Medicare excess charges are one of those complicated Medicare topics which tends to raise questions for potential Medicare Supplement plan enrollees. Read on to find out what you need to know about Medicare Part B excess charges and how they can impact your Medicare expenses.
Medicare Excess Charges Explained
Medicare excess charges occur when a physician doesn’t “accept assignment”. This means that a provider charges more than the Medicare-approved amount for their service. Excess charges are the remaining amount that you, in most cases, are required to pay.
These providers are referred to as “non-participating”, as they choose to charge more for their services than Medicare has approved. However, in most cases, a cap called “the limiting charge” is placed on how much you can be charged on top of the Medicare-approved amount.
A doctor who chooses not to accept assignment can only charge up to 15% above the Medicare-approved amount for their service. Remember that you will not only be responsible for paying that excess charge but also the regular 20% Part B coinsurance fee (unless you have a Medigap plan that covers your Part B coinsurance). So essentially, the definition of Medicare excess charges is the additional amount that you must pay in the event that a physician doesn’t accept the Medicare-approved amount for their service. Excess charges are also referred to as “balance billing”.
How common are Medicare excess charges?
While Medicare excess charges may seem like a cause of concern for Medicare enrollees, they are not nearly as frequent as you may expect. So just how common are Medicare excess charges?
In 2018, 97% of physicians who billed Medicare were participating providers. This means that they accepted assignment for all claims and didn’t charge any additional fees on top of the Medicare-approved amount for their services.
It is important to note that this percentage varies depending on the physician’s specialty. Psychiatrists, for example, make up the largest percentage of physicians opting out of Medicare, with 7.2% of providers opting out in 2020.
Other specialties that have higher rates of providers opting out include Plastic and Reconstructive Surgery (3.6%) and Neurology (2.8%). So your likelihood of finding a provider that accepts assignment will differ depending on what type of care you require. But as you can see, Medicare Part B excess charges shouldn’t be a cause of too much concern for most Medicare enrollees.
Medicare Excess Charges by State
Another important consideration to keep in mind when figuring out how Medicare excess charges will affect you is where you live. Currently, there are eight states that either limit or fully prohibit excess charges: Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont.
If you live in one of these states, the Medicare Overcharge Measure law ensures that you will either pay lower rates for excess charges or not have to worry about them at all. Being aware of your state’s excess charges policies is important when choosing a Medicare plan.
Paying Medicare Excess Charges
When it comes to paying your Part B excess charges, what you end up having to pay depends on the type of Medicare plan that you are enrolled in.
Remember that whatever excess charges you are responsible for paying comes on top of your Medicare Part B coinsurance, or 20% of the Medicare-approved amount for any given service. Additionally, excess charges do not count towards your Part B deductible.
Medicare Supplement Insurance and Excess Charges
There are two Medigap plans that cover your excess charges: Plan F* and Plan G. These are both very comprehensive plans, and should you be faced with exorbitant excess charges in event that you require a costly medical procedure or services from a physician who doesn’t accept assignment, you will be happy that you enrolled.
However, because excess charges are so rare and, in the case of certain states, sometimes not applicable, it is not advisable to choose a Medicare Supplement plan solely on the basis of its protections against excess charges.
*Plan F is no longer available to beneficiaries who became newly eligible for Medicare on or after January 1, 2020.
Medicare Advantage and Excess Charges
While Medicare Advantage plans don’t offer specific excess charge coverage benefits, they are something to keep in mind depending on the Advantage plan that you have in mind.
When it comes to plans with deductibles, like an MSA plan, excess charges incurred from non-participating providers do not count towards your deductible amount.
How To Avoid Excess Charges
You’re probably wondering how you can avoid having to pay excess charges. The best way to avoid balance billing is by choosing providers that accept Medicare assignment. You can always ask a physician whether or not they accept assignment before making an appointment.
Given that the majority of physicians are participating providers who accept assignment, you have plenty of options available to you when it comes to choosing a physician that doesn’t charge any excess charges.
But perhaps you have a non-participating doctor before you enroll in Medicare and you don’t want to change physicians. In this case, you could consider enrolling in Medigap Plan F or Plan G. Just be aware that Plan F is no longer available for beneficiaries who became eligible for Medicare starting January 1, 2020.
While excess charges tend to raise some concern in Medicare beneficiaries, they aren’t usually something that you have to be too worried about. If you would like to learn more about excess charges from a Medicare professional or are simply seeking answers to your Medicare questions, don’t hesitate to contact us.