Medicare Part B Excess Charges
Part B excess charges can add an extra 15 percent to your doctor bill. This additional cost is charged by doctors who do not accept Medicare assignment. Eight states have banned Medicare excess charges. Purchasing a Medigap policy can protect you against these costs.
What Are Medicare Excess Charges?
A Medicare excess charge is an extra cost added to your health care bill by a doctor or provider who doesn’t participate in Medicare.
Providers who participate in Medicare accept assignment, meaning they agree to charge you only the Medicare-approved amount for their services.
Doctors who accept assignment bill Medicare directly for the care you receive. Medicare pays 80 percent, and you’ll receive a bill for the other 20 percent.
However, not all doctors participate in Medicare and accept assignment. Those who don’t may charge you up to 15 percent more than the Medicare-approved amount.
Doctors who don’t accept assignment can also ask you for full payment at the time of service. You may have to undergo the reimbursement process on your own if you want Medicare to pay its 80 percent share.
How Can You Avoid Excess Charges?
Most doctors, providers and suppliers accept assignment, but you should always double check to make sure.
You can also use the Medicare.gov Physician Finder tool to find a doctor in your area who participates in Medicare.
Neither Original Medicare nor Medicare Advantage plans cover excess charges.
However, two types of Medigap supplement insurance policies do.
- Medigap Plan F: Plan F is no longer available to new Medicare beneficiaries. If you enrolled in Medicare prior to January 1, 2020, you can purchase Plan F. If you already have Plan F, you can keep it.
- Medigap Plan G: Plan G is similar to Plan F, except it doesn’t cover the Part B deductible. It does, however, cover Part B excess charges. Like all Medigap plans, it costs a monthly premium in addition to your Part B premium.
There are 10 different types of Medigap plans. Each is designated by a letter and must follow federal and state laws designed to protect the policyholder.
Basic benefits must be the same for each type of plan, no matter where the plan is purchased. Cost is typically the only difference between Medigap policies of the same letter because insurance companies can adjust rates depending on several factors.
How Do Medicare Excess Charges Work?
A vast majority of physicians and practitioners — 97 percent — participate in Medicare and accept assignment, according to a 2020 analysis by the Kaiser Family Foundation.
Only 1 percent of non-pediatric physicians — or about 9,541 doctors across the country — have completely opted-out of the Medicare program, according to the report.
But if you’re faced with an excess charge, how does it work?
Suppose Medicare’s allowed charge for a doctor’s appointment is $100, but you visit a physician who doesn’t accept Medicare assignment.
The doctor can charge you an extra 15 percent for the appointment, or in this case, an additional $15.
Instead of sending the bill directly to Medicare, the doctor may ask you to pay the entire amount up front.
It is then your responsibility to file a claim with Medicare for reimbursement.
That reimbursement would be equal to only 80 percent of the Medicare-approved amount, or $80.
In this case, your total out-of-pocket cost for the visit is $35.
In contrast, if you had visited a doctor who accepts Medicare assignment, you would owe $20 out of pocket, and you wouldn’t have to handle the reimbursement process on your own. Instead, the doctor would bill Medicare directly, and you’d receive a bill later for the amount you owe.
Which States Do Not Allow Medicare Excess Charges?
Some states have taken steps to protect Medicare beneficiaries against excess charges.
Eight states have passed laws forbidding health care providers from charging you more than the Medicare approved rate.
- New York
- Rhode Island
Beneficiaries in these states may consider purchasing a Medigap Plan N policy instead of Plan G.
Both offer similar coverage, but because Plan N doesn’t cover excess charges, it charges lower monthly premiums than Plan G.
3 Cited Research Articles
- Ochieng, N., Schwartz, K. and Neuman, T. (2020, October 22). How Many Physicians Have Opted-Out of the Medicare Program? Retrieved from https://www.kff.org/medicare/issue-brief/how-many-physicians-have-opted-out-of-the-medicare-program/
- Medicare.gov. (n.d.). Costs of Medigap policies. Retrieved from https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-costs/costs-of-medigap-policies
- Medicare.gov. (n.d.). Lower costs with assignment. Retrieved from https://www.medicare.gov/your-medicare-costs/part-a-costs/lower-costs-with-assignment