Advance Beneficiary Notice /
Limited Coverage / Medical Necessity
Definition of Limited Coverage
Coverage of certain procedures is limited by the diagnosis. If the diagnosis listed on the
claim is not the same as one of those listed as covered for the procedure, the procedure
is denied.
Definition of Medical Necessity
Medical necessity is defined as those services that are reasonable and necessary for
the diagnosis or treatment of an illness or injury, or to improve the functioning of a
malformed body member, and are not excluded under another provision of the Medicare
program.
Medicare notifies the providers of limited coverage and medical necessity in the
Medicare Part B newsletters that are sent out to the provider community. These
newsletters can also be found on Medicare’s Web page on the Internet. You can visit
this Web site via www.trailblazerhealth.com.
Expectations
Despite the fact that some physicians, providers or suppliers may have a limited
degree of contact with patients, they are expected to be aware of both national
coverage policy and current local medical review policy (LMRP). In the absence of
national coverage policy, LMRP indicates which items/services will be considered
reasonable, medically necessary and appropriate. In most cases, the availability of
this information indicates that the physician, provider or supplier knew, or should
have known, that the item/service would be denied as not medically necessary.
If there is a question regarding the number of times a service has been furnished to
the beneficiary within a specific period, the physician, provider or supplier should
clarify this information with either the beneficiary or the physician who ordered the
tests.
ICD-9-CM coding
All services reported to the Medicare program by a physician or non-physician
practitioner must demonstrate medical necessity through the use of ICD-9-CM
diagnostic coding carried to the highest level of specificity.
Reasons for non-coverage
Services denied by the Medicare program as not medically necessary or reasonable
fall into these general categories:
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Experimental and investigational.
Not safe and effective.
Limited coverage based on certain criteria.
Obsolete tests.
Number of services exceed the norm and no medical necessity demonstrated for
the extra number of services.
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Advance Beneficiary Notice /
Limited Coverage / Medical Necessity
Medicare Program Exclusions
Services that are considered to be Medicare program exclusions do not require an
advance beneficiary notice (ABN).
Examples of Medicare program exclusions are:
• Personal comfort items;
• Self-administered drugs and biologicals (i.e., pills and other medications not
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administered by injections);
Cosmetic surgery (unless required for prompt repair of accidental injury or for
improvement of a malformed body member);
Eye exams for the purpose of prescribing, fitting or changing eyeglasses or
contact lenses in the absence of disease or injury to the eye;
Routine immunizations (except influenza vaccine, pneumococcal vaccine, and
Hepatitis B vaccine);
Physicals, laboratory test and X-rays performed for screening purposes (except
screening mammograms, screening Pap smears, and various other mandated
screening services);
X-rays and physical therapy provided by chiropractors;
Hearing aids and hearing examinations;
Routine dental services (i.e., care, treatment, filling, removal or replacement of
teeth);
Supportive devices for the feet;
Routine foot care (i.e., cutting or trimming corns or calluses, unless inflamed or
infected; routine hygiene or palliative care of trimming of nails);
Custodial care;
Services furnished or paid by government institutions;
Services resulting from acts of war; and,
Charges made to the Medicare program for services furnished by a physician or
supplier to his/her immediate relatives or members of his/her household. The
following relationships are included in the definition of immediate relative:
Husband and wife; natural parent, child and sibling; adopted child and adopted
parent, adopted sibling; stepparent, stepchild, stepbrother, stepsister; father-inlaw, mother-in-law, son-in-law, daughter-in-law, brother-in-law and sister-in-law;
grandparent and grandchild; and spouse of grandparent or grandchild. By
definition, members of the household include those persons sharing a common
abode with the physician as part of a single family unit, including those related by
blood; marriage or adoption, domestic employee and others who live together as
part of a single family unit.
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Limited Coverage / Medical Necessity
Patient Responsibility
Services that are denied by the Medicare program as not medically necessary can be
billed to the patient if the physician, provider or supplier had the patient sign a proper
Advance Beneficiary Notice prior to the service(s) being furnished.
What is an Advance Beneficiary Notice (ABN)?
An ABN is a written notice that a provider/supplier gives to a Medicare patient before
items or services are rendered when the provider/supplier believes that Medicare
probably/certainly will not pay for some or all of the items or services for one of the
following reasons:
● Medical necessity;
● Screening mammography, pap smear or pelvic exam or screenings for prostate
cancer, colorectal cancer, or glaucoma that are performed more often than
allowed by Medicare; or
● Screening mammogram is being performed in an unapproved facility.
ABNs should only be provided to Medicare beneficiaries. The ABN allows the
beneficiary to make an informed decision about whether or not to receive services that
he or she may be financially responsible for paying. The ABN serves as proof that the
patient had knowledge prior to receiving the service that Medicare might not pay. If a
provider does not deliver a proper ABN to the patient, then the patient cannot be billed
for the service.
Advance Beneficiary Notice requirements
Proper advance written notice to the beneficiary must:
• Be on the approved Form CMS-R-131 (ABN-G or ABN-L);
• Clearly identify the particular item or service so the patient can understand.
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Rev. 8/03
HCPCs/CPT codes by themselves are not acceptable as descriptions;
State the provider believes Medicare will probably deny payment for the
particular item or service;
Give the reason the provider believes payment is likely to be denied. The
reasons must be sufficiently specific to allow the patient to understand the basis
for denial;
Option 1 or 2 must be personally selected by the patient; and
Be signed and dated by the beneficiary prior to the service being rendered.
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Proper use of the ABN (CMS-R-131)
When should an ABN be given?
An ABN should only be given when Medicare is expected to deny payment
(entirely or in part) for the item or service because it is not reasonable and
necessary under Medicare program standards.
When should an ABN not be given?
• If the provider expects Medicare to pay.
• If the provider “never knows whether or not Medicare will pay.”
• If the item or service is not a Medicare benefit (Refer to section “Medicare
Program Exclusions”).
Who should an ABN be given to?
• A Medicare beneficiary; or
• The Medicare beneficiary’s authorized representative (refer to the section
“Definition of Authorized Representative” and “Beneficiary Cannot
Comprehend ABN”)
How an ABN may be given:
Delivery of an ABN occurs when the beneficiary or authorized representative
both has received the notice and can comprehend its contents. An
incomprehensible notice, or a notice that the beneficiary or authorized
representative is incapable of understanding due to particular circumstances
(even if others may understand), is invalid. (Refer to section “Beneficiary Cannot
Comprehend ABN”)
Routine Notices Prohibition
Providers should not give ABNs to patients unless the provider is certain that Medicare
is likely to deny the services based on the reason(s) stated on the ABN.
DO NOT:
• Give routine notices for all claims or services.
• Give “generic” notices that state that denial is possible, or the provider never
knows whether Medicare will deny payment.
• Have the patient sign blank ABNs.
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Exceptions:
ABNs may be routinely given to patients only in the following exceptional
circumstances:
• Services which are always denied for medical necessity – if a national
coverage decision provides that a particular service is never covered (under any
circumstances) as not reasonable and necessary (such as acupuncture
services), an ABN that states in the “Because” box that: “Medicare never pays for
this item/service” may be routinely given. These are situations when a claim only
needs to be filed to Medicare if the patient requests it.
• Experimental Items and Services – Any service Medicare considers to be
experimental (e.g., “Research Use Only” and “Investigational Use Only”
laboratory tests) will be denied as not reasonable and necessary.
• Certain frequency limited items and services – If Medicare has established a
frequency limitation on the services.
Delivery of the ABN
Delivery of an ABN occurs when the beneficiary or authorized representative (the
person acting on behalf of the beneficiary) both has received the ABN and can
comprehend its contents.
Copying the ABN
A copy of the ABN should be made immediately after the beneficiary signs it. The
copy should be given to the beneficiary or authorized representative and the original
should be retained by the provider.
Beneficiary cannot comprehend ABN
The beneficiary or authorized representative must be able to comprehend the notice
in able to be capable of receiving the ABN.
The ABN must be delivered to an authorized representative if the beneficiary is:
• Comatose.
• Confused (e.g., experiencing confusion due to senility, dementia, Alzheimer’s
disease).
• Legally incompetent.
• Under great duress (e.g., in a medical emergency).
• Not able to understand and act on his/her rights.
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Advance Beneficiary Notice /
Limited Coverage / Medical Necessity
Some beneficiaries may not be able to comprehend an ABN that is delivered in the
usual manner. In the absence of an authorized representative, the provider must
take other steps to deliver the ABN so that the beneficiary can comprehend it. This is
not an all-inclusive list:
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Cannot read the language in which the ABN is written.
Cannot read at all or is functionally illiterate to read any notice.
Blind or otherwise visually impaired and cannot see the words on a printed page.
Deaf and cannot ask questions about the printed word without the aid of a
translator.
Questions
The provider must attempt to answer any questions the beneficiary or authorized
representative may have about the ABN including help in understanding the
notice and the basis for the provider’s belief that the services may be denied.
Timely Notification
The ABN must be delivered to the patient far enough in advance for the patient to
make an informed decision without feeling undue pressure, and before the patient is
already committed to receiving the service.
The ABN delivery should take place before:
• The procedure is initiated; or
• Physical preparation of the patient (e.g., disrobing, placement in or attachment of
diagnostic or treatment equipment) begins.
The ABN may still be delivered after the patient has entered an examination room,
draw station, etc., and is ready to receive services.
If, during an encounter with the patient, a provider sees the need for a previously
unforeseen service, expects that Medicare will not pay for it, and wishes to be given
an ABN, he/she may do so, if the patient is able to comprehend the ABN and can act
on it (e.g., the patient is not under general anesthesia).
Lab Tests
If the provider draws a test specimen and sends it to a laboratory for testing
without giving the patient an ABN, the laboratory may contact the patient and
give him/her an ABN as long as testing of the specimen has not begun.]
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How the ABN Protects the Provider
● When a valid ABN has been given, the provider is free to bill the patient for the
denied services.
● If an ABN is not valid, the provider may not bill the patient for the services.
● When an ABN has been properly delivered to the patient, Medicare does not limit
the amount that the provider may collect from the patient. Medicare charge limits
will not apply to either assigned or non-assigned claims, participating or nonparticipating providers.
● ABNs may not be used to bill patient for services that are denied as bundled into
other payments.
● Providing an ABN is not in violation of the Health Insurance Portability &
Accountability Act of 1996 (HIPAA) Section 231(e)(4), which provides for civil
monetary penalties when claims are submitted “for a pattern of medical or other
items or services that a person knows or should know are not medically
necessary.” This law is not related to the use of ABNs.
Definition of Authorized Representative
An authorized representative is a person who is acting on the beneficiary’s behalf and in
the beneficiary’s best interests, and who does not have a conflict of interest with the
beneficiary, when the beneficiary is temporarily or permanently unable to act for himself
or herself.
If a situation arises in which the beneficiary cannot receive an ABN and there is no
authorized representative, the patient is not liable for the services.
An authorized representative can be:
● An individual authorized under state law to make health care decisions, e.g., a
legally appointed representative or guardian of the beneficiary, or an individual
exercising explicit legal authority on the beneficiary’s behalf.
● An individual who has the beneficiary’s best interests at heart. The order of
priority of authorized representatives should be:
– Spouse, unless legally separated;
– Adult child;
– Parent;
– Adult sibling;
– Close friend if none of the above are available (close friend is defined as “an
adult who has exhibited special care and concern for the patient, who is
familiar with the patient’s personal values, and who is reasonably available”);
● Someone who has no relevant conflict of interests with the beneficiary.
● Anyone that the beneficiary indicates to act for him/her.
● Disinterested third party (e.g., public guardianship agency).
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Advance Beneficiary Notice /
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Is an ABN Needed Every Time for
an Extended Course of Treatment?
No. A single ABN covering an extended course of treatment is acceptable if the ABN
identifies all items and services for which the provider believes Medicare will not pay. If
additional services for which the provider believes Medicare will deny are furnished
during the course of treatment, a separate ABN is needed.
A single ABN for an extended course of treatment is valid for one year. If the course of
treatment extends beyond one year, a new ABN is needed for the remainder of the
course of treatment.
Once the ABN has been signed by the patient, it cannot be modified or revised. When
the patient needs to be notified of new information, a new ABN must be given.
What If There is a Medical Emergency?
An ABN should not be obtained from a beneficiary in a medical emergency or otherwise
under great duress (i.e., when circumstances are compelling and coercive). The
provider should furnish the services he believes to be medically necessary and
reasonable. If Medicare denies the services for medical necessity, the patient is not
liable for the services.
Services provided in a Skilled Nursing Facility (SNF)
SNFs may not give ABNs to beneficiaries in the case of “middle-of-the-night”
emergencies, since the beneficiary is under duress and unable to make an informed
decision, and authorized representatives are unlikely to be readily available for such
emergencies. SNF staff may not sign ABNs for beneficiaries as their authorized
representatives. Standing orders may be obtained ahead of time in preparation for
emergencies, based on the probable needs of the specific patient. However, an ABN
obtained for a standing order is only effective for one year.
Filling Out the Forms
There are two different CMS-R-131 Forms – the ABN-G and the ABN-L. The ABN-G
can be used for all services, and the ABN-L can only be used for laboratory tests. These
forms can be downloaded at www.cms.hhs.gov/medlearn/refabn.asp in both English
and Spanish languages.
Laboratories are permitted to reproduce the ABN on the back of their laboratory test
requisition forms.
The customizable boxes on the ABN may be lengthened or scaled to fit the provider’s
needs. However, the ABN must be only one page in length and may be modified only in
the specified user-customizable sections. The ABN is designed to fit on a letter-size
sheet of paper, but it may be increased to fit on a legal-sized sheet of paper. The
standard sections of the form may NOT be modified in any way.
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Format of insertions
The provider must make sure the beneficiary or authorized representative can read
the information on the ABN. Italics or any font that is hard to read cannot be used on
the ABN. An Arial or Arial Narrow font, or similarly readable font, in the font size
range of 10 point to 12 point, is recommended. High contrast dark ink on a light
background is required. Shading is prohibited. Insertions may be handwritten, but
they must be legible.
Header portion
The billing entity’s name should appear in the header portion of the ABN.
Patient name
The name of the patient should be entered here. Do not put the name of the
authorized representative.
Medicare Health Insurance Claim Number (HICN)
The patient’s Medicare number must be entered here. If a dispute should arise, the
ABN could be declared as invalid if the patient’s Medicare number is not listed here.
ABN-G Customizable boxes
Items or Services box
• Items or services must be described in detail.
• Do not list just the HCPCs code(s).
• Lists of services frequently used with check-off boxes are acceptable.
Because box
• Must be specific enough for patient to understand.
• Simply stating “medically unnecessary” is not acceptable.
• May customize with lists of frequently used reasons for denial with check off
boxes.
• May indicate more than one reason for denial.
Acceptable statements for denial:
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Medicare does not usually pay for this many visits or treatments.
Medicare does not pay for this service.
Medicare does not pay for this because it is a treatment that has yet to be
proven effective (experimental).
Medicare does not pay for this service for your diagnosis.
Medicare usually does not pay for this many services within this period of
time.
Medicare usually does not pay for such an extensive treatment.
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ABN-L Customizable boxes
Medicare does not pay for these tests for your condition box
This box is used to list laboratory tests that the provider expects Medicare to
deny due to limited coverage for diagnosis code in this box.
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Laboratory tests must be described in sufficient detail for patient to
understand.
Do not list just the HCPCs code(s).
Use of standard laboratory test descriptions is acceptable.
Lists of services frequently used with check-off boxes are acceptable.
Medicare does not pay for these tests as often as this (denied as too
frequent) box:
This box is used to list laboratory tests that the provider expects Medicare to
deny due to frequency limitations.
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Laboratory tests must be described in sufficient detail for patient to
understand.
Do not list just the HCPCs code(s).
Use of standard laboratory test descriptions is acceptable.
Lists of services frequently used with check-off boxes are acceptable.
Medicare does not pay for experimental or research use tests box:
This box is used to list laboratory tests that the provider expects Medicare to
deny due to being deemed experimental. The caption of this box may be
changed for other reasons for denial. This column may be changed to specify the
frequency and/or duration of a standing order.
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Laboratory tests must be described in sufficient detail for patient to
understand.
Do not list just the HCPCs code(s).
Use of standard laboratory test descriptions is acceptable.
Lists of services frequently used with check-off boxes are acceptable.
Estimated cost line
The provider may provide the patient with an estimated cost of the services. If this
line is left blank, or if the amount is different from the final actual cost, the ABN is still
valid. This is just additional information for the patient.
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Options 1 & 2 boxes:
The patient must personally select an option. The provider should never pre-select
an option for the patient. Option 1 should be selected when the patient decides to
receive the service and be personally responsible for payment in full. If the patient
decides not to receive the service, Option 2 should be completed. There is no third
option. If the patient insists on receiving the service and will not agree to select
either option, see instructions below “What if the Patient Refuses to Sign the ABN?”.
Date blank:
The patient or authorized representative should enter the date the ABN is signed.
Signature requirements:
The beneficiary or authorized representative may sign the ABN. Refer to “Definition
of Authorized Representative” section for information on who can be an authorized
representative for the patient.
Notifying Medicare
The following modifiers should be used for services that are applicable to the ABN:
-- GA Should be used to indicate that an advance beneficiary notice (ABN) is on file.
A copy of the ABN does not have to be submitted, but must be made available
upon request.
-- GZ Should be used to indicate that an ABN was NOT signed by the beneficiary.
Services Ordered
In cases where a supplier is merely furnishing items/services (i.e., tests) ordered by
another physician, if the ordering physician provides the beneficiary with proper
advance notice that the ordered item/service may not be medically necessary, that
notice would relieve the physician, provider, or supplier furnishing the item/service from
liability for the charge.
However, if the question of knowledge were to arise, the physician, provider, or supplier
would have to submit to Medicare a copy of the ABN that was given to the beneficiary
by the ordering physician. If the ABN is determined to be unacceptable, the provider or
supplier would not be protected by that notice and can be held liable.
Rev. 8/03
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Advance Beneficiary Notice /
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Services Referred
In cases where a physician makes a referral to another provider, any advance notice
that was given to the beneficiary by the referring provider concerning the likelihood of
denial on the basis of medical necessity cannot provide the entity to which the
beneficiary is referred with protection against liability for the items/services it furnishes
to the beneficiary.
In such cases, the furnishing provider is in the best position to evaluate the likelihood of
Medicare coverage or denial of the items/services and, therefore, is responsible for
giving proper advance notice to the patient. To be protected under the limitation of
liability provision, the furnishing provider must given his/her own proper ABN to the
patient for any item/services that he/she believes are likely to be denied as not
medically necessary.
Separately Billed Components
If an ABN is given for a service for which Medicare pays in more than one part to
different entities, e.g., for a radiological test with a technical and professional
component, if the specification of the service on the ABN reasonably includes both
components, that ABN from either party, will serve as evidence of knowledge for both
assigned and non-assigned claims. It is not necessary for both providers to give
separate ABNs. If the patient asks for a cost estimate, it should include both parts of the
service.
Partial Denials
Providers may give an ABN when they expect Medicare to reduce the level of payment
because the more extensive service is considered to be not medically necessary, but
payment is allowed for the less extensive service. An excess component means an
item, feature or service, and/or the extent of, number of, duration of, or expense for and
item, feature or service, which is in addition to, or is more extensive and/or expensive
than, the item or service which is reasonable and necessary under Medicare’s coverage
requirements.
The ABN must clearly identify in the “Items or Services” box, the excess component(s)
of the item or service for which denial is expected (it is the part of the item or service
that is expected to be denied that is the subject of the ABN, not the part that is expected
to be paid), and must state in the “Because” box the reason that Medicare is expected
to deny payment for the specified excess component(s).
You may not provide an ABN for charge increases on the basis of purported premium
quality services as “excess components” since that would be in violation of payment
limits (limiting charge for non-assigned claims, and fee schedule amounts in the case of
assigned claims).
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