Modifier GZ is a HCPCS Level II modifier used to indicate that an item or service is expected to be denied by Medicare because it is not considered reasonable and necessary under Section 1862(a)(1)(A) of the Social Security Act, and no valid Advance Beneficiary Notice (ABN) was obtained before the service was provided.

Modifier GZ is intended primarily for Medicare Part B claims. It alerts Medicare that the provider believes the service is likely to be denied for lack of medical necessity and acknowledges that no valid ABN was on file. Because no valid ABN was obtained, the provider generally may not shift financial liability to the beneficiary if Medicare denies the claim.

Correct use of Modifier GZ is important for Medicare compliance, claim processing, and accurate assignment of financial responsibility.

Modifier

Modifier Name

Item or Service Expected to Be Denied as Not Reasonable and Necessary – No Advance Beneficiary Notice (ABN) Obtained

Plain English Explanation

Modifier GZ tells Medicare:

“We expect this service to be denied because it is not medically necessary, and we did not obtain a valid ABN before providing the service.”

Purpose of Modifier GZ

Modifier GZ is used to:

Inform Medicare that a denial based on medical necessity is expected.
Indicate that no valid ABN was obtained before the service.
Support proper Medicare claim processing.
Identify provider liability when Medicare denies the service.
Distinguish claims from those billed with Modifier GA.

Understanding Modifier GZ

Medicare generally pays only for services that are reasonable and necessary for the diagnosis or treatment of illness or injury.

If a provider believes a service is likely to be denied for lack of medical necessity:

A valid ABN should normally be obtained before the service if the provider intends to shift financial liability to the patient.
If no valid ABN is obtained and the provider still submits the claim, Modifier GZ is generally appended.
If Medicare denies the service, the provider is generally financially responsible, because the patient was not properly notified in advance.

Modifier GZ is not used when a valid ABN exists. In that situation, Modifier GA is generally appropriate.

When to Use Modifier GZ

Modifier GZ is appropriate when:

The service is expected to be denied for lack of medical necessity.
No valid ABN was obtained before the service.
Medicare coverage rules apply.
The provider submits the claim to Medicare despite expecting a denial.

Common Examples

✔ A diagnostic test is ordered without documentation supporting Medicare medical necessity, and no ABN was signed before the test.

✔ A provider believes a service does not meet a Local Coverage Determination (LCD) or National Coverage Determination (NCD), but no valid ABN was obtained.

✔ A claim is submitted for a service expected to fail Medicare’s medical necessity requirements, without prior beneficiary notification.

When NOT to Use Modifier GZ

Do not use Modifier GZ when:

A valid ABN was obtained before the service (Modifier GA is generally appropriate).
The item or service is statutorily excluded from Medicare coverage (Modifier GY may apply).
A voluntary notice was issued for a non-Medicare coverage situation (Modifier GX may apply).
The service meets Medicare’s reasonable and necessary requirements.
The payer is not Medicare, unless that payer specifically instructs providers to use GZ.

Medicare Rules

Under Medicare:

Modifier GZ indicates that the provider expects a denial based on lack of medical necessity.
It also indicates that no valid ABN was obtained before the service.
If Medicare denies the service, financial liability generally remains with the provider, because the beneficiary was not properly notified.
Modifier GZ is commonly used with services affected by Medicare medical necessity policies, including National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs).

Always review the current CMS ABN instructions, Medicare Claims Processing Manual, and applicable LCDs and NCDs.

Commercial Insurance Rules

Most commercial insurers do not use Modifier GZ.

Commercial plans often have:

Their own prior authorization requirements.
Medical necessity review processes.
Member notification requirements.

Always verify payer-specific billing policies before using Medicare HCPCS liability modifiers on non-Medicare claims.

Documentation Requirements

Documentation should include:

Physician order.
Medical record supporting the service provided.
Clinical documentation explaining why the service was performed.
Evidence that no valid ABN was obtained.
Medical necessity review, if performed.
Claim documentation supporting the billed service.
Provider signature where required.

Real Billing Examples

Example 1 – Diagnostic Imaging

A physician orders an MRI that does not meet the applicable Medicare LCD requirements. The provider does not obtain an ABN before performing the study.

Billing

Appropriate CPT® code
Modifier GZ

If Medicare denies the claim for lack of medical necessity, the provider is generally responsible for the cost.

Example 2 – Laboratory Test

A laboratory performs a test expected to be denied under Medicare’s medical necessity rules without obtaining a valid ABN.

The laboratory bills:

Appropriate laboratory CPT® code
Modifier GZ

Example 3 – Cardiac Diagnostic Test

A diagnostic cardiac study is furnished without documentation supporting Medicare medical necessity, and no ABN is obtained.

Modifier GZ is appropriate if the provider submits the claim.

Example 4 – Incorrect Use

A patient signs a valid ABN before receiving a service expected to be denied for lack of medical necessity.

Billing Modifier GZ is incorrect.

The provider should generally report Modifier GA because a valid ABN is on file.

CMS-1500 Claim Example

Field	Example
CPT® Code	Appropriate CPT® or HCPCS code
Modifier	GZ
Diagnosis Pointer	Appropriate ICD-10-CM diagnosis
Charges	Provider’s usual charge

Common Denial Reasons

Service not reasonable and necessary.
Medical necessity not supported.
Incorrect liability modifier.
Documentation does not justify the service.
Missing clinical records.
Incorrect diagnosis coding.
LCD or NCD requirements not met.

How to Correct the Denial

Review the EOB or Medicare Remittance Advice.
Verify whether the service met Medicare medical necessity requirements.
Confirm whether a valid ABN was obtained.
Review the medical record and diagnosis coding.
Submit an appeal if documentation supports medical necessity.
If no ABN was obtained and the denial is appropriate, follow Medicare financial liability rules.

Coding Tips

Use Modifier GZ only when no valid ABN was obtained.
Understand the difference between GA, GY, GX, and GZ.
Review applicable LCDs and NCDs before billing.
Document medical necessity thoroughly.
Educate registration and clinical staff on ABN requirements.

Modifier GZ vs Modifier GA

Modifier	Description
GA	Valid ABN obtained before the service.
GZ	No valid ABN obtained; denial expected for lack of medical necessity.

Modifier GZ vs Modifier GY

Modifier	Description
GY	Item or service is statutorily excluded or does not meet the definition of a Medicare benefit.
GZ	Service may be a Medicare benefit but is expected to be denied because it is not reasonable and necessary.

Modifier GZ vs Modifier GX

Modifier	Description
GX	Voluntary notice of liability issued under payer policy.
GZ	No valid ABN obtained for an expected medical necessity denial.

Frequently Asked Questions (FAQs)

Q1. What does Modifier GZ mean?

Answer: Modifier GZ indicates that the provider expects Medicare to deny the service because it is not reasonable and necessary, and no valid ABN was obtained before the service.

Q2. Who is generally financially responsible when Modifier GZ is used?

Answer: If Medicare denies the service for lack of medical necessity and no valid ABN was obtained, the provider is generally financially responsible for the denied amount.

Q3. What is the difference between Modifier GZ and Modifier GA?

Answer: Modifier GA indicates that a valid ABN was obtained before the service, allowing financial liability to potentially shift to the beneficiary if Medicare denies the claim. Modifier GZ indicates that no valid ABN was obtained, so liability generally remains with the provider.

Q4. Can Modifier GZ be used for commercial insurance?

Answer: Modifier GZ is primarily intended for Medicare claims. Commercial insurers typically have different policies and may not recognize this modifier.

AR Caller Tips

When following up on a denied Modifier GZ claim:

Confirm the denial reason is based on medical necessity.
Verify whether an ABN was obtained.
Review LCD and NCD requirements.
Check documentation supporting medical necessity.
Determine whether an appeal is appropriate.
Record the payer representative’s name, reference number, and appeal instructions.

Interview Questions

Question 1

What is Modifier GZ?

Answer: Modifier GZ indicates that a service is expected to be denied for lack of medical necessity and that no valid ABN was obtained before the service.

Question 2

What is the difference between Modifier GZ and Modifier GA?

Answer: GA means a valid ABN was obtained before the service; GZ means no valid ABN was obtained.

Question 3

Who is usually financially responsible after a GZ denial?

Answer: When Medicare denies the service and no valid ABN was obtained, the provider is generally financially responsible.

Practice Scenario

Scenario

A physician orders an advanced imaging study that does not meet the applicable Medicare LCD criteria. The imaging center performs the service without obtaining a valid ABN. The provider submits the claim to Medicare knowing that the service is likely to be denied for lack of medical necessity.

Question

Which modifier should be reported?

Answer

The provider should report the appropriate CPT® code with Modifier GZ, indicating that the service is expected to be denied as not reasonable and necessary and that no valid ABN was obtained before the service.

Related Modifiers

GA – Waiver of Liability Statement Issued as Required by Payer Policy (Valid ABN on File)
GX – Notice of Liability Issued, Voluntary Under Payer Policy
GY – Item or Service Statutorily Excluded or Does Not Meet the Definition of a Medicare Benefit
KX – Requirements Specified in the Medical Policy Have Been Met

Common Billing Mistakes

Using GZ when a valid ABN exists.
Confusing GZ with GY for statutorily excluded services.
Failing to obtain an ABN before an expected medical necessity denial.
Incorrect diagnosis coding.
Submitting claims without reviewing LCD or NCD policies.
Assuming commercial insurers follow Medicare GZ rules.

Key Takeaways

Modifier GZ identifies services expected to be denied for lack of medical necessity when no valid ABN was obtained.
It is primarily used for Medicare Part B claims.
Financial liability generally remains with the provider if Medicare denies the claim.
Understanding the difference between GA, GX, GY, and GZ is essential for compliant Medicare billing.
Thorough documentation and proper ABN workflows help reduce denials and financial risk.

References

CMS Medicare Claims Processing Manual, Chapter 30 – Financial Liability Protections.
CMS Advance Beneficiary Notice of Noncoverage (ABN) guidance.
Medicare Learning Network (MLN) – ABN Booklet.
Medicare Administrative Contractor (MAC) billing guidance.
AMA CPT® Professional Edition (licensed codebook).

Conclusion

Modifier GZ is a critical Medicare liability modifier used when a provider expects a denial based on lack of medical necessity but did not obtain a valid Advance Beneficiary Notice before furnishing the service. Correct application requires a thorough understanding of Medicare medical necessity policies, ABN requirements, and provider liability rules. Proper use of Modifier GZ promotes compliant billing, accurate claim processing, and informed financial responsibility.

Educational Disclaimer

This article was prepared with the assistance of artificial intelligence (AI) for educational and informational purposes. It is based on publicly available CMS guidance, Medicare billing principles, and general medical coding practices. It is not an official publication of the American Medical Association (AMA), CMS, or any insurance payer. CPT® is a registered trademark of the American Medical Association. Always consult the latest AMA CPT® codebook, CMS Medicare Claims Processing Manual, Medicare Learning Network (MLN) resources, Medicare Administrative Contractor (MAC) policies, and payer-specific billing requirements before coding, billing, or submitting claims.