Providers either accept Medicare (basically saying they are in-network with Medicare) or they do not accept Medicare. When providers participate with Medicare, it’s called “accepting assignment,” meaning they agree to charge you only the Medicare-approved amount for their services (Source).
Providers who accept Medicare assignment agree to charge you only the Medicare deductible and coinsurance amount and usually wait for Medicare to pay its share before asking you to pay your share. They [also] have to submit your claim directly to Medicare and can't charge you for submitting the claim” (Source). Medicare then pays 80% and you receive a bill for 20%.
Providers that do not accept assignment are able to bill up to an additional 15% over the Medicare-approved payment for the service. This is sometimes referred to as “Part B excess charge,” “balance billing” or a “limiting charge.”
“Doctors who don’t accept assignment can also ask you for full payment at the time of service. You may have to undergo the reimbursement process on your own if you want Medicare to pay its 80 percent share” (Source). This is rare, as most providers (97%) in the US accept Medicare. It isn’t common, but if it happens you could be on the hook for a lot of extra money.
Original Medicare does not cover excess charges, but some of the Supplemental Plans do. Many people in an attempt to save a little money never buy a Supplemental Plan (also known as “Medigap”) and don’t know they are on the hook for not only the 20% coinsurance of Original Medicare but potentially the extra 15% excess charge for going to an “out of network” provider. Being underinsured could result in thousands of dollars of surprise out-of-pocket costs.
If you cannot afford to purchase a Medigap policy, going with a Medicare Advantage plan may be a good alternative. Some Part C Medicare Advantage plans are available at $0 per month now depending on where that person lives and will eliminate the risk of the 15% excess charges on Original Medicare.
It’s important to note that with Medicare Advantage, you would have to go to providers that are in-network as outlined by the Medicare Advantage plan you choose (since these packages are offered by private companies and vary in which providers they work with).
Why Would I Need to Worry about Excess Charges?
People who already see a provider that does not accept Medicare assignment and want to continue seeing that provider might consider selecting the Supplemental Plan/Medigap Plan G. It is the most comprehensive Medigap plan available to people who are New to Medicare after Jan 1st 2020. Unlike Medigap Plan N, Plan G does cover Part B excess charges.
Do Most Providers Bill Excess Charges at this time?
At the time of this writing it is very rare for a Medicare provider to even be able to bill Medicare Excess charges as described above as about 97% of healthcare providers in the country accept Medicare assignment.
That being said, It doesn’t mean that down the road that will continue to be true. Buying a Medigap plan G is only about $20-$30 more per month in most areas than Plan N. For the small difference in price the added coverage for Excess charges could very well be worth it to ensure no surprise out of pocket costs down the road.
(*Plan F also covers excess charges, but it is no longer available to new enrollees after January 1, 2020. If you already have Plan F, however, you can keep it. That being said plan F usually costs people hundreds of dollars more per year in premium just to have the small Medicare part B deductible paid by the plan. If you have a plan F you may want to consider pricing out the cost savings of Plan G .)
*Be aware that the limit of the excess charge not being allowed to be higher than 15% more than the Medicare cost “doesn't apply to some supplies and durable medical equipment” (Source).
One Additional Note:
As of 2022, 8 states have laws preventing health care providers from not accepting assignment. In other words, all health care providers in those states must accept Medicare and cannot charge excess charges. These states are:
Ohio
Vermont
New York
Minnesota
Connecticut
Rhode Island
Pennsylvania
Massachusetts
If you live in one of these states listed above and have a Medigap Plan G, you may be paying for extra coverage you do not need.