Preparing an Advanced Beneficiary Notice

Mar 20, 2012

An ABN is a written communication given to a Medicare beneficiary by a physician prior to providing a service that is expected to be denied by Medicare Part B.

An advanced beneficiary notice (ABN) is a written communication given to a Medicare beneficiary by a physician or other supplier prior to providing a service that is expected to be denied by Medicare Part B. As of January 1, 2012, CMS requires medical practices and other suppliers to use the revised, updated version of the form. The current version of the form has an issue date of 3/2011, which is printed in the lower left hand corner, and may be downloaded from CMS's website.

When payment is not expected

A medical practice completes an ABN, for the patient to review and sign, to inform the patient that the service may not or will not be covered by fee-for-service Medicare. This allows the provider to hold the patient financially responsible for the service, i.e., collect the fee for the service from the patient. The provider must give the patient the ABN prior to performing the service or prepping the patient for the procedure. In completing the ABN, the medical practice tells the patient what the service is, and why the practice thinks the service will be denied. The practice also informs the patient about the cost of the service. This allows the patient to decide if he wants to proceed, sign the ABN, and be held responsible for the payment. Alternatively, the patient could refuse to have the service. The practice should keep the original copy of the ABN, and file it in the patient's chart.

Reason for denial

A practice needs to give the patient a specific reason why the visit or service may not be covered. An important point to remember: A patient cannot be held responsible if she signs a blank ABN, or blanket ABN with a reason such as "Medicare may not cover this service." And, a medical group may not bill the patient for services that are bundled, according to the National Correct Coding Initiative edits. According to CMS's instructions for completing an ABN, valid reasons for expecting a denial and completing an ABN include:

• "Medicare does not pay for these tests for your condition"
• "Medicare does not pay for these tests as often as this (denied as too frequent)"
• "Medicare does not pay for experimental or research use tests"

A group could also elect to complete an ABN for a clearly non-covered service, such as a cosmetic procedure. Although completing an ABN for a service that is never covered is not required, it gives the medical practice the opportunity to discuss the fee with the patient.

Frequency of service

More typically, however, an ABN may be used when the service is provided more frequently than is covered by Medicare, or when a diagnostic test is provided for a non-covered indication. For example, a patient may request a test for thyroid function, but have no signs or symptoms that justify the test. Or, she may wish to have a screening pelvic and breast exam more frequently than is covered by Medicare. In both situations, complete an ABN form and document the cost of the service and the reason that service may or will be denied by Medicare. The patient will check one of three options; indicating that they do or do not want the care, and if the patient wants the practice to bill Medicare for the service.

Modifiers GA, GY, and GZ

If an ABN is signed, append modifier GA to the claim form. The definition of this HCPCS modifier is: Waiver of liability statement on file (used when an item or service is expected to be denied as not reasonable and necessary, and an advance beneficiary notice is on file). If the service is noncovered, such as a cosmetic procedure, hearing aid, or personal comfort item, but the patient wants the claim to be filed, use modifier GY - item or service statutorily excluded or does not meet the definition of any Medicare benefit.

What if your medical practice neglected to obtain an ABN, but expects the item to be denied? In that case, the practice may not hold the patient financially responsible. Append modifier GZ to the claim: Item or service expected to be denied as not reasonable and necessary (used when an advance beneficiary notice is not on file).

Medical groups should review the services for which an ABN may be required. Be sure to use the latest version of the CMS developed ABN; you can download the instructions for using the ABN at the same time.

Betsy Nicoletti, MS, CPC, is the founder of She is the author of "A Field Guide to Physician Coding." She believes all physicians can improve their compliance and increase their revenue through better coding. She may be reached at or 802 885 5641.