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Medicare beneficiaries may be hit with Medicare Part B excess charges when they receive health care services or access durable medical equipment (DME) from providers who don’t accept Medicare assignment. While most physicians and medical facilities accept Medicare assignment - the Medicare-approved amount - as full payment for their services, those who don’t are allowed to charge up to 15% more. This additional charge above the Medicare-approved amount is called a Medicare Part B excess charge. In order to avoid these fees, kupuna on Medicare should confirm that the health care provider or DME supplier accepts Medicare assignment before receiving services or renting/purchasing products. The other option is to enroll in a Medigap plan that covers the excess charges.
What are Medicare Part B excess charges vs regular Part B charges?
Medicare Part B is medical insurance that covers outpatient medical care such as doctor’s visits and DME. It comes with a monthly premium and deductible. In 2022 the standard monthly premium is $170.10 and the deductible is $233. After enrollees meet their deductible, they typically pay 20 percent coinsurance of the Medicare-approved amount for outpatient services and durable medical equipment.
Some healthcare providers accept Medicare insurance but choose not to accept Medicare assignment, in some cases because the Medicare-approved reimbursement amount is lower than what they charge for the treatment. Part B excess charges are only assessed when patients visit a health provider or DME supplier that doesn’t accept Medicare assignment.
The good news is that Part B excess charges are not very common because about 95% of healthcare providers, physicians, and medical suppliers accept Medicare assignment. The remaining 5% who don’t accept it are limited to a 15% surcharge. There are eight states that have laws prohibiting Medicare Part B excess charges but Hawaii is not one of them:
· Connecticut
· Minnesota
· Ohio
· Pennsylvania
· Rhode Island
· Vermont
· Massachusetts
· New York
Here is an example of how Medicare Part B excess charges work:
A Medicare recipient receives medical treatment from a health care provider that does not accept Medicare assignment for a service that has a Medicare approved amount of $200. The doctor can then charge up to an additional 15% over that amount, increasing the total to $230.
Assuming that the patient has met their Part B deductible for the year, they will be responsible for a 20% coinsurance of the Medicare-approved amount plus the full excess charge. In this case that would be $40 coinsurance + $30 excess charge for a total out-of-pocket expense of $70. If that same service had been received by a healthcare provider who did accept Medicare assignment, the patient responsibility would drop to $40.
Medigap plans that cover Part B excess charges
Apart from checking in advance to make sure that the doctor or DME supplier accepts Medicare assignment, the best way to avoid Part B excess charges is to enroll in a Medigap / Medicare Supplement Insurance plan that covers these charges.
For seniors who are looking for coverage of Part B excess charges, there are two options: Medigap plan F (for beneficiaries eligible before January 1, 2020) and Medigap Plan G.
Medicare Advantage plans (Medicare Part C) do not cover Part B excess charges but they do include an annual out-of-pocket spending limit that could help prevent members from paying Part B excess charges past a certain amount.
Contact a licensed Medicare insurance agent for help choosing the right Medicare Advantage plan or Medigap plan for you.
Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.
At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.