CMS Updates Medicare Manual regarding Advance Beneficiary Notices | Engage Health Solutions

CMS Updates Medicare Manual regarding Advance Beneficiary Notices

A Must-Read for Billing Departments

The Centers for Medicare and Medicaid Services (CMS), on July 14, 2021, issued Transmittal 10862, Change Request 12242 (r10862CP.pdf (, editing, changing, and reorganizing section 50, chapter 30 of the Medical Claims Processing Manual (MCPM) (Pub. 100-04) (implemented and effective October 14, 2021) which specifically deals with the Advance Beneficiary Notice of Non-coverage (ABN). CMS has also issued MLN Matters Number: MM12242 (MM12242 ( briefly outlining the changes.

This transmittal serves as CMS’s official instruction to the Medicare Administrative Contractor (MAC) and therefore it is imperative that anyone billing CMS is aware of these changes. Below I address a portion of the update related to Limitation on Liability and the importance of using an Advance Beneficiary Notice of Non-Coverage (ABN).

Specifically, section 50, chapter 30 of the MCPM addresses the Financial Liability Protections (FLP) provisions which protect patients, health care providers, and suppliers under certain circumstances from unexpected liability for charges associated with claims that are not covered or paid by Medicare. FLP provisions apply after Medicare makes a determination of coverage for an item or service and generally only apply to beneficiaries enrolled in the Original Medicare Fee-For-Service program Parts A and B. More specifically, in order for the FLP to apply, the items and/or services should be denied on the basis of specific statutory provisions and involve determinations about the knowledge of whether Medicare was likely to deny payment. Examples of statutory provisions which require advance notice is when the item or service may be denied as not reasonable and necessary under §1862(a)(1) of the Act or because the item or service constitutes custodial care under §1862(a)(9) of the Act.

One important provision of the FLP is the Limitation on Liability (LOL) provisions found under §1879 of the Social Security Act. This provision provides protection and financial relief to suppliers, providers, and beneficiaries by either requiring refunds or payments for which Medicare would otherwise deny.

When it is determined that a review falls under the LOL provisions, evidence must show that either a healthcare provider, supplier or the beneficiary knew or should have known that Medicare was going to deny payment on the item or service. While §1879(a)(2) of the Act specifies only that knowledge must not exist in order to apply the LOL provision, the Code of Federal Regulations (42 CFR 411.404) provides criteria for beneficiary knowledge based on written notice, such as issuing an ABN, Form CMS-R-131. Beneficiary knowledge can also be established when the beneficiary receives actual notice of a recent claim denial for the same item or service.

Medicare is prohibited from making payment to providers or suppliers when they have actual knowledge of the non-coverage of item and/or service in a particular case, could reasonably have been expected to have such knowledge, or the beneficiary was shown not to have knowledge and therefore was found not liable. It is important for providers and suppliers to issue a written notice each time to the beneficiary, and to do so as soon as they make an assessment that Medicare payment certainly or probably will not be made in order to transfer potential financial liability to the beneficiary and therefore be paid for the item or service. By making this assessment timely, the beneficiary is better able to participate in his/her own health care treatment decisions by making an informed decision whether or not to receive the item and/or service. And, if they chose to move forward, the beneficiary will have an understanding that they will be liable for payment to the provider or supplier if Medicare denies the claim.

A MAC or other Medicare contractor may hold any healthcare provider or supplier financially liable if they either fail to give notice when required or give defective notice. A provider or supplier who demonstrates that they did not know and could not reasonably have been expected to know that Medicare would not make payment will not be held financially liable for failing to give notice. This could be the case when CMS has, in the past, paid for the same item under similar circumstances or when the provider or supplier received a favorable appeal decision for the same item. However, if defective notice was provided, the provider or supplier may not claim that they did not know or could not reasonably have been expected to know that Medicare would not make payment, as the issuance of the notice itself could be evidence of knowledge that Medicare might not or would not pay. As such, it would be important from a revenue integrity point of view for a provider or supplier to differentiate a defective notice from a notice that was issued in error and therefore could negate the knowledge requirement. It is clear, however, that a provider or supplier who cannot show or prove that adequate advance notice was furnished to the beneficiary will not be able to use the provisions in section 1879 of the Act to transfer financial liability to the beneficiary and will not be paid, either by Medicare or the beneficiary.

One additional point to touch on in this review of some of the changes that CMS has made regarding ABNs is the issue of the effectiveness of the ABN delivery to the Medicare beneficiary. Delivery of an ABN has several requirements includes: actual delivery of the ABN to someone who is capable of understanding the document; use of the correct ABN form; providing the ABN far enough in advance of delivering potentially non-covered items or services to allow sufficient time for the beneficiary to consider all available options and participate in their care; and, ensuring that all of the beneficiary’s questions are addressed completely, accurately, and timely. One question that remains about the delivery of an ABN is how long the ABN is actually effective. In the update to section 50, chapter 30, CMS spells out a new section 50.8, subsection A. Under this new official instruction, CMS advises:

An ABN remains effective after valid delivery so long as there has been no change in:

  • Care from what is described on the original ABN;
  • The beneficiary’s health status which would require a change in the subsequent treatment for the non-covered condition; and/or
  • The Medicare coverage guidelines for the items or services in question (i.e., updates or changes to the policy of an item or service).

A single ABN describing an extended or repetitive course of non-covered treatment may be given to the beneficiary provided that the ABN lists all items and services the provider or supplier believes Medicare will not cover. The ABN must also specify the duration of the period of treatment, if applicable. The provider or supplier must give the beneficiary another ABN if, during the course of treatment, additional non-covered items or services are needed.

Even though the information provided herein is basic to the overall revenue integrity of a claim, many providers and suppliers fail to adhere to these requirements and end up suffering the financial consequences. If your goal is to Ensure Payment Accuracy and FutureProof your claims, and it should be, the ABN process is one that you need to make sure you are performing regularly and correctly.