With Medicare routinely changing and tightening its rules on reimbursement, PTs may be worried about receiving payment in a timely, efficient manner. Fortunately, Advance Beneficiary Notices of Noncoverage (ABNs) help you cover all your financial bases, as they:

  • put the onus on your Medicare patients to decide whether they would like to accept financial liability (i.e., pay out-of-pocket) for the therapy services you provide; and
  • safeguard you when Medicare denies a claim.

So, why not issue ABNs (cha-ching!) to all Medicare patients prior to treating them? If only if it were that easy. While that would undoubtedly bring a smile to many PTs’ faces, the truth is that ABNs are only appropriate if the services you are providing are either noncovered or non-medically necessary.

While it’s fairly simple to determine whether a service is covered, sussing out the medical necessity of a covered service in the context of a specific patient care scenario is a whole other story. As a therapist, how can you know for sure whether Medicare will consider a particular patient’s treatment medically reasonable and necessary? After all, you may think all patient care meets those standards—well, you’d like to, anyway. But, if you end up providing services that don’t fall under Medicare’s definition of medical necessity, then it could come back to bite you in the form of claim denials. So, what should you do? Start by asking yourself these questions:

  1. Are the services you’re providing critical to the patient’s ability to function adequately in his or her daily life?
  2. Has the patient not yet reached his or her prior (or maximum) level of function?

Using Advance Beneficiary Notices of Noncoverage

If the answer to either of those questions is “yes,” then Medicare likely will continue to pay for your services—and you can continue to treat the patient above the therapy cap by applying what’s called the KX modifier.

If you cannot answer “yes” to either question, then Medicare likely will not continue to pay for your services, in which case you have two main options:

  1. Discharge the patient, or
  2. Continue providing treatment on a cash-pay basis.

Leaning toward option two? This is where ABNs enter the equation. Essentially, these forms place financial liability on the patient—meaning you can collect payment from him or her directly if Medicare winds up denying a claim. Easy peasy, right? Heck, why not just issue ABNs to all Medicare patients prior to initiating treatment? That way, you guarantee payment no matter what. Not so fast, my friend. Medicare strictly forbids you from issuing ABNs across the board (i.e., to all Medicare beneficiaries).

The State of Rehab Therapy Report Blue - Regular BannerThe State of Rehab Therapy Report Blue - Small Banner

Understanding the Financial Impact

Instead, CMS wants you to be completely certain—or at least as certain as possible—that Medicare will not deem your treatment medically necessary before you issue an ABN. By having your patient sign an ABN, you’re essentially telling him or her that Medicare won’t cover this particular treatment. (As a side note, whenever you do issue an ABN to a patient, you must also affix a GA or GX modifier to all subsequent claims so that Medicare knows to deny those claims. Once you receive a denial, you can then collect payment from the patient. For a more in-depth explanation of ABN modifiers, check out this blog post.)

Being Proactive

Bottom line: you should only have a patient sign an ABN when you’re providing services that you know are:

  • not covered by Medicare, or
  • not medically necessary.

Correct use of ABNs can help ensure your practice’s financial health. But, you’ve got to be proactive—after all, if you submit a claim to Medicare without having an ABN on file, and Medicare denies the claim due to lack of medical necessity, you cannot then quickly issue an ABN in order to collect payment from the patient. In other words, you cannot use an ABN reactively—after a claim has already been denied. I know—shucks, right? So, do your due diligence; you don’t want any mistakes to come back and haunt you.


Have you successfully used ABNs in your clinic? What remaining questions do you have about them? Join the discussion by commenting below.

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