What Is ABN in Medical Billing and How to Use It

An Advance Beneficiary Notice, sometimes called an Advance Beneficiary Notice of Noncoverage (ABN), is issued by medical providers to beneficiaries of Medicare and lets them know what services might not be covered under it. Medicare is the federal health insurance system for people 65 older and certain younger people with disabilities. As of June 2023, more than 65 million Americans, 25.4% of the adult population of the United States, were enrolled in Medicare. 

The Centers for Medicare and Medicaid Services (CMS) sets  guidelines for the use of an ABN. One of them is that Medicare may reimburse health-care providers and suppliers only for procedures and equipment that are medically necessary. In a situation where a patient has requested, or a provider has recommended, a procedure that may be deemed to be medically unnecessary, the ABN is used to notify the Medicare beneficiary (the patient) of the likelihood that Medicare will deny the claim, and the patient will be responsible for the full cost of the care provided.

Along with developing familiarity with medical terminology and detail-oriented skills that are needed for maintaining patient records, aspiring medical billers and coders should familiarize themselves with the role of the ABN in medical billing. The ABN’s primary role is to help ensure providers are paid for their services, even when those services are provided to Medicare patients and may not be eligible for Medicare coverage.

Health providers are typically paid through a combination of reimbursement from an insurance plan, such as Medicare or private health insurance, and direct payment from their patients. To ensure they are paid for the services they provide, physicians’ offices, surgery and diagnostic centers, or businesses that provide medical equipment must take steps to accurately manage the medical billing and coding process. Professionals like medical billing specialists must be familiar with services that Medicare categorizes as “non-coverage services.” A signed ABN helps to ensure that if Medicare doesn’t pay, the patient will accept responsibility for payment.

Another important role of the ABN in medical billing is its function as a disclosure tool, making patients aware of the conditions necessary to receive medical services under the Original Medicare plan. Using a correctly completed ABN, signed by the patient, the health services provider educates the patient of the conditions that need to be met for the cost of the services to be covered by Medicare. 

Medicare sets penalties for lack of compliance, fraud and abuse, imposing stiff fines or even excluding providers from the plan if they routinely bill for medically unnecessary services. ABNs can perform an important function in fraud and abuse compliance, creating a record of the patient’s acknowledgement that the services provided may be deemed to be medically unnecessary — and their decision to have the services performed anyway — and helping to rebut an argument that claims were submitted with fraudulent intent.

What are some examples of services Medicare may determine to be medically unnecessary?

• A complete blood count (CBC) or other lab test when the diagnosis code doesn’t support Medicare’s definition of medical necessity.

• A screening flexible sigmoidoscopy (a test used to check the condition of the rectum and lower part of the colon) given more often than every 4 years or if the patient is less than 50 years old.

• A prostate cancer screening test given more often than annually or if the patient is under 50 years old.

Medicare maintains strict controls over services for which you may receive an ABN, the exact information required to be included on the ABN and its proper use. That’s why it is so important for medical billing and coding professionals or those involved in healthcare practice management to remain vigilant in their use of ABNs. If Medicare’s policies aren’t followed, even if a patient has signed an ABN, they could be deemed not responsible for payment and the provider would not be reimbursed for their services. 

Medicare requires the following information to be included on the ABN form:

• Patient’s full name

• Name, address and phone number of the medical provider issuing the ABN

• The name of the service or item that may not be covered by Medicare

• The reason Medicare may not pay for the service or item

• Estimated cost of the service or item in question

Some additional rules govern the way ABNs are given to patients. They may consist of a single page or less, and they may not be issued to anyone who is under duress or in an emergency medical situation. If someone is having a serious and immediate medical event, a provider can’t present them with an ABN while they’re being rushed to the hospital or treated in the Emergency Department.

Take the first step toward pursuing a career as a professional in the healthcare revenue cycle by pursing an Undergraduate Certificate in Medical Billing and Coding here at DeVry. 

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