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How Doctors Work with Medicare

When it comes to Medicare, doctors and other health-care providers have certain options. This article explains what it means to “participate” in Medicare, and other provider relationships with the program. The nature of a provider’s association with Medicare can affect what you pay for health-care services.

Provider participation in Medicare

Providers who treat patients with Medicare coverage might have various contractual agreements with Medicare. Here are some of the categories that relate to how much you might pay for covered services.

Participating doctors and other providers are those who agree to always accept Medicare assignment. This means that they will accept the Medicare-approved amount as full payment for their services. They agree to be paid directly by Medicare, and not to bill Medicare beneficiaries for services except for the Medicare-approved copayment or coinsurance amount. (You may also need to pay a deductible amount before Medicare or your Medicare plan pays for services.)

A participating doctor or other provider will charge Medicare for the appropriate portion of the Medicare-approved cost, and send his or her claim to Medicare. As a Medicare beneficiary, you typically pay a standardized portion of the Medicare-approved amount; for example, your portion is 20% for many services covered under Medicare Part B.

Non-participating doctors and other providers can either choose to accept Medicare assignment or not. If a provider accepts assignment, your out-of-pocket costs are generally the same as with participating providers (above). If the provider doesn’t accept assignment, in most cases he or she is allowed to charge no more than 15% above the cost of the Medicare-approved cost of the service. This additional charge is also known as a Medicare limiting charge. However, the limiting charge may not apply to medical equipment and supplies.

Here’s an example to illustrate how seeing a provider who doesn’t accept Medicare assignment may affect you. Suppose you visit such a provider and receive a Medicare-covered service that would normally require you to pay 20% of the Medicare-approved amount. Because your provider doesn’t accept Medicare assignment, you could pay up to 115% (100% + 15%) of the Medicare-approved amount.

A Medicare Supplement (or Medigap) plan might help pay for Medicare out-of pocket costs, such as copayments, coinsurance, and Medicare Part B excess charges. Although Medigap plans are standardized in most states, coverage details vary among plans – as do cost and availability. Feel free to use our Medicare Supplement plan comparison tool to find a Medigap plan in your area with the cost coverage you need to pay for services received by participating and non-participating doctors.

Doctors and other providers who have “opted out” of Medicare are allowed to charge self-determined costs for services. They are not allowed to bill Medicare or any Medicare-related insurance plans. If a Medicare beneficiary sees a doctor who has opted out of Medicare, the entire bill becomes the responsibility of the patient, unless the patient has health insurance other than Medicare that might cover the visit.

It is important to note that doctors are not required to accept the Medicare program; even if doctors sometimes accept Medicare assignment, they are not obligated to take every patient, unless they’re participating providers.

How Medicare sets reimbursement rates

If your provider does accept Medicare assignment, 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 its providers should be paid for the health-care 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: the doctor’s work, the relative practice expenses, and any applicable professional liability insurance. The reimbursement fee is then adjusted for the geographical location in which the service is provided.

The Center for Medicare & Medicaid Services (CMS) uses input from a committee to help set provider payment rates. 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.

Check whether your doctors participate in Medicare

What you pay in Medicare out-of-pocket costs may be higher if you visit a doctor who doesn’t accept Medicare assignment or who opted out of Medicare.

You may want to double-check to see if your current doctors still accept Medicare assignment (either as participating or non-participating providers). If your provider is no longer accepting Medicare assignment, or you would like to explore other health-care provider options, visit Medicare’s health-care provider directory for Medicare-assigned doctors in your area.