Medicare certainly can be confusing can’t it? One of the charges you can occur as a Medicare recipient who received outpatient healthcare (outside the hospital) is called Part B Excess Charges. Read on to learn more about how you may incur them when you are seeking medical care.
Our Guide To Understanding Medicare Excess Charges
If you have been doing your due diligence and looking into Medicare Supplement (Medigap) plans, Plan F and G in particular, you have probably run across the terminology “Part B excess charges.”
Sounds good doesn’t it? An extra benefit that none of the other standardized Medicare plans actually have.
But what does it really mean?
What are Part B excess charges anyway?
Do I really need that benefit?
Well, you are not alone in wanting to have your questions answered. The truth is, most folks really don’t know or worse yet, good numbers of people mistakenly believe that the benefit pays for healthcare claims not approved by Medicare.
This assumption goes back even 20+ years and is completely false. No Medigap plan will pay a nickel if Medicare does not first approve the claim and pay its portion first.
Remember, Original Medicare has standardized plans. Medicare Supplement/Medigap insurance companies must pay according to the benefits outlined in your plan after Medicare itself has payed it’s 80% of the approved amount.
For most people, Part B excess healthcare charges are usually pretty minimal… but not always. It is good to have an understanding of how you can incur them as well its effect on your actual out of pocket expenses.
What Does Medicare Part B Excess Charges Mean?
Part B Excess Charges Explained
Medicare has agreements with the vast majority of healthcare providers to perform approved services for a preset amount. All providers that accept Medicare are said to “participate” with Medicare. A provider that accepts Medicare approved and limiting amounts as payment in full are said to accept “assignment.” The difference between these two terms are where part b excess charges can occur.
Medicare Assignment
All providers that accept Medicare assignment cannot charge above and beyond the approved amount. Your average doctor, ambulance, physical therapist etc. have agreed to Medicare’s limiting/approved amount to cover a particular healthcare claim.
Now, there are also providers who do not accept assignment with Medicare though they participate with Medicare. How large can excess charges be? Well, by law, these particular providers are allowed to charge up to 15% above Medicare approved amounts on approved Part B charges. For example, your doctor refers you to a specialist such as a cardiologist for an evaluation. As it turns out, this specialist does not accept the Medicare limiting amount of the (fictitious) $100 Medicare might have otherwise paid. Instead, the specialist office charges an additional $15.00 as they are permitted. Part B excess charge coverage would pay this additional charge. 10 months later, Jane ends up in an ambulance. She had a heart attack and the nearest ambulance service came. As it turned out, this company did not accept Medicare as payment in full either. Medicare approved $1000 and the ambulance company balanced billed an additional $150 for their services.
Now, if you have a Medigap (Medicare Supplement) Plan F or Plan G, you have full coverage for any and all Part B excess charges. In the example above, Jane paid no excess charges due to her Plan G. Remember to keep in mind, with Plan G, you must pay your Part B deductible ($183) during the year before Medicare and your supplement pick up the bill with any Part B healthcare expenses. As a refresher, Part B expenses are all outpatient healthcare as approved by Medicare.
What States Do Not Allow Excess Charges?
There are a few states that do not allow any provider to charge you above what Medicare allows. This includes providers who have choosen not to participate with Medicare. Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Part B excess charges cannot be billed in these states.
Am I suggesting that you don’t necessarily need that benefit in your Medigap policy?
No, not necessarily. However, if you do not travel out of state and reside in one of the above you probably will not trigger the benefit.
How Often Do People Have Excess Part B Charges?
We’d like to be able to give you a definitive answer on this. The problem is, excess charges are the result of a provider not accepting assignment of Medicare. While most Medicare participating providers do accept Medicare Assignment, if more providers drop their assignment with Medicare, excess charges will rise. On the other hand, if more providers decide it is best for their business to accept Medicare assignment then excess charges to your insurance would be less likely. As of 2023, excess charges are quite uncommon and seemingly encountered with a specialist visit or ambulatory service. Regulations on payments to providers could ultimately cause an increase in Part B excess charges but that goes to far into the weeds for this article.
Part B Excess Charges – The Takehome
Most providers have accepted the Medicare limiting amount as payment in full for years. If you have Original Medicare and a good supplement, you’re typically ok. Part B excess charges are pretty rare in terms of “big bills,” though it can happen. Where the excess charges can get hefty for example, would be an air ambulance that does not accept Medicare’s limiting amount. Oxygen providers are another possible risk. While far and few between, those billable charges are much higher. A 15% “excess charge” can be a very significant amount of money for some people when the Medicare approved amounts are large.
The odds of running into major Part B excess charges on a medical claim from your outpatient providers is low. Decide “how much skin in the game” you want to have. If you want to put the risk to bed, a Medicare Supplement Plan G would be my recommendation. That plan includes coverage for “Part B Excess Charges.”
Remember this:
All Medicare approval medical charges outside the hospital fall under Part B. Part A is hospital care, Part B is your outpatient care and services.
Part B expenses are applicable to excess charges only. The stay in a hospital is strictly under Part A of Medicare.
Could there be a reverse trend in which most providers no longer accept the Medicare limiting amount and start charging 15% additional? Sure.
Medical billing itself has become more difficult for providers to receive reimbursements for services they have rendered to their patients. On the healthcare end of things, there are some complaints about reduced payments for certain services.
Could this create a trend of part b excess charges down the road?
Maybe.
There is a lot of pressure for medical providers to take reduced fees yet provide faster service. Providers would have to change their Medicare agreement before they can charge you anything additional. A provider just can’t decide to charge you an extra 15% without going thru and dropping their assignment agreement with Medicare.
You may always ask your provider the question, “do you accept Medicare assignment?” If yes, there will be no 15% upcharge. Again, very few providers do not accept assignment. I’m playing the devils advocate here to help you work thru this decision, nothing more.
This of course is theory on my part, but take it for what it is worth. Medicare Part B excess charges as a benefit may be something to consider in your Medigap plan.
If you are worried about how an excess charge could affect you financially, it would seem best to make sure you are not overpaying on your Medicare Supplement plan first. Overpaying for your Medigap plan should be a priority to Part B excess charges. Are you with a insurance carrier that is competitive or are you being grossly overcharged? This could easily be costing you hundreds of extra dollars each and every year just for having the wrong carrier insuring you.
We see many seniors choosing loyalty to an insurance company that is overcharging them believing the insurer has been good to them or believing they “pay better” than another carrier. They don’t understand that Medicare demands the insurers perform like this. Medicare Supplements are regulated at the State and Federal level to be certain they perform to Medicare guidelines. This is a real bonus to choosing Original Medicare (Part A and B)
There are, very often, other insurers offering the same identical plan for hundreds of dollars a year less.
Why overpay? If your on a fixed income and/or money conscious, take action and find out which insurers you can save money now. Don’t get sucked into the idea that one company pays better than the other. Having access to 99% of the insurance carriers out there, I can tell you, that is not true. I’ve had some of my own clients fight me tooth and nail insisting that their supplemental company was the best.
I’ve replaced a lot of seniors Medigap plans. In 25 years of business, no one has ever told me that saving hundreds of dollars on their Medigap plan with another insurer was a mistake.
No one changed back to the carrier that was overcharging them either.
What does that say?
The happiest seniors are all on Plan F, Plan G, Plan N or High Deductible Plan F. It’s not because they have a policy with United American, Bankers Life and Casualty or AARP (United Health Care), it is the plan letter.
Medicare standardized all Medicare policies in 1992.
There are no claims difference between Mutual of Omaha, Aetna, Allstate, United Health Care/AARP or any other previously mentioned insurers as long as you directly compare the Plan letter you have or will select.
Don’t make that mistake yourself. It just comes down to cost of ownership once you compare apples to apples.
Hanging onto loyalty to an insurance company can potentially get you taken advantage of. Sure, maybe they are paying your bills but that is because Medicare requires them to follow the rules per the Medigap plan you selected. Yes, the Plan F is the best but also the most expensive.
The issue with being “loyal” becomes a real problem if your health turns bad and the insurance company has a huge rate increase. Now you are just stuck with that company.
Does that sound like a good situation for seniors on a fixed income?
If you have decided you need Part B Excess Charge protection, Plan F and Plan G will give you the peace of mind you want. Just bear in mind the Plan F is only available to those people eligible for Medicare prior to January 1st, 2020 do to changes in the MACRA laws.
Hope this article has answered your questions today and provided some solutions to saving money.
As always, feel free to comment below.
Give us a call if you would like us to review your coverage to see where you stand. Consultation is always free. 269-244-3420
