS has incorporated concepts from “informed consent” into the ABN process. CMS requires that the ABN be “verbally reviewed” with the patient or his representative, that answers be provided to any questions that they may raise, and that the ABN be delivered sufficiently in advance of the provision of the item or service so that available options can be considered and an informed choice made.

The new form and related instructions are available at www.cms.hhs.gov/bni.