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April 22, 2026 · By David Rockaway

The ABN Trap: How Labs Use a Medicare Form to Charge You 5× What Tests Are Worth

If you’ve had lab work done on Medicare, there’s a good chance you’ve signed a form called an Advance Beneficiary Notice — an ABN. You probably signed it quickly in a stack of paperwork before your blood draw. Most people do.

That signature may be the most expensive thing you write all year.

What the ABN actually does

An ABN (officially Form CMS-R-131) is a notice labs are required to give you when they believe Medicare might not cover a test. The form is a CMS (Centers for Medicare & Medicaid Services) requirement. By signing it, you agree to pay whatever the lab charges if Medicare says no. In theory it exists to give you a choice: accept the test and the financial risk, or decline it.

In practice, it’s handed to you in a clinical setting, often with little explanation, right before your blood is drawn. In my own recent case, I was already in the chair seconds away from the needle and had to select options on a computer screen and sign electronically — with no time to read carefully, think, or discuss. I did ask about the Medicare rate and the tech said she had no idea. The choice doesn’t feel like a choice.

What they don’t tell you

Here’s what’s missing from that moment: any context for what “whatever the lab charges” actually means. Labs set their own prices, and those prices often have almost no relationship to what Medicare — or any insurer — considers reasonable.

Medicare publishes a Clinical Laboratory Fee Schedule that sets payment rates for thousands of tests. These rates are based on what private insurers actually pay, updated under the Protecting Access to Medicare Act. They represent a real-world market price.

Lab “list prices” — what they put on your bill — are typically 3 to 6 times higher than those rates. On one of my own recent bills, denied tests carried a lab charge of $1,183.17. Medicare’s rate for those same tests? $117.49. That’s a 10× markup.

The ABN doesn’t give you this context. CMS requires labs to include an estimated cost on the form, but even when they fill it in, the number reflects the lab’s inflated price — not what the test is worth in any real market.

What the experts say

“ABNs must be delivered far enough in advance of providing potentially non-covered items so as to allow the beneficiary an opportunity to consider all available options.”
— Center for Medicare Advocacy

The Center for Medicare Advocacy, a leading nonprofit focused on Medicare beneficiary rights, also notes that if a provider refuses to answer a beneficiary’s questions about an ABN, “the provider will be liable for non-covered care.” The problem is that pushing back requires data most patients don’t have at the counter.

What happens if you don’t sign

This is the part most people never hear: if a lab fails to get a valid signed ABN before running a test that Medicare denies, the lab — not you — is financially responsible. CMS is clear on this. No valid ABN means the provider cannot bill the patient. The claim gets coded with modifier GZ instead of GA, and the lab eats the cost.

That’s why your signature matters so much to them. And why it should matter to you.

Your three choices on every ABN

  1. Option 1 — The lab bills Medicare and bills you only if Medicare denies. You keep your right to appeal. If Medicare pays, you owe nothing.
  2. Option 2 — You pay now. Medicare is never billed. You lose all appeal rights.
  3. Option 3 — The test isn’t performed. You owe nothing and can take the time to talk to your doctor about whether a different diagnosis code or a different lab would change the outcome.

What you can do — starting before you sign

You don’t have to sign blind. Before you pick up that pen, run a Pre-Check on your order right there in the provider’s office. In about 60 seconds you’ll see what Medicare actually pays for every test listed — and whether your diagnosis codes match Medicare’s accepted list. You can show those numbers to the person handing you the form.

If your diagnosis codes don’t match Medicare’s accepted list for the tests being ordered, ask your doctor to revise before the lab visit. That eliminates the ABN in the first place.

A conversation about a $1,183 charge goes very differently when both of you can see that Medicare’s rate is $117.

If you’ve already signed and gotten a bill

You’re not out of options. Two questions to ask:

  1. Was the ABN valid? Did the lab give you the form before the test, explain it clearly, and give you a real chance to decline? If not, the ABN may not be enforceable.
  2. Was the denial correct? Read the denial reason on your Explanation of Benefits (EOB) carefully. Medicare denials can be appealed, and many are overturned, especially when the ordering physician provides supporting documentation. CMS outlines the redetermination process in detail.

Even if both answers are yes, you still have leverage. A lab defending a 1,000% markup has a much harder time when you can show what Medicare pays and what other labs charge for the same test.

Our affiliate gougestop.com walks you through the appeal and negotiation playbooks if you’ve already been billed.

The ABN isn’t going away. But the information gap it exploits can.

Sources

  1. CMS — Beneficiary Notices Initiative (ABN Form CMS-R-131)
  2. CMS — Clinical Laboratory Fee Schedule
  3. Center for Medicare Advocacy — Advance Beneficiary Notices (ABNs)
  4. CMS — First Level of Appeal: Redetermination by a Medicare Contractor
  5. CMS — How to Read an Explanation of Benefits
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