Why Some Healthcare Providers Charge You More for Medicare

What Is the Limiting Charge?

Not every medical professional 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.

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Healthcare Providers Who Opt-Out of Medicare

First things first, does your healthcare provider take Medicare? To do so, your practitioner 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.

In 2010, only 130 healthcare providers 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 medical professional had to opt-out every two years. Starting in 2015, an opt-out request can last indefinitely. This could have affected the number of new opt-out affidavits counted in 2017. Today, fewer than 1 percent of physicians opt out of Medicare.

If your healthcare provider 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 practitioner that opts-in for Medicare. That may not always be able to do if there is a doctor shortage in your area or if there are limited specialists where you live.

Healthcare Providers Who Opt-In and Agree to the Medicare Fee Schedule

Using a healthcare provider that accepts your insurance will save you money but how can you maximize those savings? Practitioners 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. Practitioners 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. 

The majority of physicians, approximately 97 percent, accept assignment.

Healthcare Providers Who Opt-In and Charge You More

Healthcare Providers 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 practitioners can charge. That amount is known as the limiting charge. At the present time, the limiting charge is set at 15 percent, although some states choose to limit it even further. This charge is in addition to coinsurance. Healthcare providers 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 practitioner could bill you up to $115 dollars. Medicare will pay towards the $100 portion of the bill and the healthcare provider 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 healthcare provider who prescribed that equipment accepted assignment. Not limiting how much a medical supplier can charge, unfortunately, results in millions and even billions of dollars lost to Medicare fraud. In 2019, the U.S. Department of Justice uncovered one of the largest Medicare fraud schemes in history. Legal action has since been taken against 130 durable medical companies that submitted over $1.7 billion in claims and were paid over $900 million by Medicare. It is in your best interest to shop around for medical supply companies that not only provide the best costs and customer service but that are also legitimate.

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. Healthcare providers 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. If a physician chooses to not adhere to the fee schedule, they have the choice of accepting or rejecting assignment on Medicare claims as they are received. If they accept, the 95% of the Medicare Physician Fee Schedule is divided into the beneficiary's 20% copayment and the physician's reimbursement from Medicare (80% of the approved amount).

Though a healthcare provider could bill an extra $15 with a limiting charge, this would at best be a $10 profit. A practitioner 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 healthcare provider 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
(maximum 15 percent)
How Much the Healthcare Provider Can Charge $100 $115
How Much Medicare Pays
(80 percent standard Medicare payment)

(95 percent of the 80 percent standard Medicare payment)
How Much You Will Pay
(20 percent coinsurance)

($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.

Medigap Plans

If you are are Original Medicare (Part A and Part B), you have the option to sign up for a Medicare Supplement plan, also known as Medigap. Medigap plans F and G will pay any limiitng charges for you.

A Word from Verywell

Health care is expensive enough without your having to worry about your healthcare provider charging you more. The services you receive from any practitioner 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.

11 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. MedicareInteractive.org. Participating, non-participating, and opt-out providers.

  2. Kaiser Health News. CMS sees sharp drop-off in number of doctors dropping out of Medicare.

  3. How Many Physicians Have Opted-Out of the Medicare Program? KFF. Published October 22, 2020.

  4. Centers for Medicare and Medicaid Services. Physician fee schedule.

  5. Medicare.gov. Preventive and screening services.

  6. MedicareInteractive.org. Limiting charge.

  7. Medicare.gov. Durable medical equipment (DME) coverage.

  8. The United States Department of Justice. Federal indictments & law enforcement actions in one of the largest health care fraud schemes involving telemedicine and durable medical equipment marketing executives results in charges against 24 individuals responsible for over $1.2 billion in losses.

  9. American Academy of Otolaryngology - Head and Neck Surgery. Provider participation in Medicare.

  10. Medicare.gov. Find and compare doctors, hospitals, and other providers.

  11. Department of Health and Human Services Center for Medicare and Medicaid Services. Your Medicare benefits.

By Tanya Feke, MD
Tanya Feke, MD, is a board-certified family physician, patient advocate and best-selling author of "Medicare Essentials: A Physician Insider Explains the Fine Print."