An Advanced Beneficiary Notice of Non-coverage (ABN) is a standard document used in medical billing to alert a patient that a specific item or service they are about to receive may not be covered by their insurance. The notice serves as a formal warning that the patient may be held financially responsible for the cost if their claim is ultimately denied. The ABN requires an informed decision before the service is provided, protecting the patient from unexpected bills by clarifying the potential financial liability they assume.
Defining the Advanced Beneficiary Notice
The ABN is officially known by the Centers for Medicare & Medicaid Services (CMS) as Form CMS-R-131, and its use is tied to Original Medicare beneficiaries receiving Part A or Part B services. Providers issue this notice when they anticipate Medicare will deny payment because the service is considered “not medically reasonable and necessary” according to program standards. This determination is based on whether the service is appropriate for the diagnosis or treatment, or if it exceeds frequency limits. Issuance of the ABN is mandatory when a provider believes a generally covered service will be denied, such as when the care is considered custodial rather than acute. Since the ABN must be delivered and signed before the service is rendered, it transfers potential financial liability from the provider to the patient.
Patient Options When Receiving the ABN
The ABN form presents the patient with three distinct options, each carrying a different financial and procedural consequence. The choices determine whether the service is received and whether a formal claim is submitted to Medicare for an official coverage decision. The patient must select and sign one of these options to indicate their understanding and consent to the terms outlined.
Option 1: Receive Service and Submit Claim
The first choice, Option 1, is to receive the item or service and require the provider to submit a claim to Medicare for payment. By selecting this option, the patient agrees to accept financial responsibility for the service if Medicare ultimately denies the claim. This selection is the only way to retain the right to appeal the denial later, as it ensures the patient receives a formal coverage decision from the payer.
Option 2: Receive Service and Pay Out-of-Pocket
The second choice, Option 2, is to receive the item or service but to pay for it entirely out-of-pocket, instructing the provider not to submit a claim to Medicare. Choosing this option means the patient accepts full financial responsibility immediately. Because no claim is filed, the patient forfeits any right to appeal Medicare’s decision and typically pays the provider’s full, non-discounted charge at the time of service.
Option 3: Refuse the Service
The final choice, Option 3, allows the patient to refuse the item or service listed on the ABN. By selecting this option, the patient incurs no financial cost, and the provider cannot bill them for the item or service. This choice is appropriate when the patient decides the potential cost is too high or the service is not warranted if Medicare will not cover it.
The Process for Appealing a Denial
If the patient selects Option 1 on the ABN and receives the service, the formal appeal process begins only after Medicare issues a denial, communicated via a Medicare Summary Notice or Remittance Advice. The appeal structure consists of five levels. The first step is a Redetermination, a review of the claim by the Medicare Administrative Contractor (MAC), which must be requested within 120 days of receiving the initial denial notice. If the MAC upholds the denial, the patient can request a Reconsideration, the second level, reviewed by a Qualified Independent Contractor (QIC). Subsequent levels include a hearing before an Administrative Law Judge (ALJ), a review by the Medicare Appeals Council, and Judicial Review in Federal District Court, all requiring progressively higher monetary thresholds.