The world of Medicare has many parts and words that can be difficult to understand. Medicare Part B excess charges can especially be confusing since Part B is supposed to cover the costs of outpatient services. Don’t worry, we’re here to explain it all simply!
Medicare Part B excess charges are additional costs that you’ll need to pay if your healthcare provider charges more than the Medicare-approved amount for a service. We’ll break down exactly what “Medicare-approved amount” means and how excess charges work in this article.
Before we get into excess charges, we’ll explain what your Medicare Part B covers so you can understand the full picture. Original Medicare includes two parts: Part A and Part B. Part A covers services that occur in an inpatient setting. Medicare Part B covers medically necessary services and preventative services in an outpatient setting—anywhere you would typically receive medical care like a doctor’s office and healthcare facility. Here are a few examples of what services Part B covers:
Part B pays 80% of the Medicare-approved amount for these services, leaving 20% of the remaining charges for you to cover out of pocket. We’ll discuss this more in detail later.
Medicare determines an amount of money that it will pay for for a particular service or item. This is called a Medicare-approved amount. If your provider accepts Medicare assignment, they’ll charge no more than the Medicare-approved amount. Some healthcare providers, however, will charge more than the Medicare-approved amount for their services.
Providers can choose not to accept the assignment for a service, which means that they don’t agree to the Medicare-approved amount as full payment. When this occurs, providers can charge up to 15% over the Medicare-approved amount. You’re responsible for paying 100% of these excess charges out of pocket.
Let’s take a look at an example to see Part B excess charges work in action:
You need to see a specialist for a consultation about a health concern covered by Medicare Part B. Your provider does not accept Medicare assignment and charges $120, but the Medicare-approved amount is $100 for the consultation. If your provider bills you the maximum additional cost of 15%, you would have to pay $15 in excess charges (since 15% of $100 is $15).
In this scenario, you would be responsible for paying the $15 excess charge in addition to any deductible or coinsurance costs.
Not all healthcare providers choose to charge excess fees, and some states have laws that limit or prohibit excess charges, so the rules can vary depending on your location. There are eight states that allow Medicare Part B excess charges:
To avoid unexpected charges, you should always check if your healthcare provider accepts Medicare assignment before scheduling an appointment or undergoing treatment. There are other ways to avoid or minimize Medicare Part B excess charges, like with a Medigap plan, which we’ll explain below.
Medicare Supplement plans, also called Medigap plans, help cover the remaining 20% of out-of-pocket costs that Original Medicare doesn’t cover. You can choose from 10 different Medigap plans that cover different out-of-pocket expenses. Medigap Plan F and Medigap Plan G are the only Medigap plans that provide coverage for Part B excess charges. Note that Plan F is not available for many people who are new to Medicare—you’re only eligible for this plan if you turned 65 before January 1, 2020.
Signing up for either of these plans is a good way to ensure that you don’t pay excess charges. If you have a Medicare Advantage plan, there are some plans that include an annual out-of-pocket spending limit for Part B services. This could ensure that you don’t pay an excess charge once you reach a spending limit.
Of course, you can always contact your healthcare provider ahead of time and make sure that they accept Medicare assignment. You can also get in touch with your insurance to see which healthcare facilities or providers accept the assignment for a service or item you need.
Medicare Part B excess charges are one of many fine details within the Medicare landscape. It’s normal for Medicare beneficiaries to have questions about coverage and costs because there are a lot of differences between coverage types. Let a licensed Medicare Advisor at Chapter simplify your coverage and help you get the most out of your benefits. Call 855-900-2427 or schedule a chat today to get started.