Take Notice

Know when and how to use ABNs for traditional Medicare fee-for-service claims

An Advanced Beneficiary Notice of Noncoverage (ABN) can be a valuable and useful billing tool for you, your facility, and your bottom line. It can protect you from unnecessary financial liability in certain circumstances, if used properly, or allow you to provide services when you normally would not be able to. However, you must use the form properly to ensure you don’t develop a false sense of security.

Before reviewing some of the basic rules and purposes of the ABN, remember that the form is only to be used with traditional Medicare fee-for-service claims—and not with Medicare Advantage plans or private payor plans.

Purpose and Conditions

The ABN has two distinct purposes regarding when it may be used within the Medicare program: mandatory and voluntary.

The mandatory use is to inform the Medicare beneficiary that you, as the supplier and biller of record, believe that Medicare may deny a claim as not medically necessary, and in that case, the beneficiary will be financially responsible to pay for the services rendered. This essentially shifts the financial liability from you to the beneficiary. This usage is considered mandatory because you are required to have an ABN signed and on file if you wish to transfer financial liability to the beneficiary.

When used for this purpose, several conditions must be met to render the ABN valid. For example, the ABN must be provided to the beneficiary within a reasonable timeframe for the beneficiary to make an informed decision regarding whether to accept financial responsibility for the service, should Medicare deem it not medically necessary. In most cases, you should not provide an ABN to the beneficiary at the time of delivery and make them choose between signing the ABN or receiving their care. However, in some circumstances, late delivery of an ABN may not be avoidable; when this occurs, note the time the ABN was provided to the beneficiary and the time they signed, and note if they had any questions or concerns.

This will document that the beneficiary had time to review the ABN and make an informed choice.

In addition, you must state the specific reason why you believe Medicare will deny the claim as not medically necessary and provide a good faith estimate of what the beneficiary’s liabilities may be if the claim is denied.

These are just two examples of conditions that must be met for an ABN to be considered valid. In addition, you must use the correct and current ABN form, obtain a signature from the beneficiary indicating that they understand the provisions of the ABN and accept financial liability, and include your proper identification information.

The voluntary option for the ABN form, on the other hand, occurs when it is used as a voluntary notice that a particular item or service is not a statutorily covered benefit under the Medicare program. This voluntary usage does not have any impact on financial liability for the claim because statutorily noncovered items are always the financial responsibility of the beneficiary; however, it may be used for the purposes of informing the beneficiary of the noncovered status of an item as a courtesy to the beneficiary, and as documentation that you informed the beneficiary.

Examples of Usage

ABNs should only be used when they are warranted. You should use an ABN if there is a specific reason why you believe Medicare will deny a claim as not medically necessary. This could include denials stemming from policy coverage criteria have not been met, or that you don’t have sufficient documentation from the referring physician. A not medically necessary denial also would cover frequency issues, reasonable useful lifetime issues, or same or similar.

However, some other very specific scenarios may arise when an ABN is mandatory—for example, if you don’t meet the supplier number requirements, if you don’t have a valid supplier number, or if you are not a registered supplier of select Medicare benefit categories. So, if you have applied for a supplier number but have not yet received it, and some Medicare beneficiaries are awaiting your care, you would have to ask the beneficiaries to sign an ABN and inform them that you are not an eligible Medicare supplier. a very specific reason. If the beneficiary reviews the ABN then signs and dates it, indicating that they have made an informed decision to receive the item or service, they may be held financially responsible for payment for the service (up to your full usual and customary charge) should Medicare deny the claim as not medically necessary. For the ABN to be considered valid, the beneficiary must sign and date it prior to delivery.

A more current example for using a mandatory ABN among orthotic suppliers is the emergence of competitive bidding. If you are in a competitive bidding area but you don’t have a contract, the only way you would be allowed to provide an item subject to competitive bidding is if a beneficiary signs an ABN.

For a recap, the purpose of the ABN in these instances is to inform the beneficiary, in advance of receiving the service or item, that you believe Medicare will deny the claim as not medically necessary, for

In other instances, you may ask a beneficiary to sign an ABN in the voluntary category because a specific service is simply not a benefit under the Medicare program, or because Medicare would never pay for the item under any circumstance. This may occur when delivering items such as orthopedic shoes and inserts that are not an integral part of a brace, elastic-style braces, or diabetic inserts or modifications above the beneficiary’s allotted and allowed amounts. It also may apply when providing items or features that are primarily used for comfort and convenience, for which there is no medical or clinical benefit.

In these situations, it is not mandatory to use the ABN; you may use another method to inform the beneficiary of their financial obligations. The ABN is simply being used as a courtesy: The beneficiary would not be required to choose a billing option (Options 1-3 on the ABN form), and you would not be required to adhere to the other guidelines for the ABN, such as having the beneficiary sign it, or ensuring the ABN is provided prior to delivery.

ABN Advantages

A properly executed and valid ABN allows you, as the supplier and biller of record, to possibly collect your full usual and customary charge for a service at the time of delivery. While you remain obligated to submit a claim upon the request of the beneficiary (Option 1 on the ABN form, or Section G), if Medicare denies that claim due to the reason stated on the ABN, you are not required to refund the beneficiary any payment collected and you may bill the beneficiary directly for the service if no payment was collected at the time of delivery.

This is important because the general Medicare limitation of liability rules protect the beneficiary from financial liability for services or items denied due to medically necessity unless it can be shown that the beneficiary was made aware that the service or item in question would most likely be considered not medically necessary by Medicare. The ABN serves as proof that the beneficiary made an informed decision and can be held liable for payment.

Avoiding Routine Use

Providing ABNs to beneficiaries where there is no specific, identifiable reason to believe Medicare will not pay is considered “routine use,” and this practice is not allowed. Medicare has stated that ABNs may not be routinely used—and if they are, they will be considered invalid.

An example of a routine ABN would be a generic or general ABN: ABNs that do not list a specific reason for why the item or service may be considered not medically necessary, or simply state that a denial is possible or may happen. You must include a proper explanation of why you believe

Medicare will deny the claim as not medically necessary. If the reason documented on the ABN is overly vague, or if Medicare denies the claim as not medically necessary for a different reason, the ABN is invalid, and the beneficiary would not be responsible for payment.

Refusal To Sign

If the beneficiary refuses to choose an option or refuses to sign the ABN, you are under no obligation to provide care and deliver the item or service to the beneficiary, and thus accept the financial liability. The only time this may not apply is in an emergency situation.

If a patient refuses to complete or sign the form, make a notation on the original ABN form in Section H explaining that the beneficiary refused to sign; then provide a copy of the updated ABN to the beneficiary. Retain a copy of the document in your records as well.

Modifiers

Another example of a routine ABN would be the provision of a blank ABN for the beneficiary to sign. An ABN should not be part of your general intake paperwork that a beneficiary fills out during a visit. The same goes for blanket ABNs, or providing an ABN to every single beneficiary that comes to your facility. ABNs, by nature and design, are circumstantial and therefore should never be provided to every beneficiary as standard procedure. It is possible that the routine use of ABNs as a means to shift financial liability to Medicare beneficiaries can be considered an abusive practice, which may lead to negative consequences for you as the supplier—so avoid routine ABNs.

Also note that an ABN may not be used or issued under emergency situations, or if the beneficiary is under any notable duress. In either of these situations, the beneficiary likely cannot make a reasonable and formative decision about their care and their potential liabilities.

An ABN may not be used to bypass the Medicare prior authorization program. You may obtain and use an ABN if you have received a nonaffirmative prior authorization request, or if you are intending to bill a secondary insurance, but you may not have the beneficiary sign an ABN because you do not wish to submit a prior authorization request.

Six modifiers may possibly be used when submitting a claim and using an ABN. The two most commonly used modifiers are GA—waiver of liability statement issued as required by payor policy, individual case; and GY—item or service statutorily excluded, does not meet the definition of any Medicare benefit, or, for non-Medicare insurers, is not a contract benefit.

The GA is appropriate when billing Medicare and you have a valid ABN on file, and you believe a covered item may be denied due to medical necessity—for mandatory ABN uses. The GY is appropriate when you are billing Medicare for a noncovered item, or when you use the ABN in voluntary situations. Do not use the GA modifier if you voluntarily use an ABN for noncovered items.

Now that you know and understand some of the basic rules and purposes of the ABN, use it with confidence.

Devon Bernard is AOPA’s assistant director of coding and reimbursement services, education, and programming. Reach him at dbernard@AOPAnet.org

Editor’s Note: The Office of Management and Budget recently approved the latest version of the Medicare ABN. This version of the ABN can be identified by its expiration date of January 31, 2026, located in the lower left corner of the form. The new version of the ABN is mandatory for use on or after July 1, 2023.

CHRISTINE UMBRELL