Medicare Part B Excess Charges and How to Avoid Them
- What are Medicare Part B excess charges and how can they affect your doctor bill? Learn how to avoid these potentially costly surprise medical bills.
When a Medicare beneficiary visits a doctor or other health care provider or receives an item of durable medical equipment (DME), the amount they will be billed depends partly on the type of contract the provider holds with Medicare. If the provider doesn’t accept Medicare reimbursement as payment in full, a beneficiary may have to pay Medicare Part B excess charges, which can potentially be quite costly.
In most cases, beneficiaries will pay what’s called the “Medicare-approved amount.” This is a pre-determined amount that states how much Medicare will reimburse a health care provider for a particular service or item. Many providers have agreed in their contract with Medicare to charge no more than this amount.
But certain providers have a stipulation in their contract that allows them to charge up to 15% more than the Medicare-approved amount. This extra charge is called an “excess charge” and is found only in Medicare Part B coverage.
If you are charged Medicare Part B excess charges, you are typically required to pay the amount for your treatment or services up front. You then need to submit a claim to Medicare to get reimbursement for the amount of your total costs that Medicare will pay. This reimbursement amount will be 80% of the Medicare-approved amount for your service.
What Types of Doctors and Providers Require Excess Charges?
A health care provider may fall into one of the following categories based on how they participate in Medicare:
- Accepts Medicare assignment
A provider who participates in Medicare and has agreed to “accept Medicare assignment” may not charge more than the Medicare-approved amount for their services or items.
- Does not accept Medicare assignment
Some providers will treat Medicare patients, but they have not agreed to accept the Medicare-approved amount as full payment. They reserve the right to charge up to 15% more than the Medicare-approved amount for their services or items. Again, this extra charge is what’s known as an “excess charge.”
How Do You Pay for Medicare Part B Excess Charges?
If a beneficiary incurs an excess charge, they will be responsible for paying its entirety in addition to any coinsurance and deductibles associated with Part B. As noted above, you are typically required to pay these costs up front and submit a claim to the Centers for Medicare & Medicaid Services (CMS) to get reimbursed for 80% of the Medicare-approved cost for your service.
Medicare Part B features an annual deductible, which is $198 in 2020 and typically increases slightly each year. Once you meet your deductible, you are typically required to pay the Part B copayment, which is 20% of the Medicare-approved amount for covered services for the rest of the year.
Any Part B excess charges you face, if applicable, will be added on top of your deductible and copay.
To illustrate how Part B billing works, let’s look at an example. Imagine a Medicare beneficiary had a doctor’s office visit that cost a Medicare-approved amount of $300.
Medicare Part B will cover 80% of that amount, while the beneficiary is responsible for the remaining 20%. A 20% copay requirement in this case would equal $60. If the beneficiary’s doctor accepts Medicare assignment, their out-of-pocket costs for the visit total $60, as long as they’ve met their Part B deductible for the year.
If the beneficiary’s doctor doesn’t accept Medicare assignment, they could be charged up to an additional $45 (15% of the Medicare-approved amount of $300 is $45). In this case, their total out-of-pocket costs would equal $105 (the $45 excess charge plus their $60 Medicare Part B copay).
It’s important to note that Part B excess charges do not count towards your annual Part B deductible.
How Can You Avoid Part B Excess Charges?
There are several ways Medicare beneficiaries can avoid paying Part B excess charges.
- Only see participating providers
Perhaps the easiest way to avoid Part B excess charges is to avoid visiting doctors or health care providers who don’t accept Medicare assignment. Before scheduling an appointment with a doctor, ask if they accept Medicare assignment. If they do, you will not be billed for any excess charges.
- Apply for a Medigap plan that covers excess charges
Two Medigap plans, also called Medicare Supplement Insurance, cover the cost of Part B excess charges. Medigap plans are sold by private insurers and help cover the cost of some of Medicare’s out-of-pocket costs like excess charges, deductibles, coinsurance and copayments. Medigap Plan F and Plan G are the two types of standardized Medigap plans that cover Part B excess charges.
Excess charges are only found in Medicare Part B.