The Advance Beneficiary Notice of Noncoverage (ABN) is a standardized document for beneficiaries enrolled in Original Medicare (Part A and Part B). The Centers for Medicare & Medicaid Services (CMS) requires healthcare providers to issue this notice when they anticipate Medicare may not cover a specific service or item. The ABN is a warning, not an official denial, that informs the patient of potential financial responsibility if Medicare ultimately refuses payment.
The Advance Beneficiary Notice’s Function
The ABN transfers potential financial risk from the provider to the Medicare beneficiary before services are rendered. Providers (including doctors, laboratories, and suppliers) must use the official Form CMS-R-131 when they anticipate denial for a normally covered item or service. The notice ensures the patient is informed of potential out-of-pocket costs and is not surprised by a bill.
This notice must be provided far enough in advance so the patient has adequate time to review the information and make an informed decision about proceeding with the care. The provider must detail the specific reasons why they expect Medicare will not pay, such as the service not being considered medically reasonable or necessary. The ABN is only used when Medicare coverage is possible for the service but is unlikely in the current situation, not for services that are never covered by Medicare. If the provider fails to issue a valid ABN when required, they risk being held financially liable for the service instead of the patient.
Situations Requiring an ABN
An ABN is mandatory only when a provider has a reasonable belief that Medicare will deny payment for a service that is typically covered. The denial is usually expected because the service does not meet Medicare’s specific coverage rules. One of the most common triggers is the lack of “medical necessity,” meaning the specific care or test is not indicated for the patient’s diagnosis, treatment of illness, or injury. This determination is often guided by formal National Coverage Determinations (NCDs) or Local Coverage Determinations (LCDs).
Another frequent situation involves services exceeding defined limits for a specific condition or time period. For example, an ABN may be required if a patient needs physical therapy sessions that go beyond the annual frequency limit set by Medicare for their particular diagnosis. The notice is also triggered if the recommended procedure is considered experimental or investigational, or if the provider suspects the patient does not meet the necessary criteria for a service, such as not being homebound for certain home health services. Providers are prohibited from issuing the ABN routinely or for services rendered in emergency situations.
Beneficiary Choices Upon Receiving the Notice
Upon receiving the ABN, the beneficiary must select one of three distinct options, each carrying different financial and appeal implications. The first choice, Option 1, allows the patient to receive the item or service and requires the provider to submit a claim to Medicare for a formal payment decision. By selecting this option, the patient agrees to pay for the service if Medicare denies the claim, but they retain the right to appeal that denial. This is the path to take if the beneficiary needs a formal denial to submit a claim to a secondary insurance plan.
Option 2 also allows the beneficiary to receive the service, but they agree to pay for it immediately and instruct the provider not to submit a claim to Medicare. Choosing this option means the patient waives their right to appeal Medicare’s payment decision, as no formal claim will have been adjudicated.
Finally, Option 3 is to refuse the item or service listed on the ABN entirely. If this option is chosen, the patient is not responsible for any payment, and neither the provider nor the beneficiary will submit a claim to Medicare.
Pursuing an Appeal After Denial
If Medicare denies payment after the beneficiary chooses Option 1, they can initiate the formal appeals process. The claim submission generates a Medicare Summary Notice (MSN), which serves as the official denial and starting point for the appeal. The first level of appeal is a redetermination, a review of the claim by the Medicare Administrative Contractor (MAC) that processed the original claim.
The redetermination request must be filed within 120 days of receiving the MSN. If the MAC upholds the denial, the beneficiary can proceed to the second level: a reconsideration by a Qualified Independent Contractor (QIC). The denial notice from the redetermination outlines the specific steps and deadlines for requesting this next level of review.