What You Should Know About the Medicare Overcharge Measure

Healthcare providers can accept Medicare assignment, which means they've agreed to the program's contractual rates and payment terms. When a beneficiary receives care from a physician who doesn’t accept Medicare assignment, they can be charged up to 15% more than the plan's approved amount.

Several states have enacted laws that prohibit doctors from billing this excess amount. Keep reading to find out more about Part B excess charges and the Medicare Overcharge Measure that prevents them in some states.

What Is an Excess Charge?

The federal government sets a formal payment schedule for services and procedures received through Medicare Part B, which determines how much providers are paid. These fees are location specific, so they'll vary depending on where you are in the country, and they typically change over time.

In most states, doctors who don’t accept Medicare assignment may charge up to 15% above Medicare’s approved Part B payment schedule. This additional amount, which is known as a Part B excess charge, is billed to the enrollee, and is sometimes referred to as balance billing.

How Do Excess Charges Work?

To understand how excess charges work, it's helpful to look at an example. Let's say you have an appointment with a dermatologist to have a skin tag removed and the physician doesn't accept Medicare assignment.

If the program's allowable charge for the procedure is $500, the dermatologist may bill up to 15% more in most states. That could potentially add $75 to the price of the service, for a total cost of $575.

If you’d already met your Part B deductible, your insurance would pay the $500 it allows for the procedure, minus the 20% co-insurance you're required to pay out-of-pocket. You'd ultimately have to pay $175, which includes the $100 co-insurance plus the $75 excess charge. However, if you'd visited a dermatologist who accepted Medicare assignment, your total charge would have only been $100 for the co-insurance.

Because physicians often bill Medicare first, you’ll typically see the Part B excess charge as part of the total amount remaining when you receive a bill from your physician.

How Often Do Doctors Bill for Medicare Excess Charges?

It's relatively uncommon for doctors to bill for Medicare excess charges. Although the program places no limits on how often a provider may include this charge for a service, several factors may influence whether a physician bills for an excess charge, including:

• The provider’s specialty
• Whether the treatment location is urban or rural
• The area’s cost of living

However, a provider that chooses to include a Part B excess charge may do so regularly.

How Can You Find Out If Your Provider Accepts Medicare Assignment?

Medicare beneficiaries can find out if a provider accepts Medicare assignment by visiting the program's provider locator tool, which lets enrollees look up participating clinicians, hospitals and other healthcare facilities.

Beneficiaries may also find out if a provider accepts Medicare assignment by asking front desk or billing staff for additional information. 

What Is the Medicare Overcharge Measure?

The Medicare Overcharge Measure is a law that’s been enacted in multiple states, prohibiting healthcare providers from adding excess charges onto the Medicare-approved amount of a procedure for Part B enrollees for any reason.

What States Don’t Allow Medicare Part B Excess Charges?

As of 2023, the following states enforced a Medicare Overcharge Measure, prohibiting healthcare providers from charging excess charges under Medicare Part B:

• Connecticut
• Massachusetts
• Minnesota
• New York
• Ohio
• Pennsylvania
• Rhode Island
• Vermont

Under law, physicians in these states must follow the Medicare-approved Part B payment schedule for the cost of services and procedures. However, if a resident of one of these states receives medical care from a nonparticipating healthcare practitioner in a state that doesn't have a MOM law, they may be subject to excess charges.

Can Medigap Plans Protect You from Excess Charges?

Medigap plans may protect you from some or all of Part B excess charges. These supplemental policies are purchased through Medicare-authorized private insurance companies to help beneficiaries offset the out-of-pocket costs left after Original Medicare pays a claim.

Only Plans F and G cover the costs of Part B excess charges. It's also important to note that although any Original Medicare enrollee may purchase Plan G, only enrollees who became Medicare eligible prior to 2020 may purchase Medigap Plan F.

How Can You Avoid Being Billed for an Excess Charge?

If you live in a state that supports the Medicare Overcharge Measure, you won’t have to worry about being billed for Part B excess charges.

Original Medicare enrollees who live in states that don’t offer this protection can find other ways to avoid having to pay for an excess charge, such as scheduling appointments with healthcare providers who accept Medicare assignment or purchasing a Medigap Plan F or G, which covers these excess charges.