A provider must obtain a patient’s signature on an Advance Beneficiary Notice of Noncoverage (ABN) when they believe that Medicare will not pay for a service that is normally covered. The ABN is a formal way to inform a Medicare beneficiary that they may have to pay for an item or service out-of-pocket, transferring the financial responsibility from the provider to the patient. This notice serves as a protection for both the patient, who is given time to make an informed decision, and the provider, who is protected from liability if Medicare denies the claim.
Defining the Advance Beneficiary Notice
The ABN, officially designated as Form CMS-R-131, is a standardized document mandatory for use by providers, physicians, suppliers, and laboratories when dealing with Original Medicare (Parts A and B) patients. The purpose of this notice is to anticipate a denial for a service that Medicare typically covers but is expected to deny in a specific instance. Providers are required to issue the ABN to Medicare Fee-for-Service beneficiaries before the service is rendered.
The form presents the patient with three distinct options. The patient can choose to receive the service and accept financial responsibility if Medicare denies payment. Alternatively, they can receive the service, request a claim be filed for a formal coverage decision, and accept financial responsibility if the claim is denied. The third option allows the patient to refuse the service entirely, removing any financial obligation for that specific item or procedure.
The Core Requirement: When Coverage is Uncertain
The requirement to issue an ABN is triggered by the provider’s anticipation of a Medicare denial for an item or service that falls under a covered benefit category. This notice is required when the denial is expected due to a lack of medical necessity, meaning the service is not considered reasonable or necessary under Medicare standards. An example of this is a diagnostic test ordered more frequently than Medicare’s established guidelines permit.
The notice is also required when a service exceeds a specific utilization or frequency limit set by Medicare, such as continuing physical therapy beyond the allowed threshold. Providers must also use the ABN if a procedure is considered experimental, investigational, or not generally accepted in the medical community as safe and effective. These procedures are often deemed not medically necessary.
The provider must complete the ABN by clearly stating the specific reason Medicare is likely to deny payment. This reason must be specific to the patient’s situation and cannot be a blanket statement. By signing the ABN, the patient acknowledges that they have been informed of the likely denial and understand their potential financial liability.
Situations That Do Not Require an ABN
Providers do not need to issue an ABN for services that are never covered by Medicare, known as statutory exclusions. These services are excluded from coverage by law, meaning Medicare will not pay for them under any circumstances. Examples include routine foot care, cosmetic surgery, and hearing aids. Since Medicare never covers these items, the patient is always financially responsible, and the ABN is not necessary to transfer liability.
The ABN is also not required for patients enrolled in Medicare Advantage plans (Part C), as these plans have their own notice requirements. Similarly, non-Medicare patients, such as those with Medicaid or commercial insurance, are not given an ABN. If a service is never a Medicare benefit, no ABN is needed; if it is a benefit but is not medically necessary in the specific case, an ABN is mandatory.
Procedural Rules for ABN Completion and Timing
The ABN must be presented to the beneficiary and signed before the service is rendered. This strict timing allows the patient adequate time to consider the financial implications and make an informed decision about proceeding. The notice cannot be issued retroactively or immediately before a service is performed, as this does not constitute a valid notice.
Before the patient signs, the provider must complete the form with a good-faith cost estimate for the service in question. The provider must also include a clear explanation of why Medicare is likely to deny coverage. A copy of the fully completed and signed ABN must be given to the beneficiary for their records.
The provider is required to retain the original signed ABN on file, typically for five years. If the patient refuses to sign, the provider must note the refusal on the form and may consider not providing the service, unless health and safety concerns exist. Proper completion and timely delivery are necessary for the provider to successfully transfer financial liability to the patient.