MEDICARE TERMS & MEDICARE FAQ

WHAT IS A MEDICARE ADVANCE BENEFICIARY NOTICE

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Published Jun 18, 2024

Written by Michael Braden

Let's face it, some surprises can be good, like a raise at work, news of a pregnancy in the family, or having a winning lottery ticket. But many surprises are not good news, such as unexpected car bills, rate hikes, or medical test results. Medical bills and skyrocketing Medical Costs can be terrifying to many people. The Medicare Advance Beneficiary Notice (ABN) is designed to prevent such surprises. If you’re a Medicare beneficiary,  understanding the ABN (Advance Beneficiary Notice), is important.

In this article, we’ll unpack when an ABN is required, how to interpret and complete the form,  and how it impacts your financial responsibilities, without confusing you by using foreign terms or jargon.

 

WHAT YOU NEED TO KNOW ABOUT THE MEDICARE ADVANCED BENEFICIARY NOTICE

 

  •  The Medicare Advance Beneficiary Notice (Form CMS-R-131)  is used by healthcare providers to inform beneficiaries of potential out-of-pocket expenses for services that Medicare may not cover. Most commonly, ABNs are issued in case Medicare puts "Limits" on treatments and/or if there is a question about whether the service/procedure is "medically necessary".
  •  Healthcare providers must complete several mandatory fields on the ABN form,  including providing a ‘good faith’ cost estimate and retaining the signed form for a minimum of 5 years to ensure compliance with Medicare regulations.
  •  Beneficiaries must be aware of their rights and implications of signing the Advance Beneficiary Notice, which includes decisions on whether to accept financial responsibility, pay without involving Medicare, or decline the services offered, with each choice affecting billing and their ability to appeal Medicare’s decisions.

 

                    

UNDERSTANDING WHAT THE ABN FORM IS

 

Venturing  into the Medicare terrain can be daunting, particularly when faced with  unfamiliar jargon such as ‘ABN form.’ What is it, exactly?  The ABN Form is referred to as an Advanced Beneficiary Notice. The ABN, known as Form CMS-R-131, is a protective mechanism for  Medicare providers and an informative tool for beneficiaries. Its primary function is to transfer potential financial responsibility from the provider to the patient for services that Medicare might not cover due to insufficient medical necessity. It also alerts the Medicare beneficiary that Medicare may deny payment for this service or procedure.

 

WHAT IS THE PURPOSE OF THE ABN FORM?

 

 

MEDICARE BENEFICIARY CONFUSED AFTER RECEIVING AN ABNFORM FROM HER DOCTOR
WHAT IS THE PURPOSE OF AN ABN FORM

 

The ABN form gives a "Heads-Up" to a Medicare beneficiary that although Medicare may cover a specific service or procedure, there is a possibility that Medicare could deny the payment/claim. The Advance Beneficiary Notice alerts and informs the patient before such charges are incurred. The Advance  Beneficiary Notice is a written notice that provides a cost estimate if  Medicare denies payment.

The Medicare Advance Beneficiary Notice form brings transparency to the forefront, enabling patients to understand the potential costs they may have to bear and make informed decisions accordingly. After all, knowledge is power, especially when it involves your healthcare and your money.

 

WHEN IS IT APPROPRIATE TO RECEIVE AN ABN FORM FROM A PROVIDER?

 

Now that you understand the purpose of the Advance Beneficiary Notice, the next question is: Under what circumstances is an ABN form required?  The answer lies in the realm of medical necessity and frequency limitations. An ABN form is required when a physician or healthcare provider believes that Medicare may not cover a specific item or service in certain instances.

Medicare leans on your doctor to determine medical necessity by evaluating whether the services or items are reasonable and essential for diagnosing or treating an illness or injury. Additionally, Medicare coverage of preventive care has frequency restrictions on specific preventive care medical services. If beneficiaries surpass these limitations, an  ABN form comes into play to notify them of potential out-of-pocket expenses.

The benefit is that the Advance Beneficiary Notice provides a written notice that forewarns a patient before Medicare denies payment. It protects the provider financially so they may provide coverage before the official decision of coverage from Medicare.

 

STEP BY STEP GUIDE TO COMPLETING THE MEDICARE ABN FORM

 

Having explained the purpose, requirements, and updates of the ABN form, it’s time to explore the procedure for filling it out. This step is crucial as a properly filled-out ABN form is essential for its validity and effectiveness. Guidance for completing the ABN form can be obtained from the ABN form instructions provided by CMS, offering a comprehensive understanding of the process.

The Advance Beneficiary Notice mandates that the seven required fields are correctly filled out, to ensure the form’s validity and efficacy. Among these steps, ensuring accuracy in the cost estimate is vital. Providers must provide a  ‘good faith’ estimate that accurately reflects the potential liability for the patient. The estimate should not exceed $100 or 25% deviation from the actual costs, whichever amount is greater.

 

HAVING ACCURATE COST ESTIMATES

 

The issue of precise cost estimation holds significant importance in the  ABN form. Precise cost estimations must comply with the requirement that they should not exceed $100 or 25% of the actual costs, whichever is greater. This promotes transparency and enables beneficiaries to make informed decisions. However, the consequences of inaccurate cost estimations can be severe, leading to Medicare investigations, potential financial responsibility for the provider if claims are rejected, a detrimental effect on revenue, and diminished patient satisfaction.

Providers can determine precise estimated costs for Medicare services by utilizing the Medicare Fee Schedule Rates or consulting the official  Medicare.gov website.

 

MAKING SURE EVERY SECTION IS COMPLETED 100%

 

The  ABN form doesn’t solely center around accurate cost estimation. It includes mandatory fields which must be completed to validate the form.  These include all Blank (D) fields and the Reason Medicare May Not Pay field (Blank (E)).

Failure to complete these mandatory fields could project potential liability for the provider for the services or items in question, along with financial repercussions and the possibility of Medicare investigations. So, crossing every ‘t’ and dotting every ‘i’ on the ABN form is vital for providers and beneficiaries.

 

ADHERING TO RECORD RETENTION STANDARDS

 

Completing the ABN form is one part of the equation; retaining it is another. According to  Medicare regulation, the signed ABN must be kept for 5  years from the discharge date or the completion of care delivery. This is crucial to ensure compliance with state record retention regulations,  considering the Protected Health Information (PHI) contained in the  ABN.

Failure to retain ABN form records for the mandated ten-year period may lead to non-compliance with CMS guidelines, as outlined in the CMS Manual Instructions for the ABN Form. Hence, healthcare providers must securely store ABN forms to comply with these regulations, and specific guidelines exist for electronic storage.

     

WHY YOU NEED TO UNDERSTAND THINGS BEFORE SIGNING ANY ABN FORM

 

Upon endorsing the ABN, beneficiaries are offered three potential options:

 

  1. Consenting to receive the service and possibly being invoiced by Medicare
  2. Paying directly for the service without involving Medicare billing
  3. Refusing the service outright

 

Each option carries its own implications in terms of billing,  payment, and appeal rights for the extended course, as well as the need to transfer potential financial liability.

The choice made by the  Medicare beneficiary can significantly influence their financial responsibilities, including their ability to appeal Medicare’s determinations, and even the delivery of the service. This makes it all the more important to understand the implications of each choice.

 

OPTION ONE - UNDERSTANDING AND AGREEING TO PAY.

 

Option 1 involves the beneficiary agreeing to receive the service, accepting financial responsibility if Original Medicare does not pay, and requesting the provider to bill Medicare. This option enables the beneficiary to maintain the right to appeal Medicare’s payment decisions, as the service has been provided and billed to Medicare.

However, choosing this option also entails the beneficiary’s agreement to assume financial responsibility if Medicare does not provide coverage. This option allows beneficiaries to retain their right to appeal, providing a mechanism to contest the decision if Medicare denies payment.

 

OPTION TWO - PAYING FOR THE SERVICE WITHOUT MEDICARE BILLING

 

Option  2, on the other hand, involves beneficiaries paying directly for the service without involving Medicare billing. This option may be most appropriate when a Medicare item or service is not deemed reasonable and necessary according to Program standards, or for any services not covered by Medicare under any circumstances.

By opting for option  2, beneficiaries may encounter charges if the services are not covered by Medicare. Consequently, the patient is accountable for the full cost of the service. However, this option does not affect a patient’s appeal rights. If Medicare denies payment for a claim, patients still maintain the right to pursue an appeal.

 

OPTION THREE - REFUSING THE SERVICE

 

Option  3 presents a different path. By declining the service, the healthcare provider will not perform the service, and the beneficiary will have no payment obligation. This option allows beneficiaries to avoid potential charges altogether and effectively deny payment.

We only recommend this option if you are certain your Medicare coverage does not include this service, or the cost of such service is beyond your budget.

However,  by declining the service, beneficiaries waive their rights to appeal  Medicare’s decision regarding payment for the services or items they are declining. The decision to refuse a recommended service/procedure should only be made after careful consideration of the potential financial and health implications.

 

UNDERSTANDING IF A SERVICE OR PROCEDURES IS MEDICALLY NECESSARY

 

Perhaps the biggest keyword in Medicare is whether or not a procedure is deemed "medically necessary".  Medicare defines medically necessary services or supplies as essential healthcare services and supplies required for the diagnosis and treatment of illnesses, injuries, or conditions. This definition plays a pivotal role in determining Medicare’s coverage decisions.

So, how does this tie in with the ABN form? An  ABN form is used when a service or procedure may not be covered by  Medicare due to a lack of medical necessity. In other words, it provides a safety net for both providers and beneficiaries when there is uncertainty about the medical necessity of a service or procedure their  Medicare coverage is expected to pay.

 

HOW YOU CAN APPEAL MEDICARE DETERMINATIONS

Sometimes,  beneficiaries may disagree with the Medicare coverage decision. In such cases, they can contest the decision through the appeal process. The initial step to initiate the appeal process is to follow the guidelines outlined in their Medicare Summary Notice (MSN). If a beneficiary chooses to appeal, they must submit the CMS Re-determination Request Form to the Medicare Administrative Contractor within 120 days from the date indicated on their MSN.

The appeal process is structured into five levels, each offering an opportunity to contest Medicare’s decision. During this process,  beneficiaries may need to provide supporting documents such as peer-reviewed evidence-based medical information. This underscores the importance of being well-informed and proactive about your healthcare decisions.

 

VOLUNTARY ABN USAGE

 

One such facet is the voluntary usage of the ABN form. It refers to the decision to issue an ABN despite it not being mandatory according to Medicare regulations. This voluntary usage can help beneficiaries, providing them with information about any services, that may not be covered by Medicare.

However, voluntary  ABN usage also carries potential disadvantages such as facing consequences like Medicare investigations and financial liability for denied claims. Hence, understanding when to use the ABN form voluntarily can be crucial in navigating potential challenges.

 

ABN WITH SKILLED NURSING FACILITIES

 

The  ABN form can notably influence the operations of skilled nursing facilities (SNFs). SNFs use the ABN form to shift financial responsibility for Part B items and services. This process involves specific guidelines that SNFs must adhere to, ensuring that beneficiaries are properly informed about their potential financial obligations.

Improper use of the ABN form can lead to potential consequences for SNFs, including being held accountable for the services or items in question. Understanding the proper use of the ABN form is therefore important not just for individual beneficiaries, but also for healthcare providers at large.

 

 HOW ONE ABN CAN BE USED FOR MULTIPLE SERVICES

 

Yet another frequently missed detail of the ABN form is the potential to utilize a single ABN for several services. Medicare permits the use of a single ABN form for multiple services when items or services are routinely grouped together. This can simplify the process for both providers and beneficiaries, streamlining the bundling of services into a single cost.

However, there are circumstances where a single ABN  cannot be used for multiple services, such as when the service does not meet the reasonable and necessary criteria under Medicare standards.  Hence, it’s crucial to understand these nuances to ensure compliance with Medicare guidelines.

 

WRAPPING THINGS UP..........

 

n conclusion, the  Medicare Advance Beneficiary Notice (ABN) is an integral tool in the process, providing a safety net for providers and a compass for beneficiaries. Understanding the Advanced Beneficiary Notice (ABN) and using it properly, completing it properly, and making informed choices, the ABN form requires careful attention and understanding. Overlooking any aspect of the ABN form could lead to potential consequences, underscoring the importance of being well-informed and proactive in our healthcare decisions. So whether you’re a provider or a beneficiary, remember –  when it comes to the ABN form, knowledge is power.

 

Frequently Asked Questions

 

Braden Medicare Frequesntly Asked Questions Poster
Braden Medicare Frequesntly Asked Questions Poster

 

 

WHAT IS AN ADVANCED BENEFICIARY FORM EXACTLY?

The  Medicare Advance Beneficiary Notice, also known as an Advance  Beneficiary Notice (ABN) or waiver of liability, is a notice your provider gives before a service if they believe Medicare may not cover it, listing the services, estimated costs, and reasons for potential non-payment. This form is important for informing Medicare beneficiaries of potential costs and non-coverage situations. 

 

You are not permitted to bill a Medicare patient directly without an ABN. The ABN must be given to the patient before any provided service or procedure.  Without a signed ABN, you cannot bill the patient directly and the service must be written off if denied by Medicare.

 

WHO ARE ABN FORMS FOR?

An  ABN form is used by providers, physicians, practitioners, and suppliers when providing services to Original Medicare (service fee – FFS)  beneficiaries. It is not required for Medicare Part C and Part D  services.

 

WHEN IS IT NECESSARY TO USE AN ABN FORM?

An ABN form is necessary when a healthcare provider suspects that Medicare may not cover a particular item or service. This helps inform the patient of their potential responsibility.

 

 

 

Michael Braden's Business Card
Michael Braden's Business Card

 

Disclaimer: Medicare has neither reviewed nor endorsed this information. Braden Medicare Insurance Agency is not associated with or endorsed by the United States Government or the Federal Medicare program. Braden Medicare Insurance is an Independent Medicare/Healthcare Broker offering Medicare Supplement and Medigap Plans, Medicare Advantage Plans, Medicare Prescription Drug Plans, Under 65 Health Insurance, Short Term Health Insurance, Life Insurance, Dental, Vision, and Hearing Insurance. The Braden Medicare Insurance Agency is not affiliated with the U.S. Government or the Federal Medicare Program

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