If the rules of Advance Beneficiary Notices of Noncoverage (ABNs) make you a bit confused, you’re definitely not alone. In an effort to shed some light on the ins and outs of ABNs and to highlight some recent changes to ABN requirements, Medicare created this set of FAQs clarifying their use. Here’s some info to help bring you up to speed:

Medicare Open Forum - Regular BannerMedicare Open Forum - Small Banner

What is an Advance Beneficiary Notice of Noncoverage (ABN)?

An ABN is a form practitioners use to notify a Medicare patient that Medicare might not cover the therapy services he or she is about to receive.

What is the purpose of an ABN?

ABNs allow beneficiaries (your patients) to make informed decisions about whether they would like to accept therapy services despite the possibility of having to pay for those services out-of-pocket. A signed ABN form serves as proof that a patient knew prior to accepting such services that he or she might have to pay out-of-pocket for them.

When should a therapist issue an ABN?

A therapist must issue an ABN in either of the following instances:

  1. Before providing items or services that the therapist believes or knows Medicare may not cover
  2. Before providing items or services that Medicare usually covers but may not consider medically reasonable and medically necessary for this particular patient in this particular case

In neither instance can a therapist issue an ABN after the fact (i.e., after Medicare denies a claim); therapists always must complete the form and have patients sign it prior to the time of service.

Download your ABN decision chart.

Enter your email address below, and we’ll send you a super-simple flow chart to help you decide whether or not it’s appropriate to issue an ABN.

Please enable JavaScript to submit form.

How do therapists know whether Medicare considers a service medically reasonable and medically necessary?

Yes. The American Taxpayer Relief Act (ATRA) of 2012 includes a significant change in policy regarding the use of ABNs once patients exceed the threshold formerly known as the therapy cap. Effective January 3, 2013, providers must issue a valid ABN to collect out-of-pocket payment from Medicare beneficiaries for services above the therapy threshold that Medicare deems not reasonable and necessary. It is imperative to understand that therapists should not issue an ABN for every beneficiary who exceeds the therapy threshold; rather, they should only do so when they believe the services in question do not meet Medicare’s definition of “reasonable or necessary.” This is a significant change from pre-2013 rules, which did not require providers to issue ABNs for beneficiaries to be held liable for denied charges above the therapy threshold. Now, if a therapist decides to issue an ABN to a patient who exceeds the therapy threshold, the therapist will not attach the KX modifier to that claim, but will instead apply the GA modifier to trigger Medicare to deny the claim.. The patient can then be charged for the visits.

Are there any special rules regarding the therapy threshold?

Yes. The American Taxpayer Relief Act (ATRA) of 2012 includes a significant change in policy regarding the use of ABNs once patients exceed the threshold formerly known as the therapy cap. Effective January 3, 2013, providers must issue a valid ABN to collect out-of-pocket payment from Medicare beneficiaries for services above the therapy threshold that Medicare deems not reasonable and necessary. It is imperative to understand that therapists should not issue an ABN for every beneficiary who exceeds the therapy threshold; rather, they should only do so when they believe the services in question do not meet Medicare’s definition of “reasonable or necessary.” This is a significant change from pre-2013 rules, which did not require providers to issue ABNs for beneficiaries to be held liable for denied charges above the therapy threshold. Now, if a therapist decides to issue an ABN to a patient who exceeds the therapy threshold, the therapist will not attach the KX modifier to that claim, but will instead apply the GA modifier to trigger Medicare to deny the claim. The patient can then be charged for the visits.

By attaching the KX modifier to a claim, the therapist attests that he or she believes the services are reasonable and necessary. Once a therapist uses the KX modifier, he or she cannot retroactively issue an ABN. In the event that Medicare denies a claim that includes the KX modifier, the therapist—not the patient—is responsible for the cost of services.

Can therapists issue ABNs and subsequently collect out-of-pocket payment for services provided on a maintenance basis?

No. As clarified in the Jimmo Settlement Agreement of 2013, “the Medicare program covers skilled nursing care and skilled therapy services under Medicare’s skilled nursing facility, home health, and outpatient therapy benefits when a beneficiary needs skilled care in order to maintain function or to prevent or slow decline or deterioration (provided all other coverage criteria are met).” In other words, the settlement refuted the long-standing misconception that “Medicare will only pay for rehab therapy or other skilled care if a patient shows improvement as a result of that care.” Thus, if you are providing medically necessary maintenance services, Medicare must pay for those services—even if the patient has exceeded the therapy cap. Consequently, you should not issue an ABN for those services. To learn more about the Jimmo Settlement Agreement, visit this CMS page.    

If a therapist issues an ABN, does he or she still have to complete functional limitation reporting on that patient?

Yes. Even if the therapist knows that Medicare will deny the claim and that the patient will pay for the services out-of-pocket, the therapist still must submit the claim to Medicare and therefore still must complete functional limitation reporting on the patient.

Should therapists issue ABNs on a routine basis?

No. While therapists might be tempted to issue “blanket” ABNs in order to guarantee payment no matter what, Medicare strictly prohibits providers from issuing ABNs on a regular, routine basis.

What happens if a therapist does not issue an ABN in a case that meets the established criteria?

If a therapist does not issue an ABN as Medicare requires, the therapist cannot bill the Medicare beneficiary for the services in question. If Medicare ends up denying the claim, the therapist would then be responsible for the cost of the services.


Whew! We know that’s a lot of information to digest. Still got questions? Leave ’em in the comments section below. For more information on ABNs—or to download the most up-to-date version of the form—visit this CMS webpage.

  • ABN Decision Chart Image

    downloadOct 10, 2018

    ABN Decision Chart

    Knowing when—and when not—to issue an Advance Beneficiary Notice of Noncoverage (ABN) can be a challenge for even the most senior provider. But, doing so correctly can mean the difference between being able to collect payment from your patients—and writing off denied charges as bad debt. And that can have a substantial impact on your practice’s bottom line—especially if you see a large number of Medicare beneficiaries.

  • The Complete PT Billing FAQ Image

    articleMay 24, 2016 | 25 min. read

    The Complete PT Billing FAQ

    Over the years, WebPT has a hosted a slew of billing webinars and published dozens of billing-related blog posts. And in that time, we’ve received our fair share of tricky questions. Now, in an effort to satisfy your curiosity, we’ve compiled all of our most common brain-busters into one epic FAQ. Don’t see your question? Ask it in the comments below. (And be sure to check out this separate PT billing FAQ we recently put together.) Questions …

  • articleAug 28, 2013 | 7 min. read

    No Workarounds: Following the Rules of the Therapy Cap and the Importance of Solid Documentation

    If you’re like most rehab therapists, finding a letter from Medicare in your mailbox is enough to make your brow sweat and your heart skip a beat. With all of the regulations we have to follow—and the potential penalties associated with noncompliance—it’s no surprise that we have grown to fear Medicare. We’re afraid of doing something wrong. Or in some cases, we’re afraid of not getting paid. Thus, rather than defend our decisions, our expertise, and our …

  • The Great Medically Necessary Discussion and How to Use ABNs Image

    articleMar 12, 2014 | 6 min. read

    The Great Medically Necessary Discussion and How to Use ABNs

    For many physical therapists, the phrase “medically necessary” sounds worse than nails on a chalkboard. On the one hand, it’s vague, subjective, and open to infinite interpretation. And on the other, it’s often the determining factor in whether payers—perhaps most notably, Medicare—will provide reimbursement for rehab therapy services. A Bit of History The history of the “medically necessary” reimbursement requirement stretches all the way back to the 1960s. As E. Haavi Morreim explains in  this article , it was …

  • Common Questions from Our Medicare Open Forum Webinar Image

    articleOct 25, 2018 | 43 min. read

    Common Questions from Our Medicare Open Forum Webinar

    Earlier this week, WebPT President Dr. Heidi Jannenga, PT, DPT, ATC, teamed up with Rick Gawenda, PT—President and CEO of Gawenda Seminars & Consulting—to host a Medicare Open Forum . As expected, we received more questions than our Medicare experts could answer during the live session, so we've provided the answers to the most frequently asked ones below. Don't see the answer you're looking for? Post your question in the comment section at the end of this …

  • Do You Know Your Modifiers? [Quiz] Image

    articleJul 29, 2015 | 1 min. read

    Do You Know Your Modifiers? [Quiz]

    It’s a mad, mad, mad, mad Medicare world, and unfortunately, just about every regulation requires a modifier. If you apply the wrong modifier—or forget one entirely—then your clinic suffers decreased payments or flat-out denials. Even worse, if you amass enough modifier mistakes, you make your practice vulnerable to an audit. Worried you’re miserable at modifiers or want confirmation that you’re actually a modifier master? Take our 10-question quiz below to test your modifier know-how.    

  • Denial Management FAQ Image

    articleMay 26, 2017 | 22 min. read

    Denial Management FAQ

    During our denial management webinar , we discussed the difference between rejections and denials, explained how to handle both, and provided a five-step plan for stopping them in their tracks. The webinar concluded with an exhaustive Q&A, and we’ve amassed the most common questions here. Insurance Issues Claim Quandaries Compliance Qualms Documentation Dilemmas Front-Office Frustrations Insurance Issues We’ve had issues with auto insurances denying 97112 (neuromuscular re-education) for non-neuro diagnoses, even in cases when the patient’s medical …

  • Common Questions from Our PT Billing Open Forum Image

    articleAug 18, 2018 | 34 min. read

    Common Questions from Our PT Billing Open Forum

    Last week, WebPT’s trio of billing experts—Dr. Heidi Jannenga, PT, DPT, ATC/L, WebPT President and Co-founder; John Wallace, PT, MS, WebPT Chief Business Development Officer of Revenue Cycle Management; and Dianne Jewell, PT, DPT, PhD, WebPT Director of Clinical Practice, Outcomes, and Education—hosted a live open forum on physical therapy billing . Before the webinar, we challenged registrants to serve up their trickiest PT billing head-scratchers—and boy, did they deliver! We received literally hundreds of questions on …

  • Common Questions from our Modifier Open Forum Image

    articleJul 7, 2014 | 10 min. read

    Common Questions from our Modifier Open Forum

    Should I have my patients sign an advance beneficiary notice of noncoverage (ABN) just in case Medicare doesn’t pay? No, by having your patient sign an ABN, you are acknowledging that you do not believe that the services you are providing are either medically necessary or covered by Medicare. If you have an ABN on file, you should include a modifier GA or GX modifier on your claim so Medicare knows to deny the claim and assign …

Achieve greatness in practice with the ultimate EMR for PTs, OTs, and SLPs.