What Is a Non Facility Limiting Charge?

Understanding healthcare billing can be complex, with various charges and rules directly impacting out-of-pocket costs. This article clarifies a specific aspect of medical billing to help consumers make informed decisions.

Medicare Provider Participation

Healthcare providers interacting with Medicare fall into “participating” and “non-participating” categories, which influence how they bill for services.

A participating provider has a formal agreement with Medicare to accept the Medicare-approved amount as full payment for all covered services. The provider directly bills Medicare, and the patient is typically responsible only for any unmet deductible and a standard 20% coinsurance of the Medicare-approved amount. This arrangement generally results in lower out-of-pocket costs for beneficiaries.

In contrast, a non-participating provider has not signed an agreement to accept the Medicare-approved amount for all services. These providers can still treat Medicare beneficiaries and bill Medicare for services, but they decide on a claim-by-claim basis whether to “accept assignment.” If a non-participating provider accepts assignment for a specific service, they agree to the Medicare-approved amount as full payment for that service.

However, if a non-participating provider does not accept assignment, they are permitted to charge more than the Medicare-approved amount. Medicare pays non-participating providers 95% of the Medicare-approved amount for covered services. The additional amount they can charge above the Medicare-approved rate is subject to a federal limit, which directly impacts the patient’s financial responsibility.

Understanding the Limiting Charge

The “limiting charge” is a federal regulation designed to protect Medicare beneficiaries from excessive billing by non-participating providers. It represents the maximum amount a non-participating Medicare provider can charge for a covered service if they do not accept assignment. This charge applies specifically to services covered under Medicare Part B, such as physician visits and outpatient procedures.

This limit is calculated as 115% of the Medicare-approved amount for non-participating providers. For example, if Medicare’s approved amount for a service is $100, a non-participating provider who does not accept assignment can charge up to $115 for that service. This 15% markup is the “limiting charge” portion.

The limiting charge serves as a cap, meaning a non-participating provider cannot legally charge a Medicare beneficiary more than this amount for a covered service. This regulation prevents providers from imposing unlimited charges when they choose not to accept Medicare’s full payment terms.

Identifying Non-Facility Services

The term “non-facility services” refers to medical care provided in settings that are not considered institutional facilities like hospitals or skilled nursing homes. This distinction influences the payment rates Medicare establishes for services. The “non-facility” designation pertains to the place where the service is rendered, not the specific type of medical procedure itself.

Examples of typical non-facility settings include a physician’s private office, independent clinics, or standalone diagnostic testing facilities. In these environments, the medical practice or provider typically bears the full overhead costs, such as rent, utilities, and equipment, directly. Medicare’s payment structure acknowledges these differing overhead expenses by setting distinct rates for facility and non-facility services.

When a non-participating provider furnishes a service in a non-facility setting and does not accept assignment, the limiting charge rule applies. This means the provider can charge up to 115% of the Medicare-approved amount for that specific non-facility service.

Patient Financial Impact

When a non-participating provider bills a Medicare beneficiary the non-facility limiting charge, it directly impacts the patient’s out-of-pocket expenses. The patient becomes responsible for several components of the cost, including any unmet Medicare deductible, the standard 20% coinsurance of the Medicare-approved amount, and the additional amount up to the limiting charge.

To illustrate, if Medicare’s approved amount for a non-facility service is $100, the limiting charge would be $115 (115% of $100). The patient is first responsible for their annual Medicare Part B deductible, if it has not yet been met. After the deductible, Medicare pays 80% of the approved amount, which is $80 in this example. The patient is then responsible for the remaining 20% coinsurance of the Medicare-approved amount, which is $20.

Additionally, the patient is responsible for the difference between the Medicare-approved amount ($100) and the limiting charge ($115), which is an extra $15. In this scenario, the patient’s total out-of-pocket cost would be the $20 coinsurance plus the $15 excess charge, totaling $35, in addition to any remaining deductible. Providers cannot charge more than this $115 limiting charge.