CO-116: Advance Indemnification Notice Requirements Not Met

What Does CO-116 Mean?

CO-116 means the provider must absorb the denied amount because the ABN did not meet requirements. Without a valid ABN, the provider cannot transfer financial liability to the patient. This happens when the ABN was not obtained, was missing required elements (service description, cost estimate, patient option, signature, date), used the wrong CMS form version, was signed after the service was rendered, or was issued as a blanket notice rather than being specific to the service.

CARC 116 fires when a payer determines that the Advance Beneficiary Notice (ABN) — or equivalent advance indemnification notice — for a service expected to be non-covered does not meet the required standards. The ABN is the mechanism that allows providers to transfer financial liability to patients for services Medicare or other payers are expected to deny. Without a properly executed ABN, the provider cannot bill the patient for the denied service.

CMS maintains specific requirements for a valid ABN (Form CMS-R-131): it must be issued before the service is provided, must describe the specific service expected to be non-covered, must include an estimated cost, must state the reason non-coverage is expected, and must allow the patient to select from three options — request payer billing, accept financial responsibility, or decline the service. The patient must sign and date the form before the service is rendered. Blanket or routine ABNs that are not customized to the specific service and situation do not meet CMS requirements.

The Group Code determines the financial outcome. CO-116 means the provider must write off the denied amount because the ABN was deficient and liability cannot be transferred to the patient. PR-116 means the patient accepted financial responsibility through a valid ABN and the provider can bill the patient. The modifier on the claim matters: GA indicates a valid mandatory ABN is on file, and GZ indicates the service is expected to be denied as not reasonable and necessary. Using the wrong modifier can trigger this denial even when the ABN itself is complete.

Common Causes

How to Resolve

Determine which ABN requirement was not met, verify the form on file, and either appeal with the ABN documentation or absorb the cost if no valid notice exists.

1. Review the ABN on file Pull the ABN and verify all CMS-required elements: specific service description, estimated cost, reason for expected non-coverage, patient option selection (Option 1/2/3), patient signature, and date signed before service delivery.
2. Check the form version Confirm the ABN uses the current CMS-approved version (Form CMS-R-131). Outdated form versions will invalidate the notice regardless of whether other elements are complete.
3. Verify the claim modifier Check that the claim was submitted with modifier GA (valid mandatory ABN on file) and not GZ (expected to be denied, no ABN). An incorrect modifier triggers the denial even with a valid ABN.
4. Appeal with ABN documentation If the ABN is complete and valid, submit an appeal with a copy of the signed form, highlighting all required elements and the date the form was executed before service delivery.
5. Write off if ABN is deficient If no valid ABN exists, post the denial as a provider write-off. The patient cannot be billed without a properly executed ABN.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-116:

How to Prevent CO-116

• Develop a systematic ABN workflow that triggers for every service expected to be non-covered, ensuring the notice is issued and signed before the service is rendered
• Use the current CMS-approved ABN form and update immediately when CMS releases new versions
• Implement a completion checklist verifying all required elements before the patient signs: specific service description, estimated cost, reason, option selection, signature, and date
• Never issue blanket or routine ABNs — each must be customized to the specific service and reason for expected non-coverage
• Ensure claims are submitted with the correct modifier (GA for valid ABN, GZ for no ABN) matching the actual ABN documentation status
• Store completed ABNs immediately in the patient file and maintain them for the required retention period
• Train all front-desk and clinical staff on ABN completion requirements and the consequences of a deficient notice

General Prevention

• Develop a systematic ABN workflow that triggers for every service expected to be non-covered by Medicare, ensuring the ABN is issued and signed before the service is rendered
• Use the current CMS-approved ABN form (CMS form R-131) and update immediately when CMS releases new versions
• Train all front-desk and clinical staff on proper ABN completion requirements, including specific service descriptions, cost estimates, and patient option selections
• Implement a checklist for ABN completion that verifies all required elements before the patient signs: service description, estimated cost, reason for expected non-coverage, patient option selection, signature, and date
• Never issue blanket or routine ABNs — each notice must be customized to the specific service and the specific reason non-coverage is expected
• Ensure claims are submitted with the correct modifier (GA when a valid ABN is on file, GZ when no ABN was obtained) to match the ABN documentation status
• Store completed ABN forms in the patient's file immediately and maintain them for the required retention period for audit purposes

Also Filed As

The same CARC 116 may appear with different Group Codes:

Related Denial Codes