Why Some Doctors Charge You More for Medicare

What is the Limiting Charge?

Your Medicare billing can be complicated. Knowing how your doctors charge for services can help you get the best deal.
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Not every doctor accepts Medicare. Even for those who do, they do not all play by the same rules. That includes how much they will charge you for their services. Knowing what to look for when you choose your doctor may save you money.

Doctors Who Opt-Out of Medicare

First things first, does your doctor take Medicare? To do so, your doctor needs to opt-in for Medicare.

That means he agrees to accept Medicare as your insurance and agrees to service terms set by the federal government.

Because of increased bureaucracy and administrative demands, more and more doctors are opting out of Medicare. In 2010, only 130 doctors opted out of Medicare but the number gradually increased each year, until it reached a high of 7,400 in 2016. Although the number decreased to 3,732 in 2017, this may not be an accurate estimate. It once was the case that a doctor had to opt-out every two years. Starting in 2015, an opt-out request can last indefinitely. This could have affected the number of opt-out affidavits counted in 2017.

If your doctor does not accept Medicare for payment, then you could be in trouble. In the case of a true medical emergency, he is obligated to treat you. Outside of that, you will be expected to pay for his services out of pocket. This can get expensive quickly.

It is obviously in your best interest to choose a doctor that opts-in for Medicare. That may not always be able to do if there is a doctor shortage in your area.

Doctors Who Opt-In and Agree to the Medicare Fee Schedule

Using a doctor that accepts your insurance will save you money but how can you maximize those savings?

Doctors that accept Medicare for payment fall into two categories. Those that "accept assignment" and those that do not.

Every year, the Centers for Medicare and Medicaid (CMS) puts out a recommended physician fee schedule. Doctors who agree to this fee schedule "accept assignment" and are called participating providers. They agree not to charge you more than the recommended amount for any given service. Preventive screening tests are free to you when they are ordered by a participating provider. 

Doctors Who Opt-In and Charge You More

Doctors who do not accept assignment, on the other hand, believe their services are worth more than what the physician fee schedule allows. These non-participating providers will charge you more than other doctors.

Medicare has set a limit on how much those doctors can charge. That amount is known as the limiting charge. At the present time, the limiting charge is set at 15 percent. Doctors who charge more than the limiting charge could potentially be removed from the Medicare program.

For example, if the fee schedule lists a service for $100, the doctor could bill you up to $115 dollars. Medicare will pay towards the $100 portion of the bill and the doctor will bill you separately for $15.

Sadly, the limiting charge only extends to healthcare providers. Non-participating suppliers of medical equipment, meaning they do not "accept assignment" or agree to the fee schedule, can charge you as much as they want. This is the case even if the doctor who prescribed that equipment accepted assignment. It is in your best interest to shop around for medical supply companies that provide the best costs and customer service.

Incentives for Doctors

What is to stop all Medicare providers from not participating? Wouldn’t the limiting charge help them make more money? The answer is simple. Doctors are incentivized by Medicare to participate in the fee schedule.

Medicare will cover 100 percent of the recommended fee schedule amount for participating providers but only 95 percent for non-participating providers. Put simply, for every $100 of services, a non-participating provider will lose $5 from Medicare.

Though a doctor could bill an extra $15 with a limiting charge, this would at best be a $10 profit. A doctor has to weigh whether or not his patient population would be able to afford the added cost or if more money could be lost in bad debts and collection costs.

Other benefits for participating providers include:

  • Free preventive screening. While the doctor still receives payment from Medicare for his care, Medicare beneficiaries pay no out of pocket costs.
  • Faster processing of Medicare claims. The government is notorious for slow response times. Hastening reimbursement is a significant benefit for any medical office.
  • Medicare directories. Medicare promotes participating providers to senior organizations and to anyone who asks for their directory.

How Much You Will Pay

Some preventive screening tests are free to you when you receive care through a participating provider. The rest of the time, Medicare pays 80 percent of the recommended cost and you pay a 20 percent coinsurance.

 

Participating Providers

Non-Participating Providers

Physician Fee Schedule Amount$100$100

Limiting Charge

N/A

$15

(maximum 15 percent)

How Much the Doctor Can Charge$100$115
How Much Medicare Pays

$80

(80 percent standard Medicare payment)

$76

(95 percent of the 80 percent standard Medicare payment)

How Much You Will Pay

$20

(20 percent coinsurance)

$34

($19 [95 percent of your standard 20 percent coinsurance] + $15 limiting charge)

Understanding how the system works will help you to make the most of your dollars. The table above outlines the cost breakdown if you received the same $100 service from a participating and a non-participating provider.

A Word from Verywell

Health care is expensive enough without your having to worry about your doctor charging you more. The services you receive from any doctor in the Medicare program is the same but you have the advantage of getting free preventive care and could be charged less for your other services if you choose one who "accepts assignment". Find a participating Medicare provider and reap the benefits.

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