The standard out-of-pocket costs for Medicare Part B services all assume one thing: That the provider accepts assignment. That’s because providers who do not participate in Medicare can charge more than the Medicare-approved amount. This difference is known as the Medicare Part B excess charge. However, even non-participating providers face limits as to how much they can charge for covered services. This page explains the Part B excess charge as well as how to avoid it.
How Much Is the Medicare Excess Charge?
Even non-participating providers can’t charge anything they want for Medicare-approved services, even if they don’t accept assignment. This is called the limiting charge, and it equals 15 percent of the Medicare-approved amount.
For example, if the Medicare-approved amount for a covered service is $100, non-participating providers cannot charge more than $115 for that service. The calculation: $100 + ($100 x 15% = $15) = $115. In this case, the excess charge is $15.
Please note that the limiting charge only applies to certain covered Medicare services. The limiting charge may not apply to supplies and durable medical equipment.
What Does Accept Assignment Mean?
Doctors who participate in Medicare are said to accept assignment. In short, this means that the provider agrees to charge the Medicare-approved amount for covered services.
For example, if there’s a service they typically charge $125 for, but Medicare sets the limit at $100, participating providers only charge Medicare beneficiaries $100.
It’s important to note that the vast majority of physicians accept assignment for services covered by Medicare.
What Happens if the Provider Doesn’t Accept Assignment?
The main benefit of using a Medicare-approved provider is that it saves you money. Otherwise, you may be responsible for 100 percent of the charge when your provider doesn’t accept assignment – not just the excess charge.
Even if Medicare ultimately covers their portion of the fee (typically 80 percent), you usually have to pay the entire charge up front. You then file a claim to get reimbursed by Medicare. The provider is supposed to submit the claim, but if they fail to, it falls on you to do so. (Form CMS 1490S is how you get reimbursed.)
Of course, when you use a participating provider, you can wait to pay your share until after Medicare has paid its share. Also, the provider submits the claim directly to Medicare without fuss. After all, that’s how they get paid.
Again, Medicare will only pay 80 percent of the approved amount. Going back to our example of a Medicare-approved amount of $100, that leaves you paying $35 out-of-pocket ($20 co-insurance + $15 excess charge). That’s 75 percent more than you’d have paid if you’d gone to a provider who accepts assignment.
How Do You Avoid the Medicare Part B Excess Charge?
Avoiding the excess charge is fairly simple: Just use a doctor who accepts assignment. If you aren’t sure whether your doctor accepts assignment, use Medicare’s Physician Compare tool. You can browse by doctor name, specialty – even body part. Or, when you make your appointment, just ask whether the doctor accepts assignment.
Of course, you need to ensure all providers you use accept assignment. This includes hospitals, labs – pretty much anywhere you’d go to receive healthcare services.
The other way to avoid the Medicare Part B excess charge is to purchase a Medigap plan that covers it. Currently, only Plans F and G offer this coverage.
What Are Private Contracts?
Some providers choose to opt out of Medicare. If you prefer to see one of these providers for anything other than emergency care, you must enter into a private contract with said provider. When you do this, you become responsible for paying 100 percent of whatever the provider charges. Your Medigap plan won’t pay any portion of these charges, either.
The provider must inform you whether Medicare would cover the service if you went to a participating provider instead. In addition, the provider must you tell whether they were excluded from Medicare.
Even if the provider does not accept assignment, they cannot ask you to sign a private contract for emergency or urgent care services. We recommend talking to your state’s SHIP office before signing one of these contracts.
Final Thoughts on Medicare Part B Excess Charges
The Part B excess charges can rack up very quickly. That’s why we recommend using a Medicare-approved provider whenever possible. If you’re having trouble understanding your Medicare options, or finding the best plan, the licensed agents at Medicare Solutions can help. Just call us toll-free at 855-350-8101. You can also use our online tool to see the plan options in your area.