What Is an ABN in Medical Billing & What Are Your Options?

An Advance Beneficiary Notice of Noncoverage (ABN) is a document given to Medicare beneficiaries by healthcare providers. It notifies them that Medicare may not cover a service or item they are about to receive. The ABN’s purpose is to inform the beneficiary they might be financially responsible if Medicare denies payment. This allows patients to make an informed decision about proceeding, understanding their potential financial liability.

Understanding the ABN

An ABN, Form CMS-R-131, is a written notice healthcare providers present to Medicare beneficiaries before services are rendered. Providers, such as physicians, laboratories, and suppliers, use this form to inform patients when Medicare is expected to deny payment. This notice protects the patient through transparency and the provider by establishing financial responsibility if Medicare does not cover the service.

ABNs are required when a provider believes Medicare may not cover a service because it is not medically reasonable and necessary. This includes services not indicated for diagnosis or treatment, experimental services, or those exceeding frequency limits. ABNs are also issued for custodial care, which Medicare generally does not cover. However, ABNs are not typically required for services Medicare never covers, like cosmetic procedures, though providers may issue a voluntary notice.

The ABN form includes several components. It identifies the patient, describes the service, states the reason Medicare may not pay, and provides the estimated cost. This helps the patient understand their potential financial obligation and decide whether to accept or decline the service.

Issuing a properly completed ABN is important for provider compliance. If a provider fails to issue a required ABN, or if it is invalid, they may be held financially liable for the service cost if Medicare denies coverage. The ABN formally transfers potential financial responsibility from Medicare to the beneficiary, allowing providers to seek payment.

Your Options When Presented with an ABN

When a Medicare beneficiary receives an ABN, they are presented with three options, each with different implications for financial responsibility. The ABN form requires the patient to select one, sign, and date the document. Patients should understand each choice before making a decision.

The first option allows the patient to receive the service and accept financial responsibility if Medicare denies payment. The provider will submit a claim to Medicare for an official coverage decision. If Medicare does not pay, the patient is responsible but retains the right to appeal. This option is often chosen if the patient wants Medicare to formally review the claim, perhaps for secondary insurance coverage.

The second option is to receive the service but refuse to pay. The patient agrees to receive the service but not to be financially responsible. The provider typically will not submit a claim to Medicare, so there are no appeal rights since Medicare is not billed.

The third option is to refuse the service entirely. The service will not be provided, and the patient will not be billed. This option is suitable if the patient decides the service is not worth the potential out-of-pocket cost or is not medically necessary. No claim is submitted to Medicare, so no appeal rights apply for that service.

The ABN should include an estimated cost. This estimate helps the patient make an informed decision about their healthcare and financial obligations. Patients have the right to ask their provider questions about why Medicare might not cover the service and to clarify any ABN details before signing. Providers must answer these questions and ensure the patient understands the potential financial liability.

After Signing or Refusing an ABN

After a Medicare beneficiary signs an ABN, specific procedures and outcomes follow based on the chosen option. The signed ABN records the patient’s informed choice regarding financial responsibility. Patients should keep a copy for their records.

If the patient selected Option 1, the provider submits the claim to Medicare. If Medicare denies coverage, the patient is responsible for the agreed cost. The patient retains the right to appeal Medicare’s denial, with appeal information typically found on the Medicare Summary Notice (MSN).

When Option 2 is chosen, the patient agrees to receive the service but refuses to pay. The provider typically does not submit a claim to Medicare, so the patient will not be billed, and no appeal rights exist through Medicare.

If the patient selected Option 3, refusing the service, it is not provided, and no billing occurs. There is no financial responsibility, and no claim is submitted to Medicare, meaning no appeal rights apply for that service.

If Medicare denies coverage after a claim is submitted, the patient has the right to appeal. The appeal process involves reviewing the Medicare Summary Notice (MSN) and submitting a redetermination request form. This allows the patient to challenge the denial if they believe the service should have been covered.