Does Medicare Allow Balance Billing?

Balance billing can lead to unexpected financial burdens for Medicare beneficiaries. Understanding Medicare’s policies helps individuals manage healthcare expenses and avoid unanticipated charges.

What Balance Billing Means

Balance billing occurs when a healthcare provider charges a patient the difference between the provider’s total charge for a service and the amount Medicare approves for payment. This practice is distinct from standard patient responsibilities like co-payments, deductibles, or coinsurance. For instance, if a provider charges $100 for a service and Medicare approves $70, balance billing involves the provider attempting to collect the remaining $30 directly from the patient after Medicare pays its share.

Medicare’s Rules on Balance Billing

Most healthcare providers who participate with Medicare are prohibited from balance billing beneficiaries for covered services. Medicare sets an approved amount for services, and participating providers agree to accept this amount as full payment. This agreement ensures that beneficiaries are only responsible for their standard deductibles, co-payments, and coinsurance.

Providers who do not sign an agreement to accept Medicare’s approved amount but still treat Medicare patients can charge up to 15% above the Medicare-approved amount, a limit known as the “limiting charge.” The patient is responsible for the Medicare deductible, coinsurance, and any amount up to the limiting charge. For example, if the Medicare-approved amount is $100, a non-participating provider could charge up to $115, with the patient responsible for the additional $15 beyond the standard 20% coinsurance.

Some providers have formally opted out of Medicare. They are not bound by Medicare’s fee schedules and can charge patients any amount they deem appropriate. Neither Medicare nor supplemental insurance plans like Medigap will cover these services. Before receiving care from an opt-out provider, beneficiaries must sign a private contract agreeing to pay the full cost themselves.

Medicare Advantage Plans (Part C) follow Medicare’s balance billing rules for services covered under the plan. Providers within a Medicare Advantage plan’s network cannot balance bill beneficiaries for covered services. Beneficiaries in these plans are only responsible for the co-payment or coinsurance specified by their plan. For prescription drugs covered under Medicare Part D, balance billing does not apply in the same manner as medical services, as Part D plans have their own formularies and negotiated prices.

Actions to Take Against Balance Billing

If you believe you have been illegally balance billed, review your billing statements. Compare the provider’s bill with your Explanation of Benefits (EOB) from Medicare or your Medicare Advantage plan. Discrepancies between these documents can indicate a potential issue.

Contacting the provider’s billing department directly can resolve the matter, as the charge might be a simple billing error. Clearly explain why you believe the charge is incorrect and refer to your EOB. If the issue remains unresolved, contact Medicare directly by calling 1-800-MEDICARE. They can investigate claims of illegal balance billing.

Further assistance can be sought from your state’s insurance department, especially for Medicare Advantage or Medigap policies. Maintain detailed records of all communications, bills, and EOBs. This documentation provides a clear timeline and evidence for any necessary further action.