Most Original Medicare beneficiaries are responsible for some out-of-pocket costs, such as deductibles, premiums, copays, and coinsurance. But the cost that often worries or frustrates enrollees the most is the Part B excess charge.
Excess charges can run up to 15% of Medicare-approved amounts and catch beneficiaries off guard if they don’t know what to look for. If you’re worried about Part B excess charges and looking for guidance on how to avoid them, this blog breaks it down.
What are Medicare excess charges?
As part of its cost-sharing structure, Medicare covers 80% of the approved amount for a service or item, and beneficiaries are responsible for the remaining 20%. Excess charges are the additional costs, up to 15% above Medicare-approved amounts (i.e., the amounts Medicare sets for certain services or items), that certain providers charge.
To understand which providers might have excess charges, we first need to understand provider categories. The three main categories are:
- Participating: Providers that accept Medicare assignments and bill Medicare for the approved amounts
- Non-participating: Providers that accept Medicare assignments on a case-by-case basis and don’t always accept Medicare-approved amounts as full payment
- Opt-out: Providers who have signed an agreement to opt out of the Medicare program. They create their own fee structure and don’t bill Medicare.
The category your provider falls into may determine whether or not you face excess charges.
Let’s say, for example, the Medicare-approved amount for a service is $400. Your participating provider will bill Medicare for your service, and Medicare pays 80% of the costs, which is $320. Beneficiaries are then responsible for the remaining 20%, which is $80.
Meanwhile, opt-out providers create their own cost structure and don’t bill Medicare. The entire cost of the procedure comes out of your pocket and can be higher than Medicare-approved amounts.
Non-participating providers can charge up to 15% more than Medicare-approved amounts. Medicare still covers 80%, but now, you’re responsible for the 20% coinsurance and an additional 15% in excess charges, moving your total from $80 to $140.
How common are Medicare excess charges?
Generally, Medicare Part B excess charges are fairly uncommon.
Medicare sets a price for every covered service or item. Providers who accept Medicare assignments agree to this price and bill Medicare directly. Though Medicare-approved amounts have been steadily decreasing over the last few years, a solid 98% of non-pediatric physicians participate in Medicare.
This means that fewer doctors are likely to charge more than the Medicare-set prices for services. Additionally, excess charges are limited or illegal if you live in one of these eight states:
- Connecticut
- Massachusetts
- Minnesota
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Vermont
It’s important to note that even if you live in one of these states, you may still be responsible for excess charges if you receive care from a non-participating provider in another state.
How to avoid Part B excess charges
Medicare Part B excess charges can be inconvenient, but they’re also avoidable. One way to ensure there are no surprise additional charges on your bill is to do your due diligence. Double-check whether or not your provider accepts Medicare assignment and the approved amount, so you won’t be on the hook for extra fees.
If you’ve incurred excess charges but believe them to be incorrect, you can file an appeal with Medicare.
Can Medigap help me avoid excess charges?
Some Medigap plans can also help you avoid Part B excess charges. Specifically, Medicare Supplement Plans F and G cover excess charges when Original Medicare recipients enroll in either.
Plan F has been discontinued and isn’t available to beneficiaries who turned 65 after January 1, 2020. If you turned 65 before that date, you are still eligible to enroll and can use it to cover excess charges.
New beneficiaries of Original Medicare, regardless of when they become eligible, can enroll in Medigap Plan G. Plan G is one of the most comprehensive Medicare Supplement plans and covers a host of out-of-pocket costs, including Part B excess charges.
Part B excess charges: The bottom line
Though excess charges can run you an additional 15% of Medicare-approved costs, they are preventable and manageable. In addition to checking that your provider accepts Medicare assignment, you can also enroll in a Medigap plan that covers these potential costs to prevent surprises. By being proactive about your providers and Medicare coverage, you can focus on what’s really important: your health.
