If you’ve been shopping for Medigap plans, you may have discovered that a couple of them (Plan G and Plan F) cover something called “Part B Excess Charges.” If you’re not sure what excess charges are, you’re not alone. Fortunately, they’re a rather rare occurrence for most Medicare beneficiaries.
Nonetheless, it’s important to understand how Part B excess charges work and how they might affect your out-of-pocket healthcare expenses. Here’s what you need to know.
Part B Excess Charges Defined
Doctors and other healthcare providers can choose whether or not to participate with Medicare. Providers who participate with Medicare agree to charge you only the Medicare-approved amount for their services. In essence, they agree to accept the Medicare amount as payment in full for covered services.
This is also called “accepting Medicare assignment.”
What is Medicare Assignment?
When a provider accepts Medicare assignment rates, it means that provider won’t bill you above the Medicare-allowable rate by a participating provider.
Providers who don’t participate in Medicare can bill you up to 15% more than the Medicare allowable amount at their discretion. This additional amount is considered a Part B excess charge. You will have to pay it out-of-pocket unless you have a Medigap plan that includes benefits for Part B excess charges.
There are other advantages to choosing a participating provider, aside from avoiding Part B excess charges, if you have Medicare:
- They agree to collect only your Part B deductible and/or coinsurance amount at the time of service. Most wait until Medicare has paid its share to bill you. Nonparticipating providers can collect payment in full upfront.
- They must submit your claim to Medicare for you and at no cost to you. Nonparticipating providers, on the other hand, may not bill Medicare, so you have to file a claim yourself to get reimbursed.
How Might Part B Excess Charges Affect You?
Suppose you see a nonparticipating dermatologist for removal of a few suspicious moles. If the Medicare allowable charge for this procedure is $400, the dermatologist could bill you $460. Assuming you’ve met your Part B deductible already, your out-of-pocket costs for the procedure would be $140. This is your 20% coinsurance amount of $80 plus the 15% Part B excess charges of $60. With a participating provider, your out-of-pocket expenses would be just $80.
Note that excess charges do not go towards your Part B deductible.
Statistics suggest that as many as 95% of primary care providers accept assignment. A slightly smaller number of specialist physicians accept it as well. Not all nonparticipating providers will add Part B excess charges if you don’t have a Medigap plan, so you may only rarely see Part B excess charges.
That said, however, there is no limit on the number of times a nonparticipating doctor can add excess charges to your bill. So, if you regularly see a provider who doesn’t accept assignment, you could easily pay hundreds of dollars in excess charges each year.
Also, if you see a doctor who accepts Medicare assignment, but Medicare doesn’t accept the claim for the service billed, the doctor can charge you more than Medicare’s approved price. However, if an Advance Beneficiary Notice (ABN) isn’t signed, you may not be responsible for these charges. Note that ABNs are not required for services never covered by Medicare.
What Can You Do to Protect Yourself Against Part B Excess Charges?
The easiest way to protect yourself from excess charges is to only use physicians who accept Medicare assignment. Then you know you will never be billed more than Medicare allows for your healthcare services. It’s always a good idea to ask your doctor if he or she accepts assignment before you make an appointment. Don’t forget you need to ask the same question of any Medicare provider, such as lab facilities, home health care companies, etc.
You can also find providers in your area that participate with Medicare using the Medicare.gov physician locator tool.
Of course, you can also avoid paying excess charges out-of-pocket by buying a Medigap plan that pays them for you. Currently both Plan F and Plan G include this benefit.
Some States Prohibit Part B Excess Charges
Some states have taken matters into their own hands when it comes to protecting seniors against excess charges. The following states passed laws prohibiting healthcare providers from charging Medicare beneficiaries anything higher than the Medicare allowable rate:
- Connecticut (if you are a member of CONNMAP/QMB)
- Rhode Island
- New York
People in these states then, might also consider Medigap Plan N, which has similar benefits to Plan G. One big difference is that Plan N does not cover excess charges, so the premiums for Plan N are lower.
If you live in a state that doesn’t allow excess charges, Plan N might appeal to you. Just remember that when you are out of state, you need to ask the assignment question to providers.