Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
If you're on original Medicare (Medicare Part A & Part B), and go to a doctor and that doctor does not accept Medicare assignment (accepting the Medicare-approved amount as payment in full), the doctor reserves the right to bill you an "excess charge". An excess charge is an amount up to 15% above and beyond the medicare-approved amount for the services provided by the doctor.
For each type of service, examination, procedure, etc., Medicare has an approved amount they deem as a reasonable and customary charge - this is known as the "Medicare-approved amount". If the doctor accepts assignment, they are accepting the Medicare-approved amount as payment in full for services provided. If the doctor does not accept assignment, they can bill you an excess charge.
For example, if you had an exam completed that they billed $500 for. Medicare says that a reasonable and customary charge is $400. This means that Medicare will pay $400 for the exam that was completed. If the doctor accepts assignment, they take the $400 as payment in full. If they do not accept assignment, they can bill you up to 15% of that $400 amount as an excess charge. In this example, the doctor could bill you for another $60 ($400 x 15% = $60).
If your Medigap plan covers excess charges, the Medigap insurance carrier will pay it for you. If the plan does not cover excess charges, you will be responsible for the payment of the excess charge.
The two Medigap plans that cover excess charges are plans F and G. All of the other Medigap plans do not offer this benefit. So if you'd like to have this benefit and do not already have a plan F or plan G, you may want to consider applying for one with a carrier. Remember, Medigap plans are standardized, so the only difference between insurance companies Medigap plans are the price they charge for it.
Please note, certain states do not allow excess charges (due to the Medicare Overcharge Measure law). The states that do not allow excess charges are Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island and Vermont. If you live in one of these states, then the Medicare Part B excess charge benefit of Medigap plans F and G will not be major concern unless you move out of the state. Please note, those living in these states may want to consider Medigap plans C and D for price comparison to Medigap plans F and G as they provide the exact same coverage, just without the excess charge benefit, and may provide you some savings on your premiums.
I hope the information is helpful - please feel free to contact me for help with your coverage and if you have any other questions. Thanks very much.
There is much misinformation spread about this topic. The former answer at least implies that a doctor can just "decide" whether to accept Medicare assignment or not. It is important to understand that this is only true if a doctor has signed a non-participating agreement with Medicare. Most doctors (approx. 97%) are contracted with Medicare as "participating physicians", and as such must accept Medicare assignment, i.e. the Medicare approved amount for the service as payment in full. Participating physicians are not permitted to bill any Part B excess charges.
Next, the former example given is simply incorrect: "if you had an exam completed that they billed $500 for. Medicare says that a reasonable and customary charge is $400. This means that Medicare will pay $400 for the exam that was completed. If the doctor accepts assignment, they take the $400 as payment in full. If they do not accept assignment, they can bill you up to 15% of that $400 amount as an excess charge. In this example, the doctor could bill you for another $60 ($400 x 15% = $60)."
The truth is that if the doctor is contracted as "non-participating" with Medicare and chooses not to accept assignment, they are first penalized 5% of the Medicare approved amount ($400 x 5% = $20 penalty). Medicare will only reimburse $380 for this example ($400 - $20 penalty). The doctor can bill you up to 15% of the $380 as an excess charge in this example, or $57. In not accepting assignment, the doctor may bill/collect $437 ($380 Medicare reimbursement + $57 excess charge). This gives the doctor the opportunity to receive $437 instead of the $400 Medicare assignment, which in effect is a 9.25% increase in revenue.
Non-Participating physicians can decide whether to accept Medicare assignment on a case by case basis, and often do accept assignment, because if they do not, Medicare reimburses the claim to the beneficiary (consumer), and the physician then must collect the reimbursement and the excess charge from the consumer in full. This adds administrative and collection costs that many non-Par physicians do not want to deal with.
The former answer states that If you live in one of the states banning Part B excess charges, then the Medicare Part B excess charge benefit of Medigap plans F and G will not be major concern unless you move out of the state. But the truth is that Part B excess charges are not a concern, let alone a major concern, regardless of what state you are living in. For the reasons stated, Part B excess charges are rarely billed. Ask any Medicare beneficiary when was the last time they received a claim payment directly from Medicare (required if doctor was non-Par and refused assignment). You will be hard pressed to find anyone answering yes.
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For each type of service, examination, procedure, etc., Medicare has an approved amount they deem as a reasonable and customary charge - this is known as the "Medicare-approved amount". If the doctor accepts assignment, they are accepting the Medicare-approved amount as payment in full for services provided. If the doctor does not accept assignment, they can bill you an excess charge.
For example, if you had an exam completed that they billed $500 for. Medicare says that a reasonable and customary charge is $400. This means that Medicare will pay $400 for the exam that was completed. If the doctor accepts assignment, they take the $400 as payment in full. If they do not accept assignment, they can bill you up to 15% of that $400 amount as an excess charge. In this example, the doctor could bill you for another $60 ($400 x 15% = $60).
If your Medigap plan covers excess charges, the Medigap insurance carrier will pay it for you. If the plan does not cover excess charges, you will be responsible for the payment of the excess charge.
The two Medigap plans that cover excess charges are plans F and G. All of the other Medigap plans do not offer this benefit. So if you'd like to have this benefit and do not already have a plan F or plan G, you may want to consider applying for one with a carrier. Remember, Medigap plans are standardized, so the only difference between insurance companies Medigap plans are the price they charge for it.
Please note, certain states do not allow excess charges (due to the Medicare Overcharge Measure law). The states that do not allow excess charges are Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island and Vermont. If you live in one of these states, then the Medicare Part B excess charge benefit of Medigap plans F and G will not be major concern unless you move out of the state. Please note, those living in these states may want to consider Medigap plans C and D for price comparison to Medigap plans F and G as they provide the exact same coverage, just without the excess charge benefit, and may provide you some savings on your premiums.
I hope the information is helpful - please feel free to contact me for help with your coverage and if you have any other questions. Thanks very much.
Next, the former example given is simply incorrect: "if you had an exam completed that they billed $500 for. Medicare says that a reasonable and customary charge is $400. This means that Medicare will pay $400 for the exam that was completed. If the doctor accepts assignment, they take the $400 as payment in full. If they do not accept assignment, they can bill you up to 15% of that $400 amount as an excess charge. In this example, the doctor could bill you for another $60 ($400 x 15% = $60)."
The truth is that if the doctor is contracted as "non-participating" with Medicare and chooses not to accept assignment, they are first penalized 5% of the Medicare approved amount ($400 x 5% = $20 penalty). Medicare will only reimburse $380 for this example ($400 - $20 penalty). The doctor can bill you up to 15% of the $380 as an excess charge in this example, or $57. In not accepting assignment, the doctor may bill/collect $437 ($380 Medicare reimbursement + $57 excess charge). This gives the doctor the opportunity to receive $437 instead of the $400 Medicare assignment, which in effect is a 9.25% increase in revenue.
Non-Participating physicians can decide whether to accept Medicare assignment on a case by case basis, and often do accept assignment, because if they do not, Medicare reimburses the claim to the beneficiary (consumer), and the physician then must collect the reimbursement and the excess charge from the consumer in full. This adds administrative and collection costs that many non-Par physicians do not want to deal with.
The former answer states that If you live in one of the states banning Part B excess charges, then the Medicare Part B excess charge benefit of Medigap plans F and G will not be major concern unless you move out of the state. But the truth is that Part B excess charges are not a concern, let alone a major concern, regardless of what state you are living in. For the reasons stated, Part B excess charges are rarely billed. Ask any Medicare beneficiary when was the last time they received a claim payment directly from Medicare (required if doctor was non-Par and refused assignment). You will be hard pressed to find anyone answering yes.