What Are Medicare “excess Charges”?
If a doctor or hospital does not accept the Medicare “Fee Schedule” and your Medicare Supplement plan does not cover Medicare Part B “Excess Charges,” you may be responsible for an additional 15% (outpatient only) of what Medicare allows for that outpatient service.
Medicare Supplement Plan F and G cover Excess Charges. All other plans do not pay the Medicare Part B Excess Charges.
Excess charges are an additional charge certain doctors can charge you above what Medicare allows. First, there are two types of providers (Doctors & Hospitals) regarding Part B (outpatient) of the Medicare program: participating and non-participating.
Participating Providers …
- Accept assignment or the fee schedule of Medicare for all covered services for all Medicare beneficiaries.
- Receive higher MPFS (Medicare physician fee schedule) allowances than non-participating providers.
- Accept the Medicare allowed amount as payment in full.
- Are included in the Physician and Other Health Care Professional directory.
- Assignment means the provider will be paid the Medicare allowed amount as payment in full for his or her services.
- Must submit the claim(s) directly to Medicare.
Non-participating Providers …
- May accept assignment of Medicare claims on a claim by claim basis.
- Receive lower MPFS allowances (5% less) than participation providers for assigned and non-assigned claims.
- May not submit charges for non-assigned claims that are in excess of the limiting charge amount (with exception to pharmaceuticals, equipment and supplies). And may collect up to 95% of the charge amount at the time services are furnished, which is the maximum that can be charged for the services furnished.
- Are not included in the Physicians and Other Health Care Professional Directory.
- Must submit the claim(s) directly to Medicare.
The Third kind .. “Opt-Out”
A doctor who “Opt’s-Out” of the Medicare system and will privately contract with Medicare beneficiaries. This type of doctor is a “cash-only” physician, and often called a “Concierge” doctor.
Excess Charges … If a physician or hospital does not accept Medicare’s assignment (accept Medicares reimbursement rate) they can add a maximum of 15% on top of what Medicare pays for a service. This is what is known as Excess Charges. Only Medicare Supplement Plans F and G pay for this Excess Charge, most don’t.
With 11 federally standardized plans to choose from, you will most likely find the plan that fits your budget and unique needs. F being the most popular and comprehensive, other popular plans are C and D, along with the new Plan N, although many folks ask about the “Excess Charges” not covered with Plans C, D and N.
Lets go over “Excess Charges” for a moment … First, there are three types of doctors and hospitals regarding Medicare;
- Provider who accepts Medicares assignment.
- Provider who does not accept Medicares assignment.
- Provider who has opted out of Medicare all together (Cash only Doctor).
For example; lets say the Medicare allowable charge for a certain visit or procedure is $100. Medicare Part B pays $80 and the Medicare Supplement pays the remaining $20. If the doctor does not “accept assignment” (Medicare’s payment) as I mentioned before, the doctor can charge a maximum of an additional 15% above what Medicare allows as payment for that particular service (Excess Charges). If the insured has a Medicare Supplement which does not pay for Excess Charges, the client is responsible to pays the 15% above the allowable Medicare charge.
Most doctors and health care providers agree to accept the Medicare fee schedule or “Medicare Assignment.” When a doctor or supplier accepts assignment, they also agree to bill Medicare directly, which is a very easy and seamless process.
Neither Medicare nor the Medicare Supplement will pay the doctor the additional 15% on top of what Medicare allows. Because he wouldn’t “accept assignment” of the Medicare claim. The money instead of going to the doctor, goes to the insured. So now the doctor has to hope he gets paid the $115 from the client after he does all the billing instead of knowing he’ll receive $100 if he “accepts assignment.”
Let’s assume the net annual premium difference between Plan F and Plan D is $275, after deducting the $183 Part B deductible that is not paid by Plan D. At 15%, that would mean the client would have to incur bills of almost $1,500 from doctors that don’t accept assignment.
Medicare states that if the doctor does not accept assignment the doctor can add 15% to the amount Medicare approves. However, Medicare reduces the amount they approve by 5% because the doctor does not accept assignment. Now the doctor can only add the 15% to the reduced amount.
If Medicare approves a total of $100 and the doctor does not accept assignment then Medicare reduces the amount by 5% the doctor is really only getting an additional $9.25 and not $15. When the doctor sends a claim to Medicare, Medicare will assign a value to that claim. If the doctor agrees to “accept assignment” then the doctor also agrees to accept that assigned value as 100% payment for his/her services, of which Medicare pays 80% and the Med Supp policy pays the remaining 20%.
If the doctor does not “accept assignment” the claim still goes to Medicare, and Medicare will “assign a value.” It makes no difference whether or not the doctor accepts assignment.
Questions? Call or email anytime.