All About Medicare Part B Excess Charges

Who Is This Article For?

This article is for anyone who is on Original Medicare with a Medicare supplement that does NOT cover Medicare Part B excess charges, for example, Plan N. Plan N does not cover Medicare Part B excess charges so it is important to understand what they are and how to avoid them. As it turns out, it's pretty easy to avoid Medicare Part B excess charges. (We will refer to them simply as "excess charges" for the remainder of this article.)

If you're on a Medicare Advantage plan or on Original Medicare with a Medicare supplement that covers Part B excess charges (e.g., Plan F, Plan G), this article is not for you.

What are Medicare excess charges? 

When providers go into practice, they have to decide if they will see Medicare patients or not. If they decide to see Medicare patients, they have to decide if they will accept the Medicare fee payment schedule as payment in full or not. If they decide to accept the Medicare fee payment schedule as payment in full, they are referred to as "participating" providers and cannot charge excess charges.

If a provider agrees to treat Medicare patients but will not accept "assignment" (meaning, what Medicare is willing to pay for services), they are considered "non-participating" (non-par, in Medicare speak). Medicare allowable charges for non-par providers are 5% less than for participating providers, and the provider is permitted to bill the patient no more than 15% on top of what Medicare allows. Here's a payment example:

• Let's assume a $100 Medicare-authorized service that is not an office visit. The Medicare allowable amount would be 5% less , or $95 to a non-par provider.

• Of that $95 allowable amount, Medicare would pay 80%, or $76 directly to the provider, leaving the patient to pay the $19 balance. Both Plan G and Plan N would pay the $19 balance in full.

• The non-par provider is permitted to bill the patient an additional 15% of the $95 allowable charge, or $14.25. Plan G would pay the $14.25 Medicare excess charge in full. Plan N would not pay the $14.25 Medicare excess charge leaving the patient to pay it out-of-pocket.

Is the fact that Medicare excess charges are not covered by Plan N a serious financial risk?

No. The MedPac March 2024 Report to Congress: Medicare Payment Policy gives a clear answer to this question. Note that in the following quote, the reference to "balance bill" refers to Medicare excess charges in this context. Quoting the report on page 99 (bold text ours):

CMS administrative data also confirm that a high share of clinicians accept Medicare. In 2022, 98 percent of clinicians billing the physician fee schedule were participating providers, meaning that they agreed to accept Medicare’s fee schedule amount as payment in full. Clinicians who wish to collect somewhat higher payments (...) can “balance bill” patients for additional cost sharing if they sign up as a nonparticipating provider and choose not to “take assignment” on a claim, but very few clinicians choose this option...

Do my doctors accept Medicare assignment?

Excellent question! And it's a simple matter of looking up your doctors at the online lookup provided by the official Medicare.gov website: Medicare.gov provider lookup On the doctor's listing page, right under the name, you'll see a dollar sign icon with this message if your doctor accepts Medicare assignment:

Which Types of Doctors are More Likely to Charge Excess Charges?

Mental health providers appear disproportionately represented in one reference, which said more than 40% of the doctors allowed to charge excess charges were in mental health. More rarely: chiropractors, dermatologists, podiatrists, anesthesiologists.

How to Avoid Part B Excess Charges

Learn to look up your doctors on Medicare.gov as describe above under "Do my doctors accept Medicare assignment" above. If you manage to find a doctor that does not accept Medicare assignment, I'd love to know about it. I've been looking up doctors for clients for years and have yet to find one!

But what about anesthesiologists? You have no way of knowing who your anesthesiologist will be for a surgery. So, here's what to do: call the surgery center, explain that you are a Medicare patient and you will only accept an anesthesiologist who accepts Medicare assignment. Make sure they they take note and put it in your records. The odds of this being an issue are very small. Even if there is an excess charge, the actual charge is statistically likely to be a modest amount, enough to irritate you but not enough to bankrupt you.

Where Excess Charges Absolutely Do Not Happen

The following situations will never trigger an excess charge:

1. Any billing related to a hospital or facility stay. Hospital and facility stays are covered under Medicare Part A. Excess charges happen only under Medicare Part B.

2. Any billing related to a provider that accepts Medicare assignment (a "participating" provider)

3. Any care received in a State that has banned Medicare excess charges: Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, Vermont

Concluding Thoughts

There are all sorts of nuances in selecting Medicare coverage, and that's why you should work with a qualified, local, independent Medicare agent. Please don't hesitate to contact me for Medicare Supplement quotes or to answer any questions you may have: contact me here