Traditional Medicare Advance Beneficiary Notices (ABNs)


Most private insurance contracts allow providers and enrollees to obtain prior assurance that a claim will be covered. This is the case for many higher-cost services. But in some circumstances, the health plan may require preauthorization. Medicare does not operate this way. Medicare’s standard for coverage is that care must be deemed “reasonable and necessary.” When providers recommend care for which they believe Medicare might not pay (because it is not deemed reasonable and necessary), they must notify a traditional fee-for-service beneficiary that the service may not be reimbursable. The notice must be given both verbally and in writing. This advance beneficiary notice (ABN) is intended to foster an informed discussion between the doctor and the beneficiary about whether or not to proceed with the service at the beneficiary’s expense. An ABN is not required for services that are categorically excluded from Medicare coverage, such as cosmetic surgery and experimental procedures.

An ABN is not considered a private contract. Some providers have misused ABNs, asking beneficiaries to sign blanket notices promising payment far in advance without specifying the service. A blanket notice that does not specify the service does not fulfill the purpose of the ABN or enable a beneficiary to make an informed choice each time a service is recommended.

As part of the Medicare Modernization Act of 2003, Congress called for a system of prior determination in Medicare for certain items and services. The Centers for Medicare & Medicaid Services published final rules for the new system in 2008. They state that beneficiaries or their providers may ask a Medicare administrative contractor about the coverage and cost of certain services and items. Prior-determination requests may be made only for physician services with the highest average allowed charges, or plastic and dental surgeries with a Medicare Physician Fee Schedule amount of $1,000 or more. Many beneficiaries may not be aware of physician charges or their right to prior determinations.



Appropriate use of notices

The Centers for Medicare & Medicaid Services (CMS) should prohibit routine or blanket use of advance beneficiary notices (ABNs) by providers. CMS should monitor the use of ABNs and sanction providers who use them inappropriately.

CMS should ensure that providers and beneficiaries are informed about the appropriate use of ABNs.

ABNs should clearly indicate the item or service for which Medicare payment is in question, the reason the Medicare payment is in question, and why the provider believes the service is necessary. ABNs should require the signatures of both the provider and the beneficiary.

CMS should closely monitor the system of prior determination in Medicare to ensure that it is applied fairly and broadly.