When you start Medicare, you may hear the term Part B excess charges. It sounds complicated, but the basic idea is fairly simple: in some situations, a doctor may charge more than the amount Medicare approves for a service.
These charges do not apply to every doctor, every service, or every state. Still, they can be important to understand if you are comparing Original Medicare with a Medicare Supplement plan, also called Medigap.
Here is how Medicare Part B excess charges work and what you may be able to do about them.
What are Medicare Part B excess charges?
Medicare Part B helps cover outpatient care, such as doctor visits, lab work, durable medical equipment, and many other medical services. For each covered service, Medicare sets an approved amount.
Many doctors accept the Medicare-approved amount as full payment. When they do, they are said to accept Medicare assignment. You generally pay your share of the approved amount after meeting your Part B deductible.
Some doctors do not accept assignment for every Medicare-covered service. These providers may charge more than Medicare’s approved amount. The extra amount is called a Part B excess charge.
Under federal rules, a provider who does not accept assignment may generally charge up to 15% above the Medicare-approved amount. That limit is why you may also hear this called the “limiting charge.”
How do excess charges work in real life?
Suppose Medicare approves a certain amount for a covered office visit. If your doctor does not accept assignment, the doctor may be allowed to charge somewhat more than that approved amount, depending on the rules in your state.
Medicare still pays its portion based on the Medicare-approved amount, not on the higher amount the provider bills. You may be responsible for your normal Part B share plus any allowed excess charge.
The important point is that the extra charge is separate from your usual Medicare cost sharing. It may come as a surprise if you expected Medicare to pay based on the provider’s full bill.
Do all doctors charge Medicare excess charges?
No. In fact, many people with Original Medicare may never see an excess charge. Most doctors and other health care providers accept Medicare assignment.
You can ask a provider’s office a simple question before an appointment: “Do you accept Medicare assignment?” This can help you understand how the office bills Medicare and whether excess charges may be possible.
A provider can also choose to accept assignment for some patients or services and not others. It is wise to confirm before receiving non-emergency care, especially when seeing a new specialist.
What is the difference between not accepting assignment and opting out?
These terms are easy to mix up, but they mean different things.
- A provider who does not accept assignment may still see Medicare patients and bill Medicare. The provider may be allowed to charge a limited amount above Medicare’s approved amount.
- A provider who opts out of Medicare generally does not bill Medicare for covered services. You may be asked to sign a private contract and could be responsible for the full cost. Medicare Supplement insurance generally does not cover services from providers who have opted out.
Before seeing a provider who is new to you, it can help to ask whether they participate in Medicare, accept assignment, or have opted out. These details may affect what you pay.
Are excess charges allowed in every state?
No. Some states have laws that limit or prohibit Medicare Part B excess charges. In those states, providers may not be able to bill above the Medicare-approved amount for Medicare-covered services.
Rules can vary by state, and they can change over time. If this issue matters to you, consider checking the current rules where you live or asking a licensed Medicare professional for guidance.
Even in a state that restricts excess charges, it may still be useful to ask whether a provider accepts Medicare assignment. Assignment can make billing more predictable and may reduce paperwork.
Which Medicare Supplement plans cover excess charges?
Medicare Supplement plans work alongside Original Medicare. Standardized Medigap benefits can help pay certain costs that Original Medicare leaves behind, such as deductibles, coinsurance, and copayments.
Medigap Plan G covers Medicare Part B excess charges. Plan F also covers them, although Plan F is generally only available to people who became eligible for Medicare before January 1, 2020.
Medigap Plan N does not cover Part B excess charges. Plan N may have a lower premium than Plan G in some areas, but it has different cost-sharing features. If you choose Plan N and receive care from a provider who bills excess charges, you may need to pay those charges yourself.
Benefits are standardized for the same letter plan in most states, but premiums, plan availability, and carrier choices can vary by location. Massachusetts, Minnesota, and Wisconsin standardize Medigap plans differently from most other states.
Do Medicare Advantage plans have Part B excess charges?
Medicare Advantage plans are a different way to receive your Medicare benefits. They generally use provider networks and plan-specific rules for cost sharing rather than the Original Medicare excess-charge structure.
That does not mean all costs are the same. With Medicare Advantage, your copayments, coinsurance, provider choices, referrals, prior authorization rules, and out-of-network coverage may depend on the specific plan. It is important to review the plan’s provider network and evidence of coverage before enrolling.
Original Medicare with a Medicare Supplement plan may offer broader provider access for people who want the flexibility to see providers who accept Medicare nationwide. Medicare Advantage may appeal to people who are comfortable using a plan network and want benefits bundled into one plan. The best fit often depends on your health needs, budget, travel habits, and preferred doctors.
How can you avoid unexpected excess charges?
You may be able to lower the chance of an unexpected bill by taking a few simple steps:
- Ask whether the provider accepts Medicare assignment before making an appointment.
- Use Medicare’s provider search tools to look for doctors who accept Medicare.
- Ask the office to explain any expected patient costs before a scheduled service.
- Review your Medicare Summary Notice to check how claims were processed.
- Consider whether a Medigap plan with excess-charge coverage fits your needs.
Part B excess charges may not be a major concern for everyone, especially in areas where most providers accept assignment. But knowing about them can help you compare Medicare coverage with more confidence. If you would like free, no-pressure help understanding how Medigap Plan G, Plan N, or other options may fit your situation, reach out to Eric for personalized guidance.