Medicare Frequently Asked Questions: Audiology
Medical Necessity & Advance Beneficiary Notice
What is medically reasonable and necessary?
Medicare will only pay for services considered "reasonable and necessary" which includes audiology diagnostic services. Medicare will only pay for services considered "medically reasonable and necessary." As a result, medical necessity must be met to ensure Medicare coverage for audiology diagnostic services.
Program Memorandum AB-02-080 [PDF] states "diagnostic testing, including hearing and balance assessment services, performed by a qualified audiologist is paid for as 'other diagnostic tests' under §1861(s)(3) of the Social Security Act (the Act) when a physician orders testing to obtain information as part of his/her diagnostic evaluation or to determine the appropriate medical or surgical treatment of a hearing deficit or related medical problem." Medical necessity includes the patient noting a change in one or more conditions, which may be new, or a change in a previous condition(s) such as hearing loss, tinnitus and/or dizziness. Information specifically related to the medical necessity of audiologic procedures can be found in the CMS Update to Audiology Policies [PDF].
Medicare contractors have Local Coverage Determination policies (LCDs) that are coverage guidelines developed by the contractor to provide rules either for determination of coverage in the absence of a National Coverage Determination policy (NCDs) or for further clarification of a NCD or LCD. Please go to the CMS Medicare Coverage Database to find information related to specific LCDs in your area. LCDs are not an inclusive list and may not address audiology and/or vestibular procedures. If an audiology/hearing/vestibular LCD is in effect, your Medicare contractor may define "medically necessary" as well as the appropriate codes that are reimbursed based on medical necessity. NCDs are established by Medicare and stipulate the conditions for a reimbursable procedure for a Medicare beneficiary. Currently, two NCDs relate to audiology and address cochlear implantation and tinnitus devices.
What is an Advance Beneficiary Notice (ABN)?
An Advance Beneficiary Notice (ABN) is used to notify patients when a procedure is likely not to be reimbursed by Medicare and allows them to decide if they still want the service and, if so, that they agree to pay for it out of pocket.
By signing the notice, the patient acknowledges their fiscal responsibility if the procedure is denied, based on medical necessity or if the service is statutorily excluded and is therefore a non-covered service. There are required and voluntary uses of the ABN. An ABN is required if a service is covered by Medicare but may be denied because medical necessity was not established. The use of ABN is voluntary if the services are statutorily excluded from Medicare coverage or no benefit category exists. Some examples may be a hearing test for the sole purpose of obtaining a hearing aid; annual, routine hearing tests where a patient has not reported any change in history of symptoms; cerumen removal; vestibular rehabilitation; aural rehabilitation; or tinnitus management. The form (in English and Spanish) and directions may be found on the CMS ABN Web site.
On the ABN, the patient or their representative is to choose one of three options:
- Option 1: "This option allows the beneficiary to receive the items and/or services at issue and requires the notifier to submit a claim to Medicare. This will result in a payment decision that can be appealed." See Ch. 30, §50.14.1 of the Medicare Claims Processing Manual [PDF, 1.6MB] for instructions on the notifier's obligation to bill Medicare.
- Option 2: "This option allows the beneficiary to receive the noncovered items and/or services and pay for them out of pocket. No claim will be filed and Medicare will not be billed. Thus, there are no appeal rights associated with this option." For audiologists, this option might be used for statutorily excluded services such as with annual audiograms, hearing aids, and treatment, such as canalith repositioning procedure. Evaluation and Management (E/M) codes are also non-covered Medicare services when performed by an audiologist and hearing testing when not ordered by a physician. You will want to check with your commercial payors for their payment policies regarding E/M codes.
- Option 3: According to Medicare, "This option means the beneficiary does not want the care in question. By checking this box, the beneficiary understands that no additional care will be provided and thus, there are no appeal rights associated with this option." This option indicates that the patient declines the services recommended for that date of service.
Please note that all three options allow for the collection of payment at the time of the visit.
What modifier do I use when I file a claim to Medicare with an ABN on file?
There are three modifiers of interest to audiologists that are specific to Medicare:
-GY: "Item or service statutorily excluded or does not meet the definition of any Medicare benefit." This modifier is often used to indicate that a denial is required for a secondary, commercial payor's reimbursement for the patient's contracted benefit. For audiologists, this is most commonly utilized for a hearing aid benefit.
-GA: As of April 1, 2010, this is defined as "Waiver of Liability Statement Issued as Required by Payer Policy" and is to be used only when an ABN is required for covered services and should not be reported with any other Medicare modifier. This modifier is not used if the definition of medical necessity is met for that particular patient. If not, with a signed ABN, this would allow the patient to be billed for the procedure(s).
-GX: This new modifier is effective as of April 1, 2010, and is defined as the "Notice of Liability Issued, Voluntary Under Payer Policy." It is to be used when a voluntary ABN was issued. Audiologists would typically report this modifier when performing statutorily excluded, non-covered services such as annual audiologic evaluations, and for treatment such as tinnitus retraining therapy, and/or vestibular rehabilitation. It is also applicable for hearing aids.
Note: The –GY and –GX modifiers may be reported for the same procedure, on the same line on the CMS 1500 form.