Most doctors in the USA participate in the Medicare program in one form or another. It’s a very small percentage that doesn’t. However, not all doctors participate in the same way, and this often leads to Medicare Part B Excess Charges.
Medicare Part B is the portion of Original Medicare that covers medical services from doctors, specialists, labs, and other healthcare providers. In this MedicareWire article, we’ll explain what Part B Excess Charges are and how you can avoid them. We’ll also answer the following frequently asked questions, and many more:
When a Medicare patient sees a doctor who does not agree to Medicare's assigned rates for services, the patient is financially responsible for the portion of the provider’s charge in excess of Medicare’s assigned rate. Non-participating doctors may not collect reimbursement from Medicare. They must bill the Medicare patient directly, typically at the time of service. Learn how you can get around these costs by reading Medicare Part B Excess Charges: How To Avoid Them.
The following states prohibit their doctors from charging Medicare Part B excess charges:
- New York
- Rhode Island
All other states and U.S. territories allow excess charges. Learn how you can get around these costs by reading Medicare Part B Excess Charges: How To Avoid Them.
Excess charges are unique to Medicare Part B and are not allowed in Medicare Advantage plans. All Advantage plans have copayments when patients use the plan's provider network. Plans may charge you more if you use non-network providers. Read Medicare Part B Excess Charges: How To Avoid Them to understand how Part B Excess Charges may affect your situation.
Can a Doctor Charge More Than Medicare Allows?
There are more than 800,000 doctors in the USA that accept Medicare for payment. However, not all doctors accept Medicare the same way.
Medicare has a fee schedule agreement for doctors called Medicare assignment. When a doctor accepts Medicare assignment it simply means that they agree to Medicare’s payment terms for services provided.
There are several categories for Medicare assignment:
- Participating Doctors — The doctor accepts Medicare and only charges up to the amount that Medicare allows.
- Non-Participating Doctors — The doctor takes Medicare but can choose to charge an excess charge (up to 15%).
- Doctors Opted Out — These doctors do not accept Medicare and you pay 100% if you use their services.
There is also a tool that Medicare beneficiaries can use called Medicare Assignment of Benefits. This allows a beneficiary to authorize Medicare to reimburse a provider directly. However, the health care provider must agree to accept the Medicare charge as payment in full for services rendered. This allows non-participating providers to accept assignments on an individual claims basis. They do this by checking “yes” on item 27 of the CMS-1500 claim form.
What Are Medicare Part B Excess Charges?
In the bulleted list above, you learned that a non-participating doctor can charge up to 15-percent more for their services than participating doctors. The additional amount that Medicare allows non-participating doctors to charge is a Medicare Part B Excess Charge, and it is the beneficiary’s responsibility to pay.
Here’s an example. Let’s say you need to have arthroscopic knee surgery and Medicare’s approved amount is $5,700 treatment in an outpatient surgical center. With Medicare Part B, your normal coinsurance cost (without help from a Medigap plan) would be $1,140 (20%). However, if you choose to use Dr. Shultz, because she is a specialist in sports injuries, but she does not accept assignment, Dr. Shultz can charge an additional $855 (15%). With Original Medicare (Part A and Part B) it is the Medicare beneficiary’s responsibility to pay this excess charge.
How Do You Pay for Medicare Part B Excess Charges?
The federal Medicare program has several financial protections in place designed to safeguard Medicare beneficiaries from unexpected and confusing charges when they receive care in a doctor’s office.
The Centers for Medicare & Medicaid Services (CMS) created the participating provider program in 1984 to help Medicare patients identify and choose providers who charge Medicare-approved rates as full payment. Since its inception, the number of participating providers has steadily increased across all states and the vast majority of eligible physicians are now participating providers.
When Medicare patients use a participating provider for covered services they can rest assured that these providers will not charge fees higher than Medicare’s published fee schedule, and they will not have higher out-of-pocket costs than Medicare’s 20-percent coinsurance for most services. Participating providers collect Medicare’s portion (80%) directly from Medicare, not the patient.
When a Medicare patient sees a non-participating provider, the Medicare patient is financially responsible for the portion of the provider’s charge in excess of Medicare’s assigned rate, in addition to standard applicable coinsurance and deductibles. Non-participating providers may not collect reimbursement from Medicare. They must bill the Medicare patient directly, typically at the time of service.
How Do You Avoid Paying Part B Excess Charges?
Original Medicare beneficiaries can avoid paying excess charges with a Medicare supplement plan that covers them as one of its benefits. Plan F and Plan G are the two Medigap policies that pay excess charges.
For people qualifying for Medicare as of 1 January 2020, Medigap Plan F is no longer available, making Medigap Plan G the best option. If you know you will be incurring excess charges on an ongoing basis, supplemental insurance is highly advisable.
If you don’t think excess charges will apply to you, Medigap Plan N is a cost-effective alternative to Plan G.
Call 1-866-266-4865 to speak with a HealthPlanOne licensed health insurance agent about the best Medicare supplement insurance options for your personal situation.
Do All Doctor Accept Medicare Supplement Plans?
When you have a Medigap plan you have access to every doctor in America that accepts Medicare. Sometimes a doctor’s front office staff will tell you they don’t take your plan. This is often because they are more accustomed to taking their Medicare Advantage patients. All you have to do is ask them if they accept Medicare. If they do they are required to accept your supplement.
Some States Prohibit Excess Charges
Some states have passed state laws that prohibit their doctors from charging Medicare Part B excess charges. These states include:
- New York
- Rhode Island
If you live in one of these states, you do not need to worry about Part B excess charges when you see your doctor. Just be aware that laws in your state do not protect you when you travel out of your state.
Can Hospitals Charge More than Medicare Allow?
This depends on how you are being treated. If you are an outpatient, Medicare Part B rules apply. If you are an inpatient, Medicare Part A rules apply for all hospitalization services. Under Medicare Part A a Medicare-approved hospital cannot charge you more than the Medicare-approved amount for your inpatient care. Just be aware that many services you receive as an inpatient fall under Part B (medical services).
Do Medicare Advantage Plans Cover Part B Excess Charges?
Excess charges are unique to Original Medicare coverage and are not allowed in Medicare Part C insurance plans. Each Medicare Advantage plan has its own schedule of copayments when patients use the plan’s provider network. With these plans, the insurance company may charge you more if you use non-network providers. Other enrollment restrictions may apply.
There are no excess charges with Medicare Part D prescription drug plans. But these plans have strict limitations, and most plans have a deductible that resets each calendar year.
Does Having Medicare and Medicaid Impact Your Doctor Choice?
This is often a complicated situation. If you have both Medicare and Medicaid (i.e., dual-eligible) you can use any doctor that accepts Original Medicare. However, not all doctors that accept Original Medicare accept Medicaid.
The best practice for dual-eligible people is to make sure your healthcare providers accept both Medicare and Medicaid. This way your Medicaid coverage will pay your portion of the bill.
Citations & References:
- Find Healthcare Providers: Compare Care Near You | Medicare
- How to compare Medigap policies | Medicare
- Lower costs with assignment | Medicare
- Paying for a Visit to the Doctor https://www.kff.org/medicare/issue-brief/paying-a-visit-to-the-doctor-current-financial-protections-for-medicare-patients-when-receiving-physician-services/