According to the Centers for Medicare & Medicaid Services (CMS), over 10% of Medicare claim denials each year result from insufficient patient notification or documentation errors. The Advance Beneficiary Notice (ABN) is a key compliance document that helps prevent such denials. It ensures patients understand when Medicare may not cover a service and protects providers from financial liability.

The ABN bridges the gap between patient consent and billing compliance, promoting transparency and fairness in the medical billing process.

What Is an Advance Beneficiary Notice (ABN)?

An Advance Beneficiary Notice of Noncoverage (ABN) is a written notice required by CMS that informs a Medicare beneficiary that Medicare may not pay for a particular item or service. The ABN allows the patient to decide whether to proceed with the service and accept potential financial responsibility.

CMS Form R-131 is the standard version of the ABN used by healthcare providers, suppliers, and laboratories. It must be issued before the service is rendered and signed by the patient acknowledging understanding of the potential costs.

Who Issues the ABN and When It Is Required

Healthcare providers, physicians, and medical suppliers are responsible for issuing ABNs when they believe Medicare may deny coverage.
Typical scenarios include:

• Services considered not medically necessary under Medicare guidelines.

• Items provided beyond frequency limits (e.g., diagnostic tests).

• Procedures classified as experimental or cosmetic.

Medicare Coverage Rules and the Role of ABN in Compliance

The ABN plays a crucial role in ensuring compliance with Medicare’s coverage determination process. It notifies patients of noncovered services and documents informed consent before the service is performed.

Without an ABN, if Medicare denies the claim, the provider cannot bill the patient — the provider becomes financially responsible.

How to Properly Complete and Deliver an Advance Beneficiary Notice (ABN)

Completing an Advance Beneficiary Notice (ABN) accurately is a critical step in Medicare billing compliance. The Centers for Medicare & Medicaid Services (CMS) mandates that providers use the official CMS Form R-131 to ensure all required fields and disclosures are properly documented. Any omission or incorrect entry can render the notice invalid, leaving the provider financially responsible for denied claims.

To correctly complete an Advance Beneficiary Notice, every section of the form must be carefully filled out as follows:

1. Patient and Provider Information

Begin by entering the patient’s full legal name, date, and identifying details exactly as they appear in Medicare records. Include the provider or supplier’s name, contact information, and National Provider Identifier (NPI). Accuracy in this section ensures the Advance Beneficiary Notice can be directly linked to the correct claim in CMS systems.

2. Detailed Description of the Item or Service

List the item or service in precise terms so the patient understands what is being discussed. Avoid using abbreviations or internal codes. For example, instead of writing “PT eval,” specify “Physical therapy evaluation – 60 minutes.” Each item that may not be covered should appear on a separate line for clarity.

3. Reason Medicare May Not Pay

Clearly explain why Medicare might deny payment. The explanation should relate to coverage rules, such as exceeding frequency limits, lack of medical necessity, or service exclusion. For instance: “Medicare may not pay for this service because it is performed more frequently than the coverage guidelines allow.”

4. Estimated Cost to the Patient

Provide a good-faith cost estimate for each item or service listed. While exact pricing isn’t required, the estimate should be close enough for the patient to make an informed decision. CMS recommends rounding to the nearest $10 for simplicity, such as “approximately $120.” Missing or vague cost fields are one of the main reasons Advance Beneficiary Notices are rejected in audits.

5. Patient Decision and Acknowledgment

The Advance Beneficiary Notice includes three checkboxes allowing the patient to:

• Proceed and request claim submission to Medicare.

• Proceed and pay out-of-pocket without submitting to Medicare.

• Decline the service entirely.

The patient must select one option, sign, and date the form. The signature confirms that they understand the financial implications. Unsigned ABNs or those signed after service delivery are not valid under CMS rules.

6. Delivery and Timing Requirements

ABNs must always be delivered before providing the potentially noncovered service. Delivery can be done in person, electronically, or by mail, but the patient must have adequate time to review and decide. For mailed Advance Beneficiary Notices, providers should confirm receipt and document communication before proceeding with care. CMS emphasizes that an Advance Beneficiary Notice signed under pressure or confusion may not meet informed consent standards.

7. Retention and Documentation

Once completed, a copy of the signed Advance Beneficiary Notice must be kept in the patient’s record. CMS requires that providers retain paper ABNs for 5 years and electronic versions for 7 years. Scanning and archiving ABNs within an electronic health record (EHR) system ensures accessibility during audits or disputes.

Common Errors in ABN Issuance and Their Consequences

Errors in issuing Advance Beneficiary Notices are among the most common compliance violations identified during Medicare audits. When a form is incomplete or improperly delivered, it becomes invalid, and the provider cannot bill the patient—even if Medicare denies the claim.

The most frequent mistakes include:

1. Missing or Incomplete Cost Estimates

Leaving the cost section blank or providing vague terms like “TBD” invalidates the Advance Beneficiary Notice. CMS requires a reasonable estimate to ensure transparency. Without it, the patient cannot make an informed financial decision.

2. Pre-Signed or Blanket ABNs

Using pre-signed forms or issuing the same ABN to all patients as a routine measure violates CMS policy. Each ABN must be individualized for specific services and signed after discussion with the patient. Blanket Advance Beneficiary Notices are automatically disqualified during audits.

3. Issuing the ABN After the Service Is Rendered

An ABN signed after the service is considered retroactive and invalid. Medicare requires the notice to be presented in advance so the patient can accept or decline the financial risk. Any post-service Advance Beneficiary Notice fails to meet the “advance” requirement.

4. Using Outdated CMS Forms

CMS occasionally updates the Advance Beneficiary Notice form (CMS-R-131). Using outdated versions can lead to audit findings and denials. Providers should verify that their form’s expiration date matches the current version published on the CMS website.

5. Lack of Patient-Specific Details

Generic explanations like “Medicare may not cover this” or missing patient identifiers reduce the ABN’s validity. Each form must clearly tie the service, reason for denial, and estimated cost to the individual patient encounter.

In 2023, CMS audit data revealed that over 20% of Medicare Part B documentation errors involved missing or invalid Advance Beneficiary Notices. The financial consequences can be severe—providers may be required to refund payments, absorb service costs, or face penalties for improper billing practices.

Proper ABN completion is not just an administrative requirement; it’s a compliance safeguard that protects both patient rights and provider reimbursement integrity.