The Three Types of Medicare Providers
Navigating healthcare billing with Medicare can be complex, and it all starts with understanding how your provider is enrolled with the program. Not all doctors or clinics handle billing the same way. The distinction between a participating, non-participating, and opt-out provider is the most important factor in determining your potential out-of-pocket costs.
Participating Providers
These providers have a contractual agreement with Medicare and accept "assignment" for all services. This means they agree to accept the Medicare-approved amount as full payment. They cannot bill you for more than the standard deductible and coinsurance. If you see a participating provider, you are protected from excess charges.
Non-Participating Providers
These providers accept Medicare but do not accept assignment for all services. They can choose to accept assignment on a case-by-case basis. Critically, if they do not accept assignment for a service, they are legally allowed to charge up to 15% more than the Medicare-approved amount. This extra amount is known as the Part B excess charge or limiting charge.
Opt-Out Providers
A small percentage of doctors and providers have completely opted out of Medicare. They do not accept Medicare reimbursement at all. If you see an opt-out provider, you must sign a private contract agreeing to pay their full fee out-of-pocket. Neither Medicare nor your Medigap plan will cover any of the costs, except in rare emergency situations.
How the Medicare Limiting Charge Works
The federal government sets a cap on how much non-participating providers can charge. This cap, known as the limiting charge, is a maximum of 15% above the Medicare-approved amount for the service. This charge applies only to Medicare Part B services and is in addition to your standard 20% coinsurance.
For example, if the Medicare-approved amount for a service is $100:
- A participating provider accepts $100 as full payment. You pay your 20% coinsurance, which is $20 (assuming you’ve met your deductible).
- A non-participating provider might charge you $115 (15% more). Medicare pays 80% of the approved amount ($80), and you are responsible for the 20% coinsurance ($20) plus the $15 excess charge, for a total of $35.
It's important to remember that the limiting charge does not apply to durable medical equipment (DME) from non-assigned suppliers, where there is no limit on what can be charged.
Your Options for Avoiding Excess Charges
Managing your healthcare costs proactively is essential to avoid unexpected excess charges. Here are your primary strategies:
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Stick with Participating Providers: The most direct way to avoid excess charges is to use providers who accept Medicare assignment. You can use the provider search tool on Medicare.gov to find a list of these providers in your area. It is always a good practice to ask a provider’s office about their billing policy before your appointment.
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Choose a Medigap Plan that Covers Excess Charges: Some Medicare Supplement (Medigap) plans offer coverage for excess charges. Specifically, Medigap Plan F and Plan G are designed to cover these fees. For those newly eligible for Medicare after January 1, 2020, Plan G is the most comprehensive option that covers excess charges.
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Live in a State with Limiting Charge Protections: Several states have passed laws that make it illegal for providers to charge excess charges to Medicare beneficiaries. These states include Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont. If you live in one of these states, your in-state providers cannot legally apply this additional fee.
Compare Provider Billing for Medicare Part B
This table illustrates the financial differences between the three types of Medicare providers for a hypothetical $100 Medicare-approved service.
| Feature | Participating Provider | Non-Participating Provider | Opt-Out Provider |
|---|---|---|---|
| Accepts Medicare? | Yes | Yes | No |
| Accepts Assignment? | Yes | No (can bill more) | No |
| Excess Charges? | No | Yes (up to 15%) | Yes (any amount) |
| Max Extra Charge | $0 | Up to 15% of the approved amount | Unregulated |
| Bills Medicare? | Yes | Yes (but you may pay upfront) | No |
| Payment Process | Medicare pays provider 80%, you pay 20% coinsurance | Medicare pays you 80% of the approved amount (sometimes at a reduced rate); you pay provider upfront for full bill plus excess charges | You pay provider the full amount; no Medicare reimbursement |
| Total Out-of-Pocket (pre-deductible) | $20 coinsurance | $35 ($20 coinsurance + $15 excess charge) | $100+ |
How to Check Your Doctor’s Status
To find out if your current or potential doctor accepts assignment, you can take a few steps:
- Call the Doctor’s Office: The easiest and most direct method is to simply call the office and ask if they accept Medicare assignment. It’s a good idea to confirm this before every appointment, as policies can change.
- Use Medicare’s Online Tools: Medicare offers a "Care Compare" tool on its website that allows you to search for and compare doctors, hospitals, and other providers, including their Medicare participation status. This is a reliable way to check if a provider is participating or non-participating.
- Review your Medicare Summary Notice (MSN): After receiving a service, you will receive an MSN from Medicare detailing the amount billed, the Medicare-approved amount, and what you owe. This notice will show if a provider charged more than the Medicare-approved amount.
Conclusion
While the vast majority of doctors who accept Medicare do not charge more than the program allows, some non-participating providers can impose an excess charge of up to 15%. This fee, coupled with your standard coinsurance, can significantly increase your medical costs. Providers who have opted out entirely will charge whatever they see fit, leaving you with the full bill.
Your best defense against excess charges is to be proactive. Ask your provider about their billing practices, use the official Medicare tools to verify their status, and consider a Medigap plan like Plan G if you want guaranteed coverage for these extra fees. By understanding the rules, you can make informed decisions about your healthcare and protect yourself from unexpected expenses. For official information about Medicare providers, visit Medicare's website.
