How Common Are Medicare Excess Charges?

Medicare beneficiaries may encounter unexpected out-of-pocket expenses, such as Medicare excess charges. Understanding these charges is important for managing healthcare costs.

Understanding Medicare Excess Charges

A Medicare excess charge occurs when a healthcare provider charges more than the Medicare-approved amount for a service. These charges apply to services covered under Medicare Part B, such as doctor visits and outpatient care. This additional fee is an out-of-pocket expense for the beneficiary and does not count towards the Medicare Part B deductible.

Federal law limits these excess charges to a maximum of 15% above the Medicare-approved amount. For example, if Medicare approves a service for $100, a provider could bill up to an additional $15. The beneficiary would then be responsible for their standard coinsurance plus this extra 15%. Excess charges do not apply to inpatient hospital services or emergency medical care.

Provider Participation and Excess Charges

The potential for Medicare excess charges is directly tied to a healthcare provider’s participation status with Medicare. There are three main categories for providers: “participating,” “non-participating,” and “opt-out.”

A “participating” provider has formally agreed to accept the Medicare-approved amount as full payment for all covered services. These providers cannot charge excess fees and bill Medicare directly on behalf of the patient.

“Non-participating” providers accept Medicare but have not agreed to accept the Medicare-approved amount as full payment. They can still bill Medicare, but may charge beneficiaries up to 15% above the Medicare-approved amount for Part B services. Medicare pays these non-participating providers 5% less than participating providers.

The third category, “opt-out” providers, do not accept Medicare and have signed an agreement to be excluded from the program. These providers can charge any amount for services, and Medicare will not pay for care received from them, except in emergencies. Patients seeing an opt-out provider must pay the entire cost themselves, typically under a private contract.

Assessing the Commonness of Excess Charges

Medicare excess charges are not widespread. Over 96% to 98% of doctors accept Medicare assignment, agreeing to the Medicare-approved amount as full payment and not charging excess fees. This high rate of acceptance means most Medicare beneficiaries rarely encounter these charges.

Eight states have enacted laws that prohibit Medicare excess charges:
Connecticut
Massachusetts
Minnesota
New York
Ohio
Pennsylvania
Rhode Island
Vermont

In these states, beneficiaries are protected from excess charges when receiving care, even from non-participating providers. However, if a resident of one of these states receives care in a state that allows excess charges, they may still be responsible for them.

Strategies to Mitigate Excess Charges

Beneficiaries can avoid or reduce Medicare excess charges. The most direct approach is to verify a provider’s Medicare participation status before receiving services. Many providers accept assignment, and beneficiaries can ask about this when scheduling appointments. Medicare offers online tools, such as the Physician Compare tool, to locate providers who accept Medicare assignment.

Another strategy involves Medicare Supplement Insurance, also known as Medigap plans. Some Medigap plans cover out-of-pocket costs not covered by Original Medicare, including excess charges. Medigap Plan F and Plan G cover 100% of Medicare Part B excess charges. While Plan F is only available to those eligible for Medicare before January 1, 2020, Plan G remains an option for newer beneficiaries. Medicare Advantage plans do not allow providers to charge excess charges.