Why Medicare Isn’t Paying You?

There are two main categories of services for which a physician may not be paid by Medicare:

  1. Services not deemed medically reasonable and necessary
  2. Non-covered services

In some instances, Medicare rules allow a physician to bill the patient for services in these categories. Understanding these rules and how to use them in your practice increases the likelihood of getting paid for the services your patients need, even if Medicare doesn’t cover them.

Medically Reasonable and Necessary

  • A patient may ask for a service that Medicare does not consider medically reasonable and necessary under the circumstances. For instance, the patient wants the service more frequently than Medicare allows or for a diagnosis that Medicare does not cover. You can often verify coverage information by researching the service on the payer’s website. If the patient’s policy coverage is unclear, inform the patient that it may result in an out-of-pocket expense before performing the service.
  • There are two resources to help you determine if Medicare considers services to be medically reasonable and necessary: national coverage determinations (NCDs) and local coverage determinations (LCDs). These documents provide information regarding CPT and Healthcare Common Procedure Coding System (HCPCS) codes, ICD-10 codes, billing information, as well as service delivery requirements.
  • www.cms.gov allows anyone to freely search for NCDs, LCDs, and other Medicare coverage documents. The database has quick and advanced search capabilities to search by geography, Medicare contractor, keywords, CPT codes, HCPCS codes, and ICD-10 codes. Commercial insurance companies and some Medicaid payers will have similar types of information about their coverage guidelines on their websites. Stay up-to-date on these policies for your local payers to ensure claims are processed as medically reasonable and necessary.
  • In all cases, if the patient’s policy coverage is unclear, inform the patient that they may be responsible for paying for the service. This should be done before you provide the service. If a Medicare patient wishes to receive services that may not be considered medically reasonable and necessary, or you feel Medicare may deny the service for another reason, you should obtain the patient’s signature on an Advance Beneficiary Notice (ABN). Medicare requires an ABN to be signed by the patient prior to beginning the procedure before you can bill the patient for a service Medicare denies as investigational or not medically necessary. Otherwise, Medicare assumes the patient did not know and prohibits the patient from being liable for the service.   (TIP: If an ABN is obtained, attach modifier -GA (waiver of liability statement issued as required by payer policy, individual case) to the line item(s) within the claim to indicate the patient has been notified.)

Non-covered Services

  • Certain services are never considered for payment by Medicare. These include preventive examinations represented by CPT codes 99381-99397. Medicare only covers three immunizations (influenza, pneumonia, and hepatitis B) as prophylactic physician services. Cosmetic procedures are never covered unless there is a medically-necessary reason for a procedure. In this instance, you should document and code it as such. Services rendered to immediate relatives and members of the household are not eligible for payment.
  • Non-covered services do not require an ABN since the services are never covered under Medicare. While not required, the ABN provides an opportunity to communicate with the patient that Medicare does not cover the service and the patient will be responsible for paying for the service. Pre-emptive communication through a voluntary ABN can prevent negative patient perceptions of your practice and facilitate collections.

Bundled Services

  • Medicare and most other payers do not allow for services to be “unbundled” when it has designated a set of services as represented by one payment (bundled). Examples include pre-operative and post-operative care when billing for surgery or billing for multiple laboratory procedures when a single panel test represents the service performed. When Medicare or another payer designates a service as “bundled,” it does not make separate payments for the pieces of the bundled service and does not permit you to bill the patient for it since the payer considers payment to already be included in the payment for another service that it does cover.

Medicare Carve-out Services

  • It is important to code all services provided, even if you think Medicare will not cover the services. Medicare has strict rules when billing for covered and non-covered services on the same date. This is often referred to as the “carve-out rule.” For instance, in the case of a medically-necessary visit on the same occasion as a preventive medicine visit, you may bill for the non-covered (carved-out) preventive visit but must subtract your charge for the covered service from your charge for the non-covered service. There are three modifiers to consider when dealing with non-covered services i.e. GX- Notice of liability issued; GY- Item or service statutorily excluded; GZ – Item or service expected to be denied as not reasonable and necessary
  • Patients need to be aware of cost-sharing when a problem-oriented visit is billed on the same occasion as a non-covered preventive visit. An ABN is not required, but a conversation with your patient before the services are rendered would be appropriate.
  • For example, a 67-year-old established patient presents for a covered service, such as an office visit for a chronic illness (e.g., 99213). At the same encounter, the patient chooses to receive a preventive medicine examination (e.g., 99397), which is a non-covered service under Medicare.


99397 – preventive exam (non-covered service) $201.00
99213 – office visit (covered service) ($130.00)
The patient billable amount for 99397 $71.00

Medicare rules, standards, and procedures change constantly so that you can easily miss small details that result in underpayments, denials, and rejections. Outsourcing to a company like Medical Biller and Coder (MBC) offers an effective way to regain control over billing by staying up-to-date on Medicare billing rules and regulations. For the last few years, MBC is one of the best medical billing and coding service provider in various US states. If you’re interested in outsourcing your medical billing and coding to improve revenue for your practice, contact us today at 888-357-3226 to learn how we can help you.

Source: Medicare Non-covered Services