Today, healthcare providers face a constant balancing act between delivering the right care and staying compliant with Medicare’s billing rules.

One tool that helps with both is the Advance Beneficiary Notice of Noncoverage (ABN).

On the surface, it may look like just another Medicare form, but in reality, it’s a critical document that protects both your practice and your patients.

It sets expectations upfront, reduces Medical billing disputes, and ensures you don’t get stuck absorbing the cost of services Medicare may deny.

For patients, it turns complex coverage issues into plain language, giving them the power to make informed decisions about their care.

For practices, it acts as both a financial safety net and a compliance safeguard during audits or appeals. Understanding how ABNs work isn’t just good practice—it’s essential for keeping revenue steady and patient trust strong.

What is an ABN in Medical Billing?

An Advance Beneficiary Notice of Noncoverage (ABN) is a standardized form that Medicare requires providers to use in specific situations. It’s not just a piece of paper—it’s both a patient education tool and a financial safeguard for your practice.

In simple terms, an ABN tells a patient: “We believe Medicare may not pay for this service, and if they don’t, you’ll be responsible for the cost.”

It serves two key purposes:

· Transparency: Patients know in advance about possible noncoverage and estimated costs.

·  Financial Responsibility: It documents that the patient understands and agrees to pay if Medicare denies.

Additional points worth noting:

·  ABNs only apply to Original Medicare (Part A and Part B), not Medicare Advantage (Part C) plans.

·   They’re used primarily in outpatient settings (hospitals, clinics, physician offices, DME suppliers).

·  The form is standardized—providers must use the CMS-approved template (Form CMS-R-131).

Why ABNs Matter

In medical billing, the Advance Beneficiary Notice of Noncoverage (ABN) acts like a safeguard. It ensures that providers get paid for services even if Medicare later decides the service doesn’t meet its coverage criteria.

Without an ABN, the financial risk falls on the provider. With one, the patient acknowledges the possibility of noncoverage and agrees to pay if Medicare denies the claim.

Protecting Provider Revenue

Healthcare organizations—whether a small physician’s office, a surgical center, or a supplier of durable medical equipment—rely on accurate billing to keep operations running.

Reimbursement typically comes from two sources: Medicare (or other insurers) and direct patient payments. The ABN bridges the gap between these two.

It prevents lost revenue when services are classified as “non-covered,” giving providers the legal right to bill patients directly.

For example, if a physical therapist provides treatment sessions beyond Medicare’s coverage limits, a signed ABN lets the practice bill the patient if Medicare declines payment. Without it, the practice absorbs the loss.

Enhancing Transparency for Patients

An ABN isn’t just paperwork—it’s also a disclosure tool. It tells patients, in writing, why Medicare may not cover a service, what it could cost them, and what choices they have (proceed, decline, or request billing).

This helps avoid surprises later when a patient gets a bill they didn’t expect.

By signing the ABN, the patient acknowledges that they’ve been informed and agree to financial responsibility if Medicare says no.

In this way, the ABN strengthens trust between provider and patient through transparency.

Compliance and Legal Protection

The Centers for Medicare & Medicaid Services (CMS) has strict rules around billing and medical necessity.

Providers who bill for unnecessary services without informing patients risk penalties, fines, or even exclusion from the Medicare program.

A properly executed ABN shows that the provider disclosed the risk upfront and that the patient consented.

Think of it as a compliance shield.

If Medicare later audits the provider, the ABN becomes evidence that there was no intent to commit fraud.

It documents the patient’s informed choice to receive the service despite the coverage risk.

Common Scenarios Where ABNs Apply

Medicare considers some services “non-covered” or “not medically necessary” under certain circumstances. These include:

·  Lab tests without supporting diagnoses → For example, ordering a complete blood count (CBC) when the diagnosis code doesn’t meet Medicare’s medical necessity criteria.

·  Excessive screenings → A flexible sigmoidoscopy done more often than every four years, or on a patient younger than 50.

·  Frequent preventive services → A prostate cancer screening performed more than once a year or on a patient under 50.

·  Durable medical equipment (DME) → Items that don’t meet Medicare’s coverage rules, such as extra wheelchairs or devices without supporting documentation.

·  Therapy services beyond limits → Physical, occupational, or speech therapy provided after Medicare’s cap is exceeded.

Why This Matters for Medical Billers and Coders

For those working in medical billing and coding, understanding the ABN’s role goes beyond form-filling. It requires:

· Recognizing when a service may trigger Medicare’s noncoverage rules.

·  Making sure the ABN is correctly completed, signed, and stored.

·  Using the correct modifiers (like GA, GX, GY, GZ) to signal to Medicare that an ABN was issued.

·  Educating providers and staff about when ABNs are required.

In short, the ABN protects revenue, ensures compliance, and fosters transparency. It’s both a billing tool and a legal safeguard—one that every billing professional should understand thoroughly.

When to Issue an ABN

You should issue an ABN before providing services/items that Medicare might not cover.

Typical scenarios include:

·  Durable Medical Equipment (DME): For example, a wheelchair that doesn’t meet medical necessity.

·  Therapy Services: When services exceed therapy caps or limits.

·  Lab Tests/Screenings: Tests performed more often than Medicare guidelines allow.

Additional triggers for ABNs:

·  Medicare does not approve experimental or investigational treatments.

·  Services are considered custodial care rather than medically necessary.

·  Items requested for patient convenience, like upgraded DME supplies.

·  Frequency limits exceeded, such as repeat imaging studies.

Key Components of an ABN

For an ABN to hold up legally, it must include all required elements:

·  Patient’s full name and identifying details.

·  Clear description of the service/item in question.

·  Why Medicare may not pay (with a specific reason, not vague language).

·  Estimated cost (a ballpark, not necessarily exact).

·  Patient’s options (go ahead and pay, decline, or request Medicare billing).

· Patient’s signature and date.

Extra things to keep in mind:

·  No blanket ABNs: They must be service-specific, not “just in case” forms.

·  Language must be simple: Patients should understand it without medical jargon.

·  Version control matters: Always use the most recent CMS-issued form.

How Does the ABN Appeal Process Work?

When a patient signs an ABN and chooses to move forward with the service, they usually select one of the Medicare claim submission options listed on the form. This choice determines how the appeal process unfolds if Medicare later denies coverage.

Patient Chooses to Have Medicare Billed

If the patient checks the option that says “I want the provider to bill Medicare”, then:

·  The provider submits the claim to Medicare with the proper GA modifier (indicating an ABN was signed).

·  If Medicare denies the claim, the patient receives a Medicare Summary Notice (MSN). This notice includes instructions for appealing the denial.

·  The patient can then file an appeal, starting with a redetermination request to the Medicare Administrative Contractor (MAC).

·  If denied again, the appeal can move up through four more levels: reconsideration, Administrative Law Judge (ALJ) hearing, Medicare Appeals Council, and finally federal district court.

The ABN allows the patient to pursue Medicare appeals still, but if Medicare upholds the denial, the patient—not Medicare—owes the bill.

Patient Chooses to Pay Out-of-Pocket Without Medicare Billing

If the patient selects the option “I do not want Medicare billed”:

·  The provider does not submit the claim to Medicare.

·  Because no claim is filed, the patient loses the right to Medicare’s appeals process.

·  The patient pays the provider directly and cannot later contest Medicare’s decision.

This choice cuts out the appeal path entirely, so providers must explain it very clearly. Patients often don’t realize that declining claim submission means forfeiting appeal rights.

Patient Declines the Service Altogether

If the patient checks “I don’t want the service”:

·  No service is provided, no claim is filed, and no billing or appeals occur.

·  This is the safest option financially for the patient, but it may not meet their health needs.

Why This Matters for Providers

The ABN appeal process ensures transparency, but it also shifts responsibility. Providers must:

·  Explain to patients how their choice on the ABN affects their right to appeal.

·  Submit claims correctly when patients want Medicare billed (using the proper modifiers).

·  Document conversations so patients can’t later claim they weren’t informed.

Conclusion

The ABN is much more than a bureaucratic requirement—it’s a cornerstone of transparency, compliance, and financial stability in medical billing. When used properly, it safeguards providers from revenue loss, keeps patients informed, and strengthens trust on both sides. The key lies in educating staff, ensuring the form is explained clearly, and documenting patient choices carefully. At Swiftcare Billing, we help practices streamline ABN processes, minimize denials, and stay compliant with Medicare rules—so you can focus on care, not paperwork. If you want to protect your revenue cycle and give your patients financial clarity, mastering ABNs is a must.

FAQs

Does signing an ABN mean Medicare will never pay?

Not necessarily. An ABN is a notice, not a denial. Sometimes Medicare still pays, depending on the medical necessity review. If Medicare does pay, the patient isn’t billed. If they deny, the ABN gives you the right to collect from the patient.

Do Medicare Advantage (Part C) patients need an ABN?

No. ABNs apply only to patients with Original Medicare (Part A and/or Part B). Medicare Advantage plans have their denial notices and processes, such as the Notice of Denial of Medical Coverage (NDMC).

What happens if I forget to issue an ABN?

If you provide a service without a valid ABN and Medicare denies payment, you cannot bill the patient. The financial liability falls on your practice. This is why timely, correct ABN use is critical.

Can an ABN be issued after the service is provided?

No. The ABN must be signed before the service is delivered. A retroactive ABN isn’t valid and won’t shift liability to the patient.

How long should I keep a signed ABN on file?

CMS requires providers to keep ABNs for at least 5 years from the date of service, or longer if required by state law or internal compliance policies.

Can patients refuse to sign an ABN?

Yes, patients can refuse. If they do, you should document the refusal, note that the ABN was presented, and ideally have a witness sign. In most cases, you should avoid providing the service unless the patient accepts financial responsibility.

Are there services where ABNs are never required?

Yes. ABNs are not needed for items/services that Medicare never covers (like routine dental care, hearing aids, or cosmetic surgery). They are also unnecessary for services Medicare always covers under specific criteria.

What’s the difference between an ABN and a denial letter?

An ABN is a proactive tool—it sets expectations before care. A denial letter comes after Medicare processes the claim. Without an ABN in place, you may be stuck absorbing the denied charges.