Plan N is a fantastic plan that we get asked about a lot. Plan N has premiums that are much lower than other more popular plans. Some clients are concerned about not getting the Medicare Excess Charges covered. That is because, unlike Plan F or G, Plan N does not cover Excess Charges.
I am often asked how those charges work and if they should be concerned about Medicare Excess Charges under Part B. This can be a very complex issue. I will try to make it as simple as possible without boring you with too much math and statistics.
This may be the most telling statistic about Medicare Excess Charges from one of the leading Medicare supplement companies:
In August 2016, Aetna reported that 99.34% of the claims they process have no excess charges. Of the 0.66% of claims that do have Medicare excess charges, the average amount of the charge is less than $20.
**There are some states that do not allow any excess charges to be billed to the Medicare beneficiary. As of 2020, these states include Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont. If you live in one of these states, you can enroll in a Plan N without any concern about having to pay excess charges.
Basically, there are three contract options for physicians when it comes to Medicare:
- Participating agreement (PAR)
- Non-participating agreement (non-PAR)
- Private contracting
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Medicare has approved amounts for medical procedures and practices, also known as “assignment.” Participating (PAR) physicians sign an agreement with Medicare in which they agree to accept assigned costs as payment in full for all covered services for that calendar year. This means they accept the 80% from Medicare and the 20% payment from the patient or patient’s insurance as that full payment. The physician cannot charge the patient any more than the 20%. This participation contract is for the duration of the calendar year. But the physician can go from PAR to non-PAR on an annual basis if they want to.
There are incentives for physicians to be a part of PAR:
- Medicare pays a 5% higher rate to PAR physicians than it does to non-PAR physicians for all services
- Medicare administrative contractors (MAC) provide toll-free claims processing lines to PAR physicians and process their claims more quickly.
- Directories of PAR physicians are provided to senior citizen groups and individuals who request them.
A non-participating physician has the option of whether to accept the Medicare assigned rate for services on a case by case basis. But if that physician does not accept it, the payment is lower.
The Medicare-approved amounts for services provided by non-participating (non-PAR) physicians (the 80% paid by Medicare and the 20% patient responsibility) are set at 95% of the Medicare-approved amounts that are paid to PAR physicians. However, non-PAR physicians are allowed to charge more than PAR physicians. This extra charge is known as the Part B Excess Charge.
Non-PAR physicians are limited to how much they can charge you for services. This amount is set at 15% above the Medicare-approved amount for any given service. Because the Medicare-approved amounts for non-PAR physicians are 95% of the rates for PAR physicians, the 15 percent limiting charge is effectively only 9.25% above the PAR-approved amounts for any given service.
Considering the expenses tied to running a business, especially considering the meager reimbursement that physicians receive from Medicare patients, the endeavor of earning a few extra dollars by opting out of participation in the PAR program proves unworthy. Just a handful of delinquencies, debt collections, or unpaid claims can easily swing the balance towards financial loss.
Private Contracting Physicians
The Balanced Budget Act of 1997 gave physicians and Medicare patients the right to contract privately outside of the Medicare system for health care services. These private contracting decisions cannot be made on a case-by-case basis, though. Once a physician has opted out of Medicare, he cannot submit any claims to Medicare for any patients for a two-year period.
Very few physicians are opting out of Medicare. In fact, on a national level, the number of physicians billing Medicare has continued to rise at the same rate of growth as Medicare enrollment.
Over the past decade, more than 96% of all physicians and clinical professionals have signed participation agreements with Medicare. This means they are accepting Medicare’s payment schedule as payment in full for the services they provide to their Medicare patients.
According to the Center for Medicare and Medicaid Services, as of September 2013, among all US physicians in clinical practice, only 4,863 – less than 1% – have signed affidavits with Medicare informing them that they have “opted out” of the Medicare program completely. These physicians must tell their patients. They must have their patients sign a release stating that they understand the physician has opted out of Medicare. It also must state that Medicare will not pay for any services provided by that physician.
Why is Plan F no longer recommended for Medicare coverage?
The reasons for changing our plan recommendation regarding Medicare coverage include the absence of new enrollees for Plan F after January 1, 2020. This plan, which covers excess charges for Medicare Part B, is no longer available for newly eligible Medicare beneficiaries. The change aims to encourage individuals to choose alternatives like Plan G, which offers similar benefits at a more reasonable cost.
- There are 8 states that have a ban on Medicare Excess Charges. Those states are Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island and Vermont (as of 2016).
- Fewer than 1% of all US physicians have opted out of Medicare. Those that have opted out MUST inform you ahead of time.
- Over 96% of US physicians accept Medicare Assignment as payment in full
- Of the less than 4% of physicians that are non-PAR, many of them accept assignment on many claims. Accepting Medicare assignment helps to avoid the reimbursement penalty. This also helps to avoid the costs and hassle of collecting from the Medicare beneficiary. By being non-PAR, they have the flexibility to decide on a case-by-case basis
So although there is a possibility that they could bill you for Medicare Excess Charges, that possibility is very small.
Plan N does not cover Medicare excess charges and is a great option for keeping premiums very low. Here are the details on Plan N:
The advice on this website is informational. Please consult us before making a purchasing decision to determine what is best for your individual situation. You can contact Keith Murray’s office at 888-228-6119.
Stanley Keith Murray is an independent agent and the founder of Integrity Senior Solutions Inc. He has been working with Seniors to meet their insurance and financial needs since 1996.