The Medicare Advance Beneficiary Notice of Non-Coverage (ABN): A Tool for Limiting Beneficiary Liability

Medicare's limitation on liability (LOL) protections[1] apply when a provider believes that an otherwise covered Medicare item or service will be denied because the item or service is not reasonable and necessary[2] or is for custodial care.[3] In order to shift liability to the beneficiary, a provider is required to notify a beneficiary in advance when he or she believes that items or services will likely be denied either as not reasonable and necessary or as constituting custodial care.[4] If such notice is not given, providers may not shift financial liability for such items or services to Medicare beneficiaries.[5]

Over the years, the Centers for Medicare & Medicaid Services (CMS) has been refining the notices that must be provided to beneficiaries explaining their rights when a provider believes that Medicare will not pay for an otherwise Medicare-covered item or service. These refinements are reflected in CMS' Beneficiary Notice Initiative.[6]

In March 2011, CMS revised its ABN. On September 20, 2011, CMS extended the date of mandatory use of its revised ABN, form CMS-R-131, to January 1, 2012. Further, CMS states on its website that "all ABNs with the release date of 3/2008 that are issued on or after January 1, 2012 will be considered invalid."[7] Instructions for the use of the revised ABN are available for download on the CMS website.[8] About the revision, CMS states:[9]

[t]he revised Advanced Beneficiary Notice of Non-coverage (ABN), Form CMS-R-131, is issued by providers (including independent laboratories), physicians, practitioners, and suppliers in situations where Medicare payment is expected to be denied. The revised ABN replaces the ABN-G (Form CMS-R-131G), ABN-L (Form CMS-R-131L), and NEMB (Form CMS-20007).

Mandatory Use of the ABN

An ABN must be used to convey to the beneficiary that a provider believes that an item or service will not be covered when:
• The item or service is not reasonable and necessary; or
• The item or service is provided in violation of the prohibition on unsolicited telephone contacts; or
• The item or service is for medical equipment and supplies for which the supplier number is not provided; or
• The item or service is for medical equipment and /or supplies denied in advance;
• The item or service is for custodial care; or
• The item or service is for hospice care provided to a patient who is not terminally ill.[10]

The ABN is not required for items and services that are never covered under the Medicare statute (statutorily excluded) or for items and services that do not meet a technical benefit requirement (such as a required certification by a provider, physician/practitioner).[11]

With respect to hospice services and Comprehensive Outpatient Rehabilitation Services (CORF), if there is a complete cessation of all Medicare covered services, an Expedited Determination notice must be issued by hospice and CORF providers.[12]

Voluntary Use of the ABN

The ABN can be issued voluntarily in place of the Notice of Exclusion from Medicare Benefits (NEMB) for care that is never covered because it does not meet the definition of a Medicare benefit[13] or for care that is explicitly excluded[14] from Medicare coverage.[15]

The Medicare Claims Processing Manual (Chapter 30) lists the following as examples of care that are explicitly excluded from coverage: [16]
• Services for which there is no legal obligation to pay;
• Services paid for by a government entity other than Medicare (this exclusion does not include services paid for by Medicaid on behalf of dual-eligibles);
• Services required as a result of war;
• Personal comfort items;
• Routine physicals and most screening tests;
• Routine eye care;
• Dental care; and
• Routine foot care.

Routine Notice Prohibition

CMS prohibits providers from "routine" use of an ABN, in other words, "giving ABNs to beneficiaries where there is no specific, identifiable reason to believe Medicare will not pay."[17] CMS states that a provider (also called a notifier) "should not give ABNs to beneficiaries unless the notifier has some genuine doubt that Medicare will make payment as evidenced by their stated reasons."[18] Generic ABNs – ones that "do no more than state that Medicare denial of payment is possible, or that the notifier never knows whether Medicare will deny payment" – are also unacceptable (emphasis in original).[19] In addition, giving ABNs for all items or claims or services ("blanket ABNs") is prohibited, as is the practice of obtaining beneficiary signatures on blank ABNs and then completing the ABNs later.[20]

Beneficiary Protections

The requirement to provide an ABN is generally triggered at the initiation (beginning of a new patient encounter, start of a plan of care, or beginning of treatment). If the provider believes that certain otherwise-covered items or services will be non-covered (as not reasonable and necessary) at initiation, an ABN must be issued prior to the beneficiary receiving the non-covered care.[21] In addition, an ABN is to be provided when care is reduced (frequency or duration of a service), or when care in terminated (the discontinuance of certain items or services, for example physical therapy).[22]

Provider Protections

A provider (also called a notifier) who can successfully demonstrate to the Medicare contractor (under contract CMS to administer Medicare claims) that he or she did not know and could not reasonably have been expected to know that Medicare would not make payment will not be held financially liable for failing to give notice. On the other hand, a provider who gives a defective notice may not claim that he or she did not know or could not reasonably have been expected to know that Medicare would not make payment. Medicare considers the delivery of the defective notice as evidence of provider knowledge.[23] The beneficiary, however, is not protected from liability if there is clear evidence that he or she knew that Medicare would not make payment.[24]

The Standard Notice

The ABN, Form CMS-R-131, is the standard notice approved by the Office of Management and Budget (OMB).[25] If a provider does not use the required notice, he or she runs the risk of its notice being invalidated and/or being held liable for the items or services in question.[26]
The ABN is available in English and Spanish on the CMS website. Providers are to provide the ABN in the language the beneficiary best understands.[27] ABNs are effective on the OMB approval date given at the bottom of each notice, and generally approved for a three-year period.[28] When CMS revises its ABNs, it usually allows a 6-month transition period from the date of issuance of its mandatory use instructions.[29]

Delivery of the ABN

Delivery of an ABN is deemed to be effective when the notice is delivered by a provider to a recipient who is capable of receiving and understanding the notice and provided on the appropriate notice form with all required blanks completed.[30] In addition, the burden of proof is on the provider to show that he or she has informed the beneficiary of the purpose and content of the notice to the best of the provider's ability.[31] This requirement is generally satisfied if the provider has used the OMB approved notice with all appropriate blanks completed and it is signed by the beneficiary or by someone capable of understanding the importance of the notice on behalf of the beneficiary.[32]

Providers are to provide the ABN far enough in advance of providing potentially non-covered items so as to allow the beneficiary an opportunity to consider all available options, and should direct the beneficiary to contact 1-800-MEDICARE if the beneficiary has questions the provider cannot answer. If a Medicare contractor learns that a provider has refused to answer a beneficiary's questions or refused to direct the beneficiary to 1-800-MEDICARE, the provider will be liable for non-covered care.[33] With respect to the delivery of a particular ABN addressing specific items or services, it is deemed effective for a period of one year, provided no other triggering event occurs.[34]

When a provider believes that otherwise-Medicare-covered items or services will not be covered, the ABN should be delivered in-person and prior to the delivery of the item or service at issue.[35] When in-person delivery is not possible, providers may deliver an ABN by telephone contact, mail, secure fax machine, or e-mail.[36] A provider must receive a response from the beneficiary or his or her representative in order to validate delivery and note in his or her records the response received. Telephone contacts must be followed immediately by either a hand-delivered, mailed, emailed, or faxed notice which the beneficiary or representative must sign then retain a copy of the signed notice and send one to the provider for retention in the patient's record.[37]

Beneficiary Liability

A beneficiary who has agreed to pay, after having been given a properly written and delivered ABN, may be held liable.[38] Even so, a provider may not issue ABNs to shift financial liability to a beneficiary when full payment is made by Medicare through bundled payments or when the amount of the Medicare payment is otherwise payment in full.[39] Moreover, a provider must make a prompt refund to the beneficiary of any erroneously collected funds.[40]

Conclusion

The ABN protects both the beneficiary and the provider. Advocates should make sure that beneficiaries understand the circumstances under which the use of the ABN is mandatory or voluntary as described above. Similarly, it is important to make sure that ABNs are filled out properly and that they contain sufficient information to inform the beneficiary of the likely basis of non-coverage as well as his or her options upon receipt of an ABN.
In addition, Advocates and beneficiary should frequently review the Beneficiary Notice Initiative page on the CMS website. The website contains information about how the ABN form is to be completed and about how proof of delivery will be reviewed.

For more information, contact attorney Alfred Chiplin (achiplin@medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.


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[1] See §1879 of the Social Security Act, 42 U.S.C. §1395pp. In addition, compliance with the LOL protections is a condition of participation (CoP) for providers and the failure to comply can lead to the imposition of sanctions. See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.2.2(Compliance with Limitation On Liability Provisions).
[2] See §1862(a)(1) of the Social Security Act, 42 U.S.C. §1395y(a)(1).
[3] See §1862(a)(9) of the Social Security Act, 42 U.S.C. §1395y(a)(9).
[4] See §1879 of the Social Security Act, 42 U.S.C. §1395pp. The ABN is used in Fee-for-Service Medicare. Medicare Advantage plans must use the Notice of Medicare Non-Coverage (CMS Form 10095) See http://www.cms.gov/MMCAG/Downloads/NOMNC.pdf. In Medicare Part D (prescription drug coverage), a plan must issue a coverage determination in response to a request from a beneficiary or prescriber. See 42 U.S.C. §1395w-104(g)-(h). For a discussion of Part D notice received at the point of sale in the pharmacy, see CMA Alert, New Pharmacy Notice Rule in Effect: Stay Tuned for Final Model Notice: http://www.medicareadvocacy.org
/2012/01/05/new-medicare-part-d-pharmacy-notice-rule-in-effect-
stay-tuned-for-final-model-notice/.
[5] See §1879 of the Social Security Act, 42 U.S.C. §1395pp.
[6] https://www.cms.gov/BNI/
[7] See www.cms.gov/BNI/02_ABN.asp#TopOfPage.
[8] https://www.cms.gov/BNI/Downloads/ABNFormInstructions.zip.
[9] www.cms.gov/BNI/02_ABN.asp#TopOfPage. See Form CMS-R-131 (03/11) Form Approved OMB No. 0938-0566. The ABN was formerly known as the Advance Beneficiary Notice. See Medicare Claims Processing Manual Chapter 30, §50.1. The replaced ABNs are: ABN-G (Form CMS-R-131G)(general ABN), ABN-L (Form CMS-R-131L)(laboratory ABN) and NEMB (Form CMS-20007)(Notice of Exclusion from Medicare Benefits). Note: Skilled nursing facilities (SNFs) must use the revised ABN for items/services expected to be denied under Medicare Part B only. Ibid. Advocates and others should visit the CMS “Beneficiary Notice Initiative” page regularly for updates.
[10] See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.3.1 (Mandatory Use), available at: http://www.cms.gov/manuals/downloads/clm104c30.pdf.
[11] Ibid. §50 .3. 2.
[12] See §50.14.5 (for detailed instructions on issuing Expedited Determination notices).
[13] Medicare’s definitions of services are found in §1861 of the Social Security Act, 42 U.S.C. §1395x.
[14] Explicitly excluded services are defined in §1862 of the Social Security Act, 42 U.S.C. §1395y.
[15] See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.3.2 (Voluntary Use).
[16] Ibid. §50.3.2. Advocates should be careful to note the expanded array of preventive services that the Medicare program currently covers, many of which have been added in the last several years. See for example, the Center for Medicare Advocacy’s Alert, “Affordable Care Act Expands Medicare Coverage for Prevention and Wellness,”http://www.medicareadvocacy.org/InfoByTopic/
PartB/10_09.09.WellnessVisit.htm. Likewise, CMS now covers therapeutic shoes for patients with severe diabetic foot disease. See 42 U.S.C. §1395l(o). The coverage of additional preventive services (including screening tests) stands in contrast to the old general prohibition against Medicare payment for routine preventive services. See, for example, Chapter 12 of the Claims Processing Manual, § 30.6.2 (Billing for Medically Necessary Visit on Same Occasion as Preventive Medicine Service), https://www.cms.gov/manuals/downloads/clm104c12.pdf. In addition, Medicare provides coverage for influenza, pneumococcal, and hepatitis B vaccines. See 42 C.F.R. §410.57.
[17] See Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §40.3.6; but see §40.3.6.4 for exceptions to the prohibition against routine ABNs.
[18] Ibid.
[19] Ibid §40.3.6.1.
[20] Ibid §40.3.6.2 and §40.3.6.3.
[21] Ibid. §50.5.
[22] Ibid §50.5.
[23] Medicare Claims Processing Manual Chapter 30 - Financial Liability Protections, §50.3.2
[24] Ibid §50.12.
[25] Ibid. §50.6.1.
[26] Ibid.
[27] Ibid.
[28] Ibid.
[29] Ibid.
[30] Ibid. §50.7.1.
[31] Ibid.
[32] Ibid.
[33] Ibid.
[34] Ibid. See §50.5 (triggering events).
[35] Ibid. See §50.7.2.
[36] Ibid.
[37] Ibid.
[38] Ibid. §50.7.3.
[39] Ibid.
[40] Ibid.