What Are Medicare Part B Excess Charges?

Medicare Part B is a component of Original Medicare that provides coverage for medically necessary services and preventive care, such as doctor visits, outpatient care, and durable medical equipment. While Medicare covers a substantial portion of healthcare costs, beneficiaries are responsible for certain out-of-pocket expenses. These can include deductibles, coinsurance, and in some situations, specific charges known as “excess charges.” Understanding these charges helps manage healthcare expenses under Medicare Part B.

Understanding Part B Excess Charges

A Medicare Part B excess charge occurs when a healthcare provider bills an amount higher than the Medicare-approved amount for a service. The “Medicare-approved amount,” also known as the “assignment” amount, is the maximum fee Medicare sets for a covered service. Providers who agree to accept this amount as full payment are “participating providers” and cannot charge beneficiaries more than Medicare’s approved rate, aside from deductibles and coinsurance.

“Non-participating providers” accept Medicare but have not agreed to accept the Medicare-approved amount as full payment. They can charge up to 15% more than the Medicare-approved amount for a service. This additional 15% is the excess charge, billed directly to the patient. Medicare does not cover this additional 15%, meaning the beneficiary is fully responsible for paying it.

For example, if Medicare approves a service for $100, a participating provider accepts $100. A non-participating provider could charge up to $115. The extra $15 is the excess charge, which the beneficiary pays in addition to their standard 20% coinsurance.

When Excess Charges May Apply

Excess charges primarily apply when a Medicare beneficiary receives services from a “non-participating provider” who does not “accept assignment” for that specific service. A provider can choose to be non-participating, deciding on a case-by-case basis whether to accept assignment.

Even if a provider generally accepts Medicare, confirm their “assignment” status for the specific service. Some states prohibit Part B excess charges, including Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont. In these states, providers must accept the Medicare-approved amount as full payment, protecting beneficiaries within their home state. However, if care is received outside these states, excess charges may still apply if the provider is non-participating.

Financial Impact of Excess Charges

Part B excess charges can significantly increase a beneficiary’s out-of-pocket healthcare costs. These charges are an additional expense paid directly to the provider, beyond the standard Medicare Part B deductible and the 20% coinsurance.

For instance, if a service has a Medicare-approved amount of $500, Medicare pays $400 (80%), and the beneficiary owes $100 (20% coinsurance), assuming the deductible is met. If the provider charges a 15% excess charge, an additional $75 is added to the beneficiary’s responsibility, bringing the total out-of-pocket cost to $175. These charges can accumulate quickly, especially for frequent or expensive services. Excess charges do not count towards the Part B deductible. Providers typically bill for these charges separately or include them as an additional line item on a larger bill.

Managing Potential Excess Charges

Beneficiaries can employ several strategies to manage or avoid Medicare Part B excess charges. A primary step involves directly asking healthcare providers if they “accept assignment” for all Medicare services before receiving care. This ensures the provider accepts the Medicare-approved amount as full payment, preventing excess charges.

Another measure is utilizing Medicare’s official online tools, such as the Care Compare tool on Medicare.gov, to find providers who accept assignment. Certain Medicare Supplement Insurance (Medigap) plans also cover Part B excess charges. Specifically, Medigap Plans F and G are designed to cover these additional costs, paying the 15% excess after Medicare has paid its share. Plan F is generally only available to beneficiaries eligible for Medicare before January 1, 2020. Beneficiaries should also be aware of their state’s specific rules regarding excess charges, as some states prohibit them entirely.