A Medicare excess charge is the cost difference between the Medicare-approved insurance payment 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 physician accepts Medicare assignment, he or she must accept the Medicare-approved amount as full payment for costs of covered services.
Participating vs. non-participating physicians
Health care providers 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 make a payment of up to 15% of the Medicare-approved amount for a service out of your own pocket as part of your Medicare Part B coverage. This applies only to certain services (for instance, medical supplies and equipment are excluded).
Here’s an example of how this might work:
You go to a hospital where the 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 costs for the MRI, for a grand total of $1,150. In this situation, you potentially could have to pay the $150 Medicare Part B excess charges out of pocket in addition to any co-payments and deductibles.
Medicare assignment is optional for care providers
Physicians are not required to accept Medicare assignment, but most do. 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.
Cost benefits of choosing a participating doctor
If your medical provider accepts assignment, you could benefit in the following 3 ways:
- Your out-of-pocket costs may be less.
- Your provider can only charge you the Medicare deductible and co-insurance.
- Your provider must submit the medical claim directly to Medicare and cannot charge you for submitting it.
Be prepared for Medicare Part B excess charges. 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 Part B 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.