Original Medicare consists of Part A, which covers hospital services, and Part B, which covers outpatient services like doctor visits and medical equipment. Medicare establishes an approved amount it will pay for each Part B service. However, providers who do not accept Medicare assignment can charge up to 15% over this amount, known as excess charges. These extra costs fall to the beneficiary to pay out of pocket. Fortunately, some states prohibit excess charges to protect Medicare beneficiaries.
What Are Medicare Excess Charges?
Medicare excess charges refer to the additional amount above the Medicare-approved payment rate that non-participating providers may bill patients. Here is how it works:
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Medicare sets a limit on what it will pay for each medical service or item under Part B based on location and type. This is called the Medicare-approved amount.
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Providers who agree to accept assignment bill Medicare directly and accept the Medicare-approved amount as full payment.
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Providers who do not accept assignment can charge up to 15% over the Medicare-approved amount. This additional charge is what is known as excess charges.
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As a patient, you are responsible for paying 100% of any excess charges billed by the provider. These amounts do not count toward your Medicare Part B deductible or out-of-pocket maximum.
Excess charges could potentially cost thousands of dollars depending on the services received. However, some states prohibit excess charges to protect Medicare beneficiaries.
States That Do Not Allow Excess Charges
The following eight states have laws banning Medicare providers from charging excess fees above the Medicare-approved amount:
- Connecticut
- Massachusetts
- Minnesota
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Vermont
This means providers in these states must accept Medicare assignment. They cannot bill Medicare patients above the Medicare-approved rate, even if they are non-participating providers who opt out of Medicare.
Beneficiaries in these states will never face excess charges for Part B services. However, the protection does not apply for medical treatment received outside of the state.
States That Allow Excess Charges
Medicare providers in the remaining 42 states and Washington D.C. can legally bill excess charges if they do not accept Medicare assignment. This impacts beneficiaries in:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Michigan
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- North Carolina
- North Dakota
- Oklahoma
- Oregon
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
In these states, providers may choose to accept assignment or not. Those who do not accept Medicare assignment maintain the right to balance bill up to the 115% excess charge limit.
Beneficiaries in these states face greater risk for excess charges. But there are still steps they can take to avoid surprise billing.
How to Avoid Excess Charges
Beneficiaries in states that allow excess charges have a few options to avoid paying extra:
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Ask providers upfront if they accept assignment – Know the billing practices of your doctor or supplier before receiving care. Those who accept assignment cannot excess bill.
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Look for providers who participate with Medicare – Participating providers have signed agreements to always accept assignment. Search for a participating doctor or hospital near you.
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Get a Medigap plan – Medigap Plan F and Plan G both cover 100% of Medicare excess charges from non-participating providers. Plan F is only available to those eligible for Medicare before 2020.
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Use doctors who opt out of Medicare – Opt-out providers are not allowed to balance bill patients. However, traditional Medicare will not cover services. You would need a private contract.
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Go out of state – Visiting Connecticut, Massachusetts, Minnesota, or another state prohibiting excess charges removes the risk entirely.
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Appeal excess charges – If billed, appeal to Medicare and your state insurance department arguing the charges are prohibited or unreasonable.
While most providers accept Medicare assignment, it helps to be proactive if you live in a state allowing excess billing. Avoid surprise medical bills by partnering closely with your providers and Medicare.
Understanding Excess Charges Protection by State
To summarize the protection by state:
States Prohibiting Excess Charges
These 8 states ban excess charges entirely under state law:
- Connecticut
- Massachusetts
- Minnesota
- New York
- Ohio
- Pennsylvania
- Rhode Island
- Vermont
Beneficiaries in these states will never face excess charges from in-state providers. But out-of-state providers can still excess bill.
States Allowing Excess Charges
The remaining 42 states and Washington D.C. allow providers to impose excess charges if they do not accept Medicare assignment:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Michigan
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- North Carolina
- North Dakota
- Oklahoma
- Oregon
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Beneficiaries in these states risk paying more for health services unless their provider accepts assignment. Proactive navigation of Medicare is advised.
Avoiding Surprise Medical Bills
Medicare excess charges can lead to unexpected medical bills for thousands of dollars in states that allow the practice. But being an informed Medicare beneficiary can help you steer clear of excess fees and maintain a budget-friendly healthcare experience.
Know your state’s rules on provider billing, research physician payment practices ahead of visits, and protect yourself further with supplemental coverage like Medigap. Saving money on healthcare starts with understanding your Medicare protections.
Medicare-Excess-Charges-Are-Dead
FAQ
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