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Doctors and Medicare

Medicare spends over $64 billion a year on doctors and other practitioners. With the upcoming Medicare changes in doctor payments, there will be changes to doctor availability and doctor service costs in relation to the Medicare program.

Doctor Availability and Costs

There are three options for doctors when it comes to Medicare - participating, nonparticipating, and opting-out - that affects availability of doctors covered by Medicare in any particular locale.

Participating doctors are providers who have agreed to "accept assignment", which means that they will accept the Medicare-allowed amount as a full payment for their services. After submitting medical claims to Medicare, Medicare would then determine how much the service costs or the Medicare-allowed amount. A "participating" doctor will charge Medicare for 80% of the Medicare-allowed cost and charge the Medicare beneficiary 20% of that same amount only after a beneficiary's yearly deductible has been met.

Nonparticipating doctors can either choose to accept Medicare assignment or not. If the doctor chooses not to accept assignment, an additional 15% above the cost of the service as determined by Medicare may be charged. This additional charge is also known as a Medicare excess charge. For beneficiaries who see nonparticipating doctors and have reached their yearly deductible, the total out-of-pocket cost would be a maximum of 35% of a Medicare approved charge rather than just 20%.

Medicare Supplement, or Medigap, plans can help pay for the 20% that Medicare does not pay as well as the Medicare excess charge. Use our Medicare Supplement plan comparison tool to find a plan with the cost coverage you need to pay for services received by participating and nonparticipating doctors.

Doctors who have opted out of Medicare are not enrolled in Medicare like participating and nonparticipating doctors. If a doctor has opted out of the Medicare system, they are allowed to charge self-determined costs for services and are not allowed to bill Medicare or any Medicare-related insurance plans. If a patient sees a doctor who has opted out of Medicare, the entire bill is the responsibility of the patient. It is important to note that doctors are not required to accept the Medicare program; even if doctors are enrolled in Medicare, they are not obligated to take every patient.

Determination of Doctor Reimbursement

If your provider does take Medicare, then the services received are, in part, reimbursed through the Medicare program.

Since 1992, the Medicare program has been using a Resource-Based Relative Value Scale (RBRVS) to determine how doctors should be paid for the doctors' services they provide. Instead of being paid on an absolute fee-for-service basis, payments for services through the RBRVS system are relative to the combination of three separate determining factors: doctor's work (52%), relative practice expenses (44%), and professional liability insurance (4%). The reimbursement fee is then adjusted for the geographical location in which the service is provided.

Three times a year, a special committee of doctors meets to discuss recommendations on updates to how much doctors should be paid for their work and other relative values. The committee, also known as the Relative Value Scale Update Committee (RUC), is made up of individuals convened by the American Medical Association (AMA) and other medical-specialty trade groups. Around 90 percent of the recommendations by the RUC are followed by the Center for Medicare and Medicaid Services (CMS), allowing the committee great influence over the billions of taxpayer dollars in the Medicare program.

Medicare Doctor Fee Changes

The fact that Medicare reimbursement rates are significantly lower than other private insurers, many doctors are opting out of Medicare, making the availability of doctors even more complicated for Medicare beneficiaries. All beneficiaries should double check to see if their current doctors are still enrolled with Medicare either as a participating or nonparticipating provider. If your provider is no longer enrolled in Medicare or you would like to explore other healthcare provider options, visit Medicare's healthcare provider directory for doctors taking Medicare payments in your area.

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Medicare Advantage Plans, sometimes called "Part C" or "MA Plans," are offered by private companies approved by Medicare and provide Medicare Part A and Part B coverage. Medicare prescription drug coverage is insurance run by an insurance company or other private company approved by Medicare. A Medicare Supplement plan is a health insurance plan provided by a private company that fills in the "gaps" in original Medicare coverage.

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