Medicare and ABN Forms Made Easy 

Medicare and ABN forms

Clearing Up Confusion on medicare and ABN Forms

An ABN is a form that practitioners use to notify a Medicare patient that Medicare might not cover the therapy services he or she is about to receive.  It is a form that allows beneficiaries to make informed decisions about whether he/she 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. While Medicare and ABN forms can sometimes be confusing, hopefully this article can alleviate your concerns and confusion.

“Prior to the American Taxpayer Relief Act ( ATRA ), original (fee-for-service) Medicare claims for therapy services at or above therapy caps that did not qualify for a coverage exception were denied as a benefit category denial, and the beneficiary was financially liable for the non-covered services. CMS encouraged suppliers and providers to issue a voluntary Advance Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131, as a courtesy, to alert beneficiaries to potential financial liability. However, issuance of an ABN wasn’t required for the beneficiary to be held financially liable. Section 603 (c) of the ATRA amended §1833(g)(5) of the Social Security Act (the Act) to provide limitation of liability (LOL) protections (See §1879 of the Act) to beneficiaries receiving outpatient therapy services on or after January 1, 2013, when services are denied and the services provided are in excess of therapy cap amounts and don’t qualify for a therapy cap exception. 

Now, the provider/supplier must issue a valid, mandatory ABN to the beneficiary before providing services above the cap when the therapy coverage exceptions process isn’t applicable. The ABN informs the beneficiary why Medicare may not or won’t pay for a specific item or service and allows the beneficiary to choose whether or not to get the item or service and accept financial responsibility. ABN issuance allows the provider to charge the beneficiary if Medicare doesn’t pay. If the ABN isn’t issued when it is required and Medicare doesn’t pay the claim, the provider/supplier will be liable for the charges.”

As of 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 important to understand that therapists should not issue an ABN for every beneficiary who exceeds the therapy threshold.  An ABN should be issued only when the provider believes the services in question do not meet Medicare’s definition of “reasonable or necessary.” This is a significant change from previous 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.

Many practitioners express confusion as to when to use this form. Therapists should issue an ABN before providing services that Medicare usually covers but may not consider medically reasonable and necessary for this patient in this case. Practitioners may opt to issue an ABN as a courtesy to the patient before providing items or services that the therapist believes or knows Medicare may not cover. Keep in mind for those using Medicare that ABN forms cannot be completed after the fact (for instance, after Medicare denies a claim). Patients should sign this form prior to delivery of the service.

Many clinicians wonder if this form should be routinely filled out by Medicare patients who are being seen on a maintenance basis. The answer to this question is “no”. This is clarified in the Jimmo Settlement Agreement from January 2013, referenced from CMS: 

The Centers for Medicare & Medicaid Services (CMS) reminds the Medicare community of the Jimmo Settlement Agreement (January 2013), which clarified that 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). Specifically, the Jimmo Settlement Agreement required manual revisions to restate a “maintenance coverage standard” for both skilled nursing and therapy services under these benefits:

Skilled nursing services would be covered where such skilled nursing services are necessary to maintain the patient’s current condition or prevent or slow further deterioration so long as the beneficiary requires skilled care for the services to be safely and effectively provided.

Skilled therapy services are covered when an individualized assessment of the patient’s clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist (“skilled care”) are necessary for the performance of a safe and effective maintenance program.  Such a maintenance program to maintain the patient’s current condition or to prevent or slow further deterioration is covered so long as the beneficiary requires skilled care for the safe and effective performance of the program. 

The Jimmo Settlement Agreement may reflect a change in practice for those providers, adjudicators, and contractors who may have erroneously believed that the Medicare program covers nursing and therapy services under these benefits only when a beneficiary is expected to improve.  The Jimmo Settlement Agreement is consistent with the Medicare program’s regulations governing maintenance nursing and therapy in skilled nursing facilities, home health services, and outpatient therapy (physical, occupational, and speech) and nursing and therapy in inpatient rehabilitation hospitals for beneficiaries who need the level of care that such hospitals provide.”

In other words, if you are providing medically necessary maintenance services, Medicare must pay for those services even if the patient has exceeded the therapy cap. Therefore, you should not issue an ABN for those services. 

This leads me to another point of confusion for therapists – how do you know if services are considered medically necessary? In an attempt to help providers and insurance companies to determine this, the APTA created  the document Defining Medically Necessary Physical Therapy Services position in 2011:

“Physical therapy, as part of an individual’s health care, is considered medically necessary as determined by the licensed physical therapist based on the results of a physical therapy evaluation and when provided for the purpose of preventing, minimizing, or eliminating impairments, activity limitations, or participation restrictions. Physical therapy is delivered throughout the episode of care by the physical therapist or under his or her direction and supervision; requires the knowledge, clinical judgment, and abilities of the therapist; takes into consideration the potential benefits and harms to the patient/client; and is not provided exclusively for the convenience of the patient/client. Physical therapy is provided using evidence of effectiveness and applicable physical therapy standards of practice and is considered medically necessary if the type, amount, and duration of services outlined in the plan of care increase the likelihood of meeting one or more of these stated goals: to improve function, minimize loss of function, or decrease risk of injury and disease.”

Information about Medicare and ABN forms can be obtained at the CMS website:

CMS offers an email address to send questions to: [email protected]



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