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August 16, 2012

On June 1, 2012, the Centers for Medicare & Medicaid Services (CMS) issued Transmittal No.R2480CP, which updates its instructions on the issuance of the Advance Beneficiary Notice (ABN), Form CMS-R-131.[1]  The changes are effective on September 4, 2012.[2]  The new transmittal is part of an ongoing effort by CMS to provide additional information about the use of ABNs. It provides clarification on when an ABN is mandatory and when it is voluntary or not necessary. Additionally, the transmittal updates manual language, brings the ABN process into compliance with the Affordable Care Act (ACA),[3] provides a new Quick Glance Guide, and creates additional hypothetical situations for illustration purposes.

ABNs extend financial liability protections to Medicare beneficiaries when a provider knows or has reason to know that an ordinarily covered Medicare an item or service will not be covered in a particular instance.[4] Regardless of who provides the services, the billing entity is always responsible for ensuring that the appropriate ABN is delivered to the beneficiary.[5] If a beneficiary has a known legal representative, the ABN must be issued to the representative.  If they do not, CMS may appoint a representative if it is necessary.[6]

The ABN is to be provided before the item or service is provided.[7] In addition, providers are prohibited from systematically issuing ABNs and must have specific, identifiable reasons for asserting non-coverage through the use of an ABN.[8] Providing an ABN that is out of date is inadequate notice.[9]  If a provider issues an ABN that is no longer current, he or she is presumed to have known that the services would not be covered and is not able to shift liability to the beneficiary.[10]  Use of the most current ABNs may avoid protracted disputes, including litigation by providers seeking to obtain payment from unsuspecting beneficiaries. Providers and suppliers may charge their usual and customary fee for the items or services that it furnishes to the beneficiary if (a) the supplier/provider furnishes a proper ABN, (b) the beneficiary agrees to pay, and (c) Medicare denies the claim.[11]

If a provider fails to issue the ABN or uses an outdated version, the provider risks being held liable for the services or items in question.[12]  ABNs inform Medicare beneficiaries in advance that a particular service will not be covered by Medicare.  Beneficiaries can then decide whether to have the service or treatment and whether to appeal to Medicare to challenge the non-coverage.

The ABN is mandatory for a Medicare-covered item or service 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
  • (New) (1) The item or service is furnished by a non contract supplier; and (2) The item is included in the Durable Medical Equipment, Prosthetic, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) for a Competitive Bidding Area (CBA) (unless the beneficiary has already signed an ABN); or
  • (New) The preventive service frequency limitations have been exceeded.[13]

Usage Cautions

For Part A items and services, SNFs should continue to issue the Skilled Nursing Facility Advance Beneficiary Notice of Noncoverage (SNFABN). For Part B services provided in a SNF, however, the ABN form CMS-R-131 is used.  Home Health Agencies (HHAs) also have a separate form. HHAs should issue the Home Health Advance Beneficiary Notice of Noncoverage (HHABN).[14]  Hospice providers are not required to issue an ABN unless they administer services billable to hospice, and (a) the beneficiary is not determined to be terminally ill, (b) separately billed specific items are not medically necessary, or (c) the level of hospice care for terminal illness and/or related conditions is not considered medically necessary.[15]  In addition, hospices are not required to issue an ABN when a patient seeks care outside of the hospice's jurisdiction.

ABNs and Preventive Services

Transmittal No.R2480CP expands the mandatory use of the ABN for the preventive services established by the ACA's annual wellness visit[16] and the preventive physical examination (Welcome to Medicare physical) established by the Medicare Modernization Act.[17] The ABN is also given when the beneficiary has exhausted the frequency limitation for any preventive service that is otherwise covered by Medicare.[18]


As Medicare's Durable Medical Equipment Prosthetics Orthotics and Supplies Competitive Bidding Program (DMEPOS) is rolled out in a given geographic area, providers and suppliers who are not certified under DMEPOS will not be reimbursed by Medicare for equipment provided to beneficiaries.[19]  If such providers wish to serve Medicare beneficiaries, they must supply them with an ABN before the equipment is delivered to the beneficiary.[20]  If the supplier complies with the ABN requirements and the beneficiary still wishes to receive the equipment, the supplier may ask to be paid by the beneficiary at its full payment rate.[21]

ABNs and Ambulance Services

Ambulance services are covered under Part B of the Medicare program if they are medically necessary.[22]  Before shifting liability to a beneficiary for ambulance services that are not reasonably necessary, the provider must issue an ABN.[23] Delivery of an ANB during an emergency is inappropriate.  The transmittal provides three clarifying questions for guidance as to when an ABN is mandatory.  If the answer to all the following  questions is "yes", an ABN must be issued: "Is this service a covered ambulance benefit; Will payment for part or all of this service be denied because it is not reasonable and necessary; and Is the patient stable and the transport non-emergent?"[24]

ABNs and CORFs

Comprehensive outpatient rehabilitation facilities (CORFs) are settings in which a beneficiary may receive multidisciplinary rehabilitative services billed under Part B.[25]  CORF services are eligible for Medicare payment only if the beneficiary could receive the same services if he or she were a hospital inpatient and if the CORF services are directly related to rehabilitation.[26]  The new transmittal makes it clear that CORFs must issue an ABN if services are no longer medically necessary but the beneficiary wishes to continue treatment.[27]

Voluntary Use of the ABN

Providers may use the ABN when a service or item is either never covered under Medicare, or explicitly excluded under the Medicare benefit, including (a) services for which there is no legal obligation to pay; (b) 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); (c) services required as a result of war; (d) personal comfort items; (e) routine physicals and most screening tests; (f) routine eye care; (g) dental care; and (h) routine foot care.[28] Additionally, the provider need not comply with formal requirements when voluntarily issuing ABNs.[29]

Electronic Retention of ABNs

CMS is moving toward electronic retention of documents. The manual now specifies that providers are permitted to retain electronic copies of signed ABNs.[30]  Providers may also inform beneficiaries electronically about a service that will not be covered by Medicare.  Electronic ABN's are valid only if the beneficiary can clearly see the screen.  Providers must, nonetheless, supply the beneficiary with a hard copy of the ABN following signed acknowledgement.[31]  Additionally, notices are no longer contained within the manual appendix.  Instead, providers are directed to the CMS website, and are charged with the duty to check expiration dates and the CMS website for periodic updates.[32]  Step-by-step instructions for notice can be found at[33]

New CMS ABN Quick Glance Guide

CMS's new transmittal contains a useful ABN Quick Glance Guide chart for use of ABNs.[34]  The chart is a snapshot of situations when providers should issue an ABN and the timing of the ABN, and clarifies that ABNs are voluntary when providers cover an item or service that is never covered by Medicare.


As CMS continues to refine requirements of the ABN, advocates and providers should keep a close tab on the ensuing changes.  Additionally, advocates should make sure that as CMS becomes more permissive in electronic ABN retention and notice, beneficiaries are appropriately informed of their rights. 


[1] The new transmittal may be found in its entirety at
[2] Ibid.
[3] See §4103(d)((1)(C) of the ACA, Public  Law 111-148; see also Affordable Care Act Expands Medicare Coverage for Prevention and Wellness, available at <;;
[4] See 42 U.S.C. §1395pp; 42 C.F.R. §411.400 et seq.  See also, The Medicare Advance Beneficiary Notice of Non-Coverage (ABN): A Tool for Limiting Beneficiary Liability, available at <>, for further discussion of when an ABN is needed.
[5] Id at § 50.4.1.
[6] Id at § 50.4.3.
[7] Id at § 50.4.2.
[8] Id. at §40.3.6.
[9] Id. at § 50.7.3(B).
[10] Ibid.
[11] Id at § 50.7.3.
[12] Medicare Claims Processing Manual Chapter 30 – Financial Liability Protections, §40.3.6 (subject to exceptions found under §
[13] Id. at §50.3.1.
[14] Id. at §50.3.
[15] Id. at §
[16] 42 U.S.C. §1395x(hhh)(2)(e); 42 §C.F.R. 410.16.
[17] 42 U.S.C. §1395x(ww); 42 C.F.R. §410.15.
[18] Medicare Claims Processing Manual Chapter 30 – Financial Liability Protections, § 50.3.1.
[19] Id. at § 50.12; 42 C.F.R. §§414.400-414.426.
[20] 42 C.F.R. §414.408(e)(3)(ii).
[21] For more information on the process of acquiring durable medical equipment, see the Center for Medicare Advocacy 2012 Handbook, Chapter 6, §6.03[D][2].
[22] See  Center for Medicare Advocacy 2012 Handbook, Chapter 6, §6.03[D][1] for further clarification and 42 C.F.R. § 410.10 and 42 U.S.C. § 1302.
[23] Medicare Claims Processing Manual Chapter 30 – Financial Liability Protections, § 50.15.2.
[24] Ibid.
[25] Medicare Benefit Policy Manual Chapter 12, § 10; Medicare Claims Processing Manual Chapter 30 – Financial Liability Protections, §
[26] Medicare Benefit Policy Manual Chapter 12 § 10.
[27] Medicare Claims Processing Manual Chapter 30 – Financial Liability Protections, §
[28] Id. at §50.3.2.
[29] Id at § 50.3.2.
[30] Id. at § 50.6.4.
[31] Id. at § 50.7.1(D).
[32] Id. at § 50.6.1(B).
[33] Id. at § 50.6.3.
[34] Id at § 50.1.



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