Understanding Medicare Part B Excess Charges
One of the most frustrating parts of Medicare Part B comes from surprise costs associated with doctors, providers, and suppliers that do not accept Medicare Assignment. This presentation educates Medicare beneficiaries on why this is important to understand, and how they can avoid any unexpected out-of-pocket costs
If a doctor, provider, or supplier agrees that Medicare’s limiting schedule (the set amount of money that Medicare will pay for approved services) is payment in full, then they are considered to accept Medicare assignment. Those who accept Medicare assignment are called Participating, or PAR providers, within the Medicare program.
If a beneficiary sees a PAR provider for their healthcare services, this is what they can expect:
• Their out-of-pocket costs may be less (depending on Medicare’s fee schedule)
• The provider agrees to charge the beneficiary only for Medicare’s deductible and coinsurance amount, and they usually wait for Medicare to pay its share before asking the beneficiary to pay theirs
• Providers are required to submit the claim directly to Medicare, and cannot charge the beneficiary a cost for submitting the claim.
Needless to say, seeing a PAR provider is the best chance a beneficiary has to not only paying the lowest out of pocket costs, but to also have the smoothest experience with their claims.
If a doctor, provider, or supplier doesn’t agree that Medicare’s limiting schedule is payment in full, but still accepts Medicare insurance, they are considered Non-Participating or Non-PAR providers.
These providers are not required to submit claims to Medicare on the beneficiary’s be-half, and they can charge 15% higher than Medicare’s fee schedule for their services (called a Part B Excess Charge), and the beneficiary is responsible for paying that additional 15%. Also, Medicare will pay the beneficiary for the services (minus their portion), and the beneficiary has to pay the provider in full directly.
If a beneficiary sees a Non-PAR provider for their healthcare services, this is what they can expect:
• Their out-of-pocket costs could be more (providers can pick and choose if they want to bill for the Part B Excess charge on each claim)
• The provider may require payment for services up front, leaving the beneficiary to file their claims directly to Medicare
• The beneficiary will be responsible for paying the provider directly, not Medicare.
Excess Charge Example
If a beneficiary sees a PAR provider for a service with a Medicare-approved amount of$100, here’s how the payments will break down:
• Medicare pays 80% of the approved amount: $80
• Beneficiary pays 20% of the approved amount: $20
The beneficiary’s total out-of-pocket cost is $20
If a beneficiary sees a Non-PAR provider for the same service as above, Medicare is going to reduce their fee schedule to 95% of the original amount, so $95, and the payments will break down as follows:
• Medicare pays 80% of 95% of the approved amount: $76
• Beneficiary pays 20% of 95% of the approved amount: $19
• Plus a 15% Excess Charge of 95% of the approved amount: $14.25
The beneficiary’s total out-of-pocket cost is $33.25
With our example, the difference between the two situations is only $13.25, but that’s an overall increase of 60% in out-of-pocket costs. Imagine what that could be for higher cost providers that bill the Part B Excess Charge.
Some states prohibit providers from billing for a Part B Excess Charge if they accept Medicare insurance. Those states are:
• New York (providers are limited to an Excess Charge of 5%)
• Rhode Island
CAUTION: Medicare Supplement plans sold in MA and MN do not offer Part B Excess coverage. If beneficiaries travel outside the state to obtain services at a Non-PAR provider, they may have to pay the Part B Excess charge.
Avoiding Excess Charges
The simplest way for beneficiaries to avoid paying Part B excess charges is to find a PAR provider that accepts Medicare’s assignment. Medicare has created their Care Compare search tool at www.medicare.gov/care-compare to make that process simple for beneficiaries across the country. Each PAR provider in the search tool is highlighted by a dollar sign symbol that states “Charges the Medicare-approved amount (so you pay less out-of-pocket”, making is easy to identify where to seek the lowest cost healthcare in their area.
Medicare Supplement (Medigap) plans are also another great way to cover the cost of Part B Excess charges. Plans F and G provider coverage for excess charges, and in Wisconsin beneficiaries can add a rider to cover those costs when they sign up for their coverage. Massachusetts and Minnesota supplement plans do not offer coverage for Part B Excess charges, so if beneficiaries seek care outside of their state they may be required to pay the additional costs for those services.
Most Medicare Advantage plans are network based, meaning HMO or PPO plans. The best way for a HMO or PPO Medicare Advantage beneficiary to avoid paying unexpected costs is to seek care from contracted, in-network providers. These providers are not allowed to bill beneficiaries over and above their contracted amount for any covered service, keeping the client’s out-of-pocket costs predictable.
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