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 ChargesA Medicare Part B excess charge is the difference between a health care provider’s actual charge and Medicare’s approved amount for payment..
In this article, we’ll explain what these charges are, how much they may cost you, and how you can avoid them.
- Excess charges only apply to Medicare Part BMedicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services.. They do not occur in Medicare Part AMedicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care. or with a Medicare Advantage planMedicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Medicare Part A and Medicare Part B)..
- Excess charges cannot exceed 15% of the Medicare-approved amountA Medicare-approved amount is what Medicare will pay for a covered service. Healthcare providers that agree to Medicare assignment accept the approved amount without excess charges. What Does Medicare-Approved Amount Mean? A Medicare-approved amount is... for the healthcare service delivered.
- The Medicare beneficiaryA person who has health care insurance through the Medicare or Medicaid programs. is directly responsible for paying all excess charges to medical providers.
- Medicare excess charges are not offset by the Medicare Part B monthly premiumA premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums. or the Part B deductible.
- Medicare excess charges can apply to any healthcare service or supply covered under Part B, not just to doctor visits. For example, durable medical equipmentDurable medical equipment (DME) is equipment that is designed to last and can be used repeatedly. It is suitable for home use and includes wheelchairs, oxygen equipment, and hospital beds. (DME) can have an excess charge.
- Medicare Supplement plansMedicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage. are the only health insurance that covers excess charges.
What is Medicare Assignment?
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 assignmentAn agreement by your doctor to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.. When a doctor accepts Medicare assignment they agree to the amount Medicare pays for a service as payment in full. They cannot bill you more.
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.
Medicare excess charges occur when a non-participating provider charges more than Medicare’s approved amount.
RELATED: Understanding Medicare in 4 Easy Steps
Do you know the answers to the following frequently asked questions about Medicare?
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.
There is 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 healthcare provider must agree to accept the Medicare charge as payment in full. 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?
Now you know that a non-participating doctor can charge up to 15 percent more for their services. The additional amount that Medicare allows is a Medicare Part B Excess Charge (also known as balance billing). It is the beneficiary’s responsibility.
Here’s an example.
Let’s say you need to have arthroscopic knee surgery and Medicare’s approved amount is $5,700 for treatment in an outpatient surgical center. With Medicare Part B, your normal coinsurance cost is $1,140 (20%).
This is the amount you will pay after you have paid the Part B deductible ( in ).
However, if you choose to use a doctor that does not accept Medicare’s standard rates, they can bill you an additional $855 (15%). With Original Medicare (Part A and Part B) it is your responsibility to pay this excess charge.
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How Do You Pay for Medicare Part B Excess Charges?
The federal Medicare programMedicare is a federal health insurance program for people ages 65 and older and people with certain disabilities. created the participating provider program in 1984. It helps 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. Today, the vast majority of eligible physicians are now participating providers.
When Medicare patients use a participating provider for covered services, they can be certain they will not be billed more 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. Patients can see all claims on their accounts by visiting their MyMedicare.gov account.
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 deductiblesA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share.. Non-participating providers may not collect reimbursement from Medicare. They must bill the Medicare patient directly, typically at the time of service.
What Medicare Supplement Insurance Plans Pay Part B Excess Charges?
Original MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage. beneficiaries can avoid paying excess charges with a Medicare supplement plan that covers them as one of its benefits. Medicare Supplement Plan FMedicare Supplement Plan F is the most comprehensive Medicare supplement plan available. This plan covers all Original Medicare deductibles, coinsurance, and copayments, leaving you with no out-of-pocket costs on all Medicare-approved services. and Plan G are the two plans that cover excess charges.
For people qualifying for Medicare as of 2020, Medigap Plan F is no longer available, making Medigap Plan GIf you're turning age 65 this year, Medicare Supplement Plan G is the most comprehensive Medicare supplement you can buy. It's also the most popular. You might be thinking that Medicare Supplement Plan F is... Medicare 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 NMedicare Supplemental Plan N is one of the ten standardized Medigap plans. Although it is one of the newest plans available, Medicare Plan N is quickly becoming a favorite with Baby Boomers aging into their... is a cost-effective alternative to Plan G.
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Do All Doctors 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 careInpatient care refers to care provided in a hospital or other inpatient facility. Inpatients are admitted and stay at least one night depending on their condition.. 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.
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Does Having Both Medicare and Medicaid Impact Your Doctor Choice?
This is often a complicated situation. If you have both Medicare and MedicaidMedicaid is a public health insurance program that provides health care coverage to low-income families and individuals in the United States. (i.e., dual-eligibleDual-eligible beneficiaries are those who receive both Medicare and Medicaid benefits. It includes beneficiaries enrolled in Medicare Part A and/or Part B while receiving full Medicaid and/or financial assistance through a Medicare Savings Program....) 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/