Little Health Law Blog
Our healthcare and business law firm advises many physicians and medical practices on Medicare compliance, including one of the most foundational questions a Medicare-participating provider must answer before offering a new service: is this a covered service? The answer has significant legal and financial consequences. This post walks through a framework for analyzing whether a service is covered under Medicare, why that distinction matters, and what options a provider has when a service may or may not be covered. If you would like to discuss Medicare compliance for your practice or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@littlehealthlaw.com. You may also learn more about our law firm by visiting www.littlehealthlaw.com.
(1) Why the Covered vs. Non-Covered Distinction Matters
As a Medicare-participating provider, you have agreed—through your provider agreement—to accept Medicare’s approved payment amount as payment in full for covered services. That means if a service is covered by Medicare, you generally cannot bill the patient a separate or higher fee for that same service. Doing so can result in severe penalties, including civil monetary penalties and exclusion from the Medicare program.
On the other hand, if a service is never a covered service, you are not bound by Medicare’s billing rates, are not required to submit a claim to Medicare, and can generally charge patients directly—provided you are transparent about the fact that the service is non-covered. Understanding where your services fall within this framework is essential before you set your pricing or marketing strategy.
(2) How to Analyze Whether a Service Is Covered
There is no single master list that resolves the coverage question for every clinical scenario, but the analysis generally involves three steps.
Step 1: Identify the Applicable CPT or HCPCS Code. Most Medicare-covered services are billed using Current Procedural Terminology (CPT) codes or Healthcare Common Procedure Coding System (HCPCS) codes. The starting point is identifying which billing code, if any, would apply to the service you intend to offer. There are many CMS Manuals, local and national coverage determinations, and other resources that can help with this analysis. For instance, CMS publishes a Medicare Physician Fee Schedule and a Preventive Services reference chart that identify covered services, applicable codes, frequency limitations, and billing requirements.
Step 2: Review the Code’s Requirements. Even if a code exists for a type of service, coverage depends on whether your service actually meets all of the code’s requirements. Many codes have specific conditions that must be satisfied—such as minimum time thresholds, the type of clinical encounter required (e.g., synchronous vs. asynchronous), the setting in which the service is delivered (e.g., primary care setting), or the frequency with which the service may be billed. If the service you offer does not satisfy all of the code’s requirements, it is not properly billed under that code. If the service offered in the way that it is offered is a covered service, but not covered in a specific situation (for example, because it exceeds the number permitted within a time period), then it is still considered a covered service, however, the practice may be able to bill the patient for it provided the practice complies with the Advanced Beneficiary Notice of Non-Coverage (“ABN”) (see Section 4 below). ABNs are not required when a service is never covered.
Step 3: Determine Whether a Non-Covered Service Can Be Documented as Medically Appropriate. When a service does not meet the requirements of a covered code, it may appropriately be classified as a non-covered service. However, non-covered does not mean unregulated. You must still be able to demonstrate that the service is medically appropriate and that a proper patient-provider relationship has been established before the service is rendered. If a service is non-covered, there’s an inherent question about why the provider is offering it. There are many reasons why a provider will offer a non-covered service, such as purely aesthetic reasons or to learn more about the patient’s health status in a preventative way.
(3) Preventive Services: A Common Area of Complexity
Preventive services are a frequent source of coverage questions, particularly for providers offering wellness-oriented services. Medicare covers a defined set of preventive services, many of which involve screening or counseling for specific conditions. The full list is available in CMS’s Medicare Preventive Services chart.
As an example of how this analysis works in practice, consider a provider looking to offer asynchronous questionnaire-based services related to alcohol use and smoking cessation. Medicare does cover preventive services in both of those areas—CPT codes 99406 and 99407 for smoking and tobacco cessation counseling, and HCPCS codes G0442 and G0443 for alcohol misuse screening and counseling. However, several of those codes are time-dependent and require synchronous or face-to-face interactions. A provider offering only asynchronous questionnaire review—without any synchronous counseling visit—may not satisfy the billing requirements for those covered codes and can, with appropriate analysis, structure those services as non-covered. That conclusion, however, requires careful examination of the billing manual requirements for each specific code, the mode of service delivery, and the clinical setting. The same type of careful code-by-code analysis applies whenever a provider introduces a new service.
(4) What to Do If a Service Is or May Be Covered
If after your analysis you conclude that a service you intend to offer is a covered service—or if there is meaningful uncertainty about whether it is—you have two primary options. First, you can structure your billing to comply with Medicare’s requirements: accept assignment, bill Medicare at the approved rate per the Medicare Physician Fee Schedule, and collect only applicable cost-sharing amounts from the patient. Second, if a beneficiary wants a service that Medicare covers but the provider believes is not medically necessary in a particular case, you can use an ABN to notify the patient in advance that Medicare may not pay, allowing the patient to decide whether to proceed and pay out of pocket.
What you cannot do is charge Medicare patients a different rate for a service that is covered, or omit billing Medicare for a covered service in order to charge patients directly. The penalties for doing so—including civil monetary penalties and exclusion from the Medicare program—are severe and apply regardless of whether the violation was intentional.
As your practice evolves and you add new services, we recommend revisiting the coverage analysis for any new offering, particularly if your service model, delivery method, or patient population changes. If you would like to discuss Medicare billing compliance or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@littlehealthlaw.com. You may also learn more about our law firm by visiting www.littlehealthlaw.com.