What are Part B Excess Charges?
Key Takeaways
- Medicare Part B excess charges are additional fees some providers may charge above Medicare’s approved rate, potentially increasing out-of-pocket costs.
- Providers who don’t fully accept Medicare’s payment rates can charge up to 15% over the approved amount, while those who accept Medicare assignment charge only the standard 20% coinsurance.
- Some states, like Connecticut and New York, prohibit Part B excess charges, ensuring all Medicare providers in those states accept Medicare’s approved rate as full payment.
- To avoid excess charges, beneficiaries can seek providers who accept Medicare assignment or enroll in Medigap Plans F or G, which cover these extra fees.
Medicare Part B excess charges are fees certain healthcare providers may charge above the Medicare-approved amount for services. This extra cost can surprise beneficiaries, especially if they did realize that their doctors do not fully accept Medicare’s payment rates. Understanding these charges can help beneficiaries plan for out-of-pocket expenses and explore ways to minimize or avoid Part B excess charges.
Why Should You Care About Part B Excess Charges?
As of 2023, approximately 98% of physicians opted in to Medicare nationwide. The majority of these doctors agree to charge the Medicare-approved amount for specific services. However, some who do not fully opt in to Medicare assignment may charge more for care. While you may still see these doctors, you will be responsible for covering the excess charge out of pocket.
Excess charges can particularly affect beneficiaries with chronic conditions or those seeking care from specialized providers who are more likely to opt out of Medicare’s payment assignments. Knowing about excess charges in advance allows beneficiaries to budget accordingly or seek ways to eliminate these additional fees.
Understanding Part B Excess Charges
Medicare Part B helps cover outpatient services, and Medicare generally pays 80% of approved rates for Part B services while you cover the remaining 20% out of pocket. However, doctors that do not accept Medicare assignment can charge up to 15% more than this approved rate. This additional amount is called a Part B excess charge, and it can quickly add up for patients with ongoing or specialized care needs.
This happens when a provider chooses to be “non-participating” with Medicare, meaning they don’t fully accept Medicare’s rate as the only service charge. Instead, they may bill you for the difference, or “excess,” between what Medicare allows and their actual charge.
Providers must inform you of this difference, so you should not be billed unexpectedly. However, it’s still critical for beneficiaries to be aware and ask about a provider’s Medicare status before receiving services. Ensuring your preferred doctor accepts Medicare assignment will help you avoid excess charges.
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How Much Do Medicare Excess Charges Cost?
The amount of a Medicare Part B excess charge varies depending on the provider’s fees and Medicare’s approved rate. Here’s how it works in practice:
- If your doctor accepts Medicare assignment: Providers who accept Medicare assignment agree to Medicare’s rate as payment in full. In this case, you would only be responsible for the 20% coinsurance (after meeting the Part B deductible) and won’t face any excess charges.
- If your doctor declines Medicare assignment but still accepts Medicare: A non-participating provider can charge up to 15% more than the Medicare-approved rate. For example, if Medicare approves $100 for a visit, Medicare pays $80 (80%), and you’d owe $20 (20%), plus up to $15 as an excess charge. This totals $35 out of pocket for this visit.
- If your doctor doesn’t accept Medicare at all: If a provider opts out of Medicare entirely, you may be responsible for the entire bill, as Medicare will not cover any portion of these services. In such cases, there’s no limit to what a provider can charge, so it’s essential to clarify these costs upfront.
States Without Part B Excess Charges
Some states have banned Part B excess charges, protecting Medicare beneficiaries from these additional fees. If you live in one of these states, you won’t encounter excess charges from non-participating providers. Here are the states where Part B excess charges are prohibited:
- Connecticut
- Massachusetts
- Minnesota
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Vermont
In these states, all Medicare providers are required to accept Medicare’s approved rate as full payment, which helps beneficiaries avoid extraneous out-of-pocket costs.
How to Avoid Excess Charges
To steer clear of Part B excess charges, consider the following strategies:
- Find a healthcare provider who accepts Medicare assignment. Providers who accept assignment agree to Medicare’s full rate as payment, which means you won’t be billed for any excess charges. You’ll only be responsible for your usual coinsurance or copay.
- Enroll in a Medigap plan that covers Part B excess charges. Medigap plans work in tandem with Original Medicare to cover Medicare’s out-of-pocket expenses. Medigap Plans F and G cover Part B excess charges. However, Plan F is only available to those who became eligible for Medicare before 2020, so new Medicare enrollees will have to consider Plan G instead for Part B excess charge coverage. Both options protect you from excess charges by covering any amount above Medicare’s approved rate.
Putting It All Together
Medicare Part B excess charges can be an extra cost for beneficiaries. Knowing how these charges work and understanding how to avoid them, such as by choosing the right healthcare providers or enrolling in a Medigap plan, can help reduce out-of-pocket costs from receiving care. By staying informed, you can avoid unnecessary financial surprises. If you are concerned about Part B excess charges, reach out to a licensed insurance agent or broker who can help you navigate your options.
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