Tips March 8, 2026

The ABN Trap: How Labs Use a Medicare Form to Charge You 5x 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. In some cases that pricing is on the form. 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: you can 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 latest case, I was already in the chair seconds away from the needle and had to select options on a computer screen and sign electronically — feeling like I had 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 Fee Schedule that sets payment rates for thousands of tests. These rates are based on what private insurers actually pay, updated every three years 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 my own recent bill, denied tests carried a lab charge of $1,183.17. Medicare's rate for those same tests? $117.49. That's a 10x 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.

Real ABN form annotated with Medicare rates by GougeStop — showing lab charges of $1,183 vs Medicare rates of $117 for the same tests

A real ABN annotated with Medicare rates. The lab estimated $1,183 — Medicare's rate for the same tests is $117.

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."

And according to Solace Health's guide on disputing medical bills, "many providers are willing to negotiate bills, offer discounts for prompt payment, or set up interest-free payment plans" — but only if you know enough to push back.

The problem is that pushing back requires data most patients don't have.

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.

What you can do — starting before you sign

You have three options on every ABN, and you should read them:

Your three choices on an ABN:

Option 1 — The lab bills Medicare and bills you if denied. You keep your right to appeal. If Medicare pays, you get refunded.

Option 2 — You pay now. Medicare is never billed. You lose all appeal rights.

Option 3 — The test isn't performed. You owe nothing and can take the time to shop labs and potentially save yourself $900.

      Here's something no one else will tell you: You don't have to sign blind. Before you pick up that pen, take a photo of the ABN with your phone and open GougeStop right there in the provider's office. In about 60 seconds, you'll see what Medicare actually pays for every test listed — and what other labs nearby charge for the same work. You can show those numbers to the person handing you the form.
    

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 received a bill, you're not out of options. That same pricing data changes the negotiation entirely.

Two questions to ask yourself after getting an ABN-related bill:

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? When your Explanation of Benefits (EOB) arrives, read the denial reason carefully. Medicare denials can be appealed, and many are overturned, especially when the ordering physician provides supporting documentation.

Even if the ABN was valid and the denial stands, 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.

That's exactly why we built GougeStop. Upload a photo of your lab bill, lab order, or ABN, and you'll see Medicare's rates for every test listed — plus what other labs in your area have charged. It's free and takes about 60 seconds.

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

Know what Medicare pays before you sign.

Try GougeStop Free