A Medicare excess charge is the cost difference between the Medicare-approved amount for a medical service and the amount your health care provider typically charges for that service.

Medicare excess charges only occur if your doctor does not accept Medicare assignment. If your doctor accepts Medicare assignment, he or she must accept the Medicare-approved amount as full payment for covered services, according to Medicare.gov.

Participating vs. non-participating doctors

Doctors who do accept Medicare assignment are called “participating” doctors, and they cannot add excess charges.

Doctors who do not accept Medicare assignment are called “non-participating” doctors, and they can add excess charges.

If you go to a non-participating doctor, you could have to pay up to 15% of the Medicare-approved amount for a service out of your own pocket. This applies only to certain services (for instance, supplies and equipment are excluded).

Here’s an example of how this might work:

You go to a doctor whose standard fee for an MRI is $1,500, but the Medicare-approved amount for an MRI is $1,000. You need an MRI, and the procedure is approved to diagnose a medical condition.

If the doctor is participating, he will charge Medicare $1,000 for the MRI, and all you have to pay are any applicable co-payments and deductibles.

If the doctor is non-participating, he could charge 15% more than the $1,000 Medicare-approved amount for the MRI, for a grand total of $1,150. In this situation, you potentially could have to pay the extra $150 out of pocket in addition to any co-payments and deductibles.

Medicare assignment is optional

Doctors are not required to accept Medicare assignment, but most do, according to Medicare.gov.

Brent Leavitt, a licensed insurance agent and health care solutions adviser for Nevada Benefits, said that if a doctor is enrolled in the Medicare program, they must accept the current rules.

Benefits of choosing a participating doctor

Medicare.gov states that if your medical provider accepts assignment, you could benefit in the following 3 ways:

  1. Your out-of-pocket costs may be less.
  2. Your provider can only charge you the Medicare deductible and co-insurance.
  3. Your provider must submit the medical claim directly to Medicare and cannot charge you for submitting it.

If you are unsure whether your doctor accepts Medicare assignment, ask your doctor before each visit and check their status on the Medicare.gov physician tool.

Medigap coverage for excess charges

Certain Medicare Supplement insurance plans can help protect you against Medicare excess charges if your doctor does not accept Medicare assignment. Medigap Plan F and Plan G include a benefit that covers all Medicare excess charges.

Medicare beneficiaries with Medicare Supplement Plan F or Plan G would not pay the excess charges, even if they visit a non-participating doctor.

Although no formal statistics track the rate of excess charges, Leavitt said excess charges are uncommon and that none of his clients have ever experienced an excess charge. Still, Leavitt said the Medigap excess charge benefit provides “good protection” against uncertainty.