What Are Medicare Excess Charges?
The term Medicare excess charges refer to the additional number of charges, over and above the Medicare-approved payment amount that non-participating doctors and hospitals may bill patients. Here is how it works:
- Medicare sets a limit on what they will pay for each service provided under Part B. This is called the Medicare-approved amount.
- Providers that agree to accept assignment will bill Medicare directly and agree to accept the Medicare-approved amount as full payment.
- Providers who do not accept assignment may charge up to 15% over the Medicare-approved amount. The additional charge is what is known as Medicare excess charges.
- You are responsible for paying 100% of any excess charges billed by the provider. These excess charges do not count toward your Medicare Part B deductible.
Excess charges could potentially cost thousands of dollars depending on the services received. However, some states prohibit excess charges to protect Medicare beneficiaries.
States That Do Not Allow Excess Charges
The following eight states have laws banning Medicare providers from charging excess fees above the Medicare-approved amount:
- Connecticut
- Massachusetts
- Minnesota
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Vermont
This means that medical providers in these states must accept Medicare’s assignment or, approved amount. They cannot bill Medicare patients above the Medicare-approved rate, even if they are non-participating providers who opt out of Medicare.
Medicare Beneficiaries in these states will never pay excess charges for Medicare Part B services. However, the\is protection does not apply to medical treatment received outside of that state.
In these states, providers may choose to accept assignment or not. Those who do not accept Medicare assignment maintain the right to balance bill up to the 115% excess charge limit.
Beneficiaries in these states face greater risk for excess charges. But there are still steps they can take to avoid surprise billing.
How to Avoid Excess Charges
Beneficiaries in states that allow excess charges have a few options to avoid paying extra:
- Ask providers upfront if they accept assignment – Know the billing practices of your doctor or supplier before receiving care. Those who accept assignment cannot excess bill.
- Look for providers who participate with Medicare – Participating providers have signed agreements to always accept assignment. Search for a participating doctor or hospital near you.
- Get a Medigap plan – Medigap Plan F and Plan G both cover 100% of Medicare excess charges from non-participating providers. Plan F is only available to those eligible for Medicare before 2020.
- Use doctors who opt out of Medicare – Opt-out providers are not allowed to balance bill patients. However, traditional Medicare will not cover services. You would need a private contract.
- Go out of state – Visiting Connecticut, Massachusetts, Minnesota, or another state prohibiting excess charges removes the risk entirely.
- Appeal excess charges – If billed, appeal to Medicare and your state insurance department arguing the charges are prohibited or unreasonable.
While most providers accept Medicare assignment, it helps to be proactive if you live in a state allowing excess billing. Avoid surprise medical bills by partnering closely with your providers and Medicare.
Understanding Excess Charges Protection by State
To summarize the protection by state:
States Prohibiting Excess Charges
These 8 states ban excess charges entirely under state law:
- Connecticut
- Massachusetts
- Minnesota
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Vermont
Beneficiaries in these states will never face excess charges from in-state providers. But out-of-state providers can still excess bill.
States Allowing Excess Charges
The remaining 42 states and Washington D.C. allow providers to impose excess charges if they do not accept Medicare assignment however, 98% of doctors in those States, do not charge excess charges and all Beneficiaries would be wise in asking the Providers upfront whether they will accept assignment or not.
Joe DeAngelis
Medicare Insurance Broker