Category: Medigap (Medicare Supplements)
The Truth About Medicare Excess Charges
Plan N is a great plan that we get asked about a lot. Some clients are concerned about not getting the Medicare Excess Charges covered. That is because unlike Plan F or G, Plan N and Plan D do 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.
**There are some states that do not allow any excess charges to be billed to the Medicare beneficiary. As of 2024, 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 or Plan D 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
Medicare Participation
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.
Non-Participation
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.
Taking into account the cost of running a business, and particularly the fact that physicians already make so little money when taking Medicare patients, it really is not worth it to try and make a few extra dollars by being non-PAR. Just a few bad debts, collections, or unpaid claims and they are losing money by doing so when the profit margin is so low at 9.25% above PAR rates.
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 that the physician has opted out of Medicare. It also must state that Medicare will not pay for any services provided by that physician.
Statistics From Aetna About Medicare Excess Charges
In August 2016, Aetna reported that 99.34% of the claims they processed had no excess charges. Of that 0.66% of claims that have excess charges, the average charge is less than $20.
Conclusion
- 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 2024).
- Fewer than 1% of all US physicians have opted out of Medicare.
- More than 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 do accept assignment on many claims. Accepting 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 you could receive Excess Charges, that possibility is very small.
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 president of Integrity Senior Solutions Inc. He has been working with Seniors to meet their insurance and financial needs since 1996.
The Parts and Plans Of Medicare
How Medicare Works 2019- Parts and Plans of Medicare | ExpertMedicare.com
Sometimes the P words can get a little confusing. When adding to all the talk of deductibles and copays and all the things that go with making good insurance decisions, it can be a little overwhelming. Let’s talk about which is which. The Parts of Medicare are the actual divisions of the Medicare program. Medicare plans are the supplemental plans offered by insurance companies.
The Parts of Medicare
When talking about the parts of Medicare, it is in reference to how the Medicare program is divided into the separate parts, or divisions. Medicare is divided into 4 parts – Part A, Part B, Part C, and Part D.
- Helps cover inpatient care in hospitals
- Helps cover skilled nursing facility, hospice, and home health care
- Helps cover doctors’ and other health care providers’ services, outpatient care, durable medical equipment, and home health care
- Helps cover some preventive services to help maintain your health and to keep certain illnesses from getting worse
Medicare Part C (also known as Medicare Advantage)
- Medicare Advantage is a Medicare replacement program
- Offers health plan options run by Medicare-approved private insurance companies, not by Medicare
- You give up your rights to Medicare and give them to an HMO or PPO to make your coverage decisions for you
- Medicare Advantage Plans are a way to get the benefits and services covered under Part A and Part B
- Most Medicare Advantage Plans cover Medicare prescription drug coverage (Part D)
- Some Medicare Advantage Plans may include extra benefits for an extra cost
- Helps cover the cost of prescription drugs
- May help lower your prescription drug costs and help protect against higher costs in the future
- Run by Medicare-approved private insurance companies
Who Pays For What?
Parts A and B are funded by the Medicare program. There are some gaps in the coverage from Medicare, which is why it is important to get a supplemental coverage plan for Medicare – whether it is through employer group coverage or individual plans that you purchase.
Parts C and D – although completely controlled and governed by the Medicare program – provide care through private insurance companies like UnitedHealthcare, Humana, or Aetna. With a Part C plan, Medicare pays the insurance company to provide the coverage for you. The plan you choose pays all the bills. Each of the plans provided by individual insurance companies comes with its own copays and deductibles that you pay when you receive medical care. You should be sure you know what your share of the cost will be when services are rendered as each plan is different. The downside is that each plan has its own network of providers, so if you have a doctor you work with that you like, make sure to find a program that he or she participates in. There could also be limitations if you travel outside the coverage area for your plan.Under Part D – the Medicare Prescription Drug Plan – you pay a premium to the insurance company for your coverage. Then you also pay a copay any time you fill a prescription.
Medicare Plans Explained
The Medicare supplement plans (Plans A-N) are individual insurance plans offered by the insurance companies. Congress established these plans and every company that sells them must sell the exact plan as regulated by Medicare. The plans are identical from company to company.
There are 10 different plans available for insurance companies to sell. The only difference in a Plan G policy from one company compared to a Plan G policy from another company is the price, the underwriting involved, and the agent assisting you. A Plan G from Mutual of Omaha is identical to a Plan G from UnitedHealthcare. In the Medicare and You book which is printed and distributed by Medicare each year, it says, “Different insurance companies may charge different premiums for the same exact policy.” They have different premiums, but the coverage is exactly the same.
The companies will base their rates on the underwriting required to be approved. A cheaper plan may be harder to get into if you have any health issues. Other companies may cost more but may accept more applicants including those with pre-existing conditions. Here is a chart that shows the different plans that the companies have to abide by. All companies must offer Plan A and either Plan C or Plan G. Other than that, they can choose what to offer their customers.
Keith Murray is an independent agent and the owner of Integrity Senior Solutions Inc. He has been working with Seniors to meet their insurance and financial needs since 1996.