What Is An ABN In Medical Billing

Healthcare providers perform many services for patients which do not get paid either by insurance or by patient. This loss of income amounts to millions of dollars each year. Most payment denials are due to lack of pre-visit process and/or absence of required insurance protocols. A common reason for non-payment is the lack of patient’s written consent on file, granting the doctor permission to render services and consenting to the cost for the services. An essential aspect of billing Medicare is maintaining Advance Beneficiary Notice (ABN) on file for non-covered services.

What is ABN in Medical Billing

What is ABN in Medical Billing

An Advance Beneficiary Notice (ABN) is a written notice from Medicare that is given to a patient before receiving certain items or services. An ABN is also known as a CMS-R-131 form and is issued by the Centers for Medicare & Medicaid Services (CMS).

It notifies the patient that Medicare may deny payment for that specific procedure or treatment, and that they will be personally responsible for full payment if Medicare denies payment. The purpose of an ABN is to give patients the opportunity to accept or decline the service knowing that they may have to pay out of pocket if Medicare denies coverage.

In medical billing, an ABN is an important tool for healthcare providers to communicate with their patients. It is a required document that must be signed by the patient before receiving certain services that may not be covered by Medicare. The ABN informs the patient of their financial responsibility for the service, and gives them the option to decline the service if they do not wish to pay out of pocket. The ABN is also used to protect healthcare providers from liability if Medicare denies coverage for a service that the patient has received.

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Purpose of an ABN

As a medical billing professional, it is essential to understand the purpose and use of Advance Beneficiary Notices (ABNs).

The purpose of an ABN is to ensure transparency by informing Medicare beneficiaries about their financial obligations before receiving services which may be deemed non-covered by Medicare. ABNs allow patients to make informed decision about their healthcare and understand the potential costs involved.

There are two types of ABNs; voluntary and mandatory. Voluntary ABNs are issued when a provider believes that Medicare may not cover a service, but the provider is not certain. In contrast, mandatory ABNs are issued when Medicare will not cover a service, and the patient is responsible for payment.

  • Self-Pay Services: ABN is typically used for services or items that Medicare may consider “voluntary”, meaning they may not deem the treatment medically necessary for a patient’s condition. Examples include certain diagnostic tests, screening services, elective procedures, medical devices, or frequency of treatment.
  • Patient’s Consent: Before providing services that may not be covered by Medicare, healthcare providers must obtain the patient’s written consent (ABN). Patients will need to sign an ABN which describes the services and charges. By signing the ABN, patients acknowledge their understanding of the potential costs involved and their agreement to pay if Medicare denies coverage.
  • Billing Regulations: Medicare requires healthcare providers to follow specific guidelines for completing ABNs, which provide clear and accurate information to patients about reasons for the notice, estimated cost, and patient’s rights and responsibilities. It is very important to ensure doctors are using the latest version of ABN. An expired ABN form will not be considered valid by Medicare.
  • Appeal Process: If Medicare denies coverage for a service listed on the ABN, patients have the right to appeal the decision by submitting an appeal to Medicare. This process allows patients to dispute coverage denials and seek reimbursement for services they believe should be covered. Healthcare providers will need to submit all required medical records for the service as well.

Medicare Advantage and Original Medicare plans require providers to issue ABNs to patients before providing services that may not be covered by Medicare. ABNs are not required for services that are always covered by Medicare, such as preventive services.

How ABNs Protect Patients and Providers

How ABNs Protect Patients and Providers

ABNs are used to inform Medicare beneficiaries about potential costs associated with certain medical services or items that may not be covered by Medicare. Let’s see how ABNs protect patients and providers.

1. Explaining Financial Liability to Patients

One of the main purposes of ABNs is to explain financial liability to patients. ABNs help patients understand that they may be responsible for the estimated cost of a medical service or item that is not covered by Medicare. This allows patients to make informed decisions about their healthcare and avoid unexpected bills.

2. Provider’s Responsibilities in Issuing ABNs

Healthcare providers have a responsibility to issue ABNs when necessary. Providers must ensure that patients receive the ABN before receiving the service or item that may not be covered by Medicare. Providers must also explain the reason for the ABN and the estimated cost to the patient. Failure to issue an ABN when required can result in liability for the provider.

3. Patient Rights and Options After Receiving an ABN

After receiving an ABN, patients have two options. Option 1 is to receive the service or item and be responsible for the estimated cost if Medicare does not cover it. Option 2 is to decline the service or item. If the patient chooses Option 2, they will not be responsible for the estimated cost, but they will not receive the service or item.

It is important to note that patients have the right to refuse an ABN. However, if the patient refuses the ABN, the provider will not be protected from liability if Medicare does not cover the service or item.

The Process of Delivering and Handling ABNs

The Process of Delivering and Handling ABNs

Here are the steps and procedures for completing and submitting ABNs to Medicare, as well as their impact on reimbursement and appeals.

1. Steps for Completing Form CMS-R-131

The first step in delivering an ABN is to complete Form CMS-R-131, which is the standard government form used for this purpose. The form includes specific information that must be provided, such as the beneficiary’s full name, the provider’s name, address, and phone number, and the name of the service or item that may not be covered by Medicare. It is important to ensure that all required information is included on the form to avoid any delays or denials.

2. Procedures for Submitting ABNs to Medicare

Once the ABN is completed, it must be delivered to the beneficiary or their representative before the service or item is provided. The ABN must be delivered far enough in advance that the beneficiary or representative has time to consider the options and make an informed choice. Employees or subcontractors of the notifier may deliver the ABN.

When submitting claims to Medicare, the ABN must be attached to the claim form or included in the electronic submission. This will alert Medicare that the beneficiary has been informed that the service or item may not be covered and that they may be responsible for payment.

3. Impact of ABNs on Reimbursement and Appeals

If Medicare denies payment for a service or item that was provided with an ABN, the beneficiary will be personally responsible for full payment. The provider may bill the beneficiary directly for the service or item, but they must follow specific procedures for doing so. The provider must use the appropriate redetermination request form to appeal the denial and must include a copy of the ABN with the appeal.

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Understanding ABNs is essential for medical billing professionals to ensure that patients are aware of their financial responsibility for services that may not be covered by Medicare. By issuing ABNs, providers can protect themselves from financial liability and ensure that patients are informed about their options for medical services.

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