Medicare Part B has an annual deductible that is currently set at $198 per year. Medicare will not pay anything under Part B until that amount is paid by the patient.
Billed Amount vs. Approved Amount
The billed amount, or professional fee, is simply the amount for a service or item that appears on a provider’s bill. If no insurance was involved, that is the amount a patient would be charged.
The Medicare-approved amount is what Medicare would pay for any covered service or item. It is usually less than the billed charge and varies by geography.
Medicare takes into account, for example, that the same office visit probably costs more in New York City than a small town in Nebraska. The approved amount is also sometimes referred to as the Medicare Fee Schedule.
Medicare Part B pays 80 percent of its approved amount. The remaining 20 percent that can be billed to the patient is known as the Medicare coinsurance.
One of the keys to understanding Medicare Part B reimbursement is “assignment,” which can be confusing for those not familiar with medical insurance terminology.
Medicare’s definition of an assignment is “an agreement by your doctor, provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.”
What does that mean in the real world?
The best way to explain assignment is to use a simple example using the terms already covered.
Billed Amount – $100
Medicare-approved amount – $75
Medicare payment (80 percent of $75) – $60
Medicare coinsurance/ amount billed to patient – $15
A doctor who accepts assignment agrees that he or she will accept that $75 as payment in full from Medicare and will not bill you the $25 difference between the approved amount and the professional fee.
A provider who does not accept assignment can bill you for the $25 difference between the professional fee and the approved amount, plus the $15 coinsurance for a total of $40.
From a financial standpoint, it is obvious that it’s to your advantage to find providers and suppliers that accept assignment. The good news is the vast majority do. Medicare.gov has a provider search feature.
What if the Doctor or Supplier Does Not Accept Assignment?
This does not mean you cannot seek treatment from them. It also doesn’t mean the service or item will be denied by Medicare. These are both common misconceptions. However, there are some distinct disadvantages to using non-participating providers:
You may have to pay the entire charge for the service or item at the time of service.
You will usually end up paying more out of pocket.
In some instances, you may have to submit your own claim.
How are Medicare Part B Claims Paid?
All Medicare Part B claims are processed by contracted insurance providers divided by region of the country. The current term for these providers is “Medicare administrative contractors” (MACS).
Providers file your Part B claim to one of the MACS and it is from them that you will receive a notice of how the claim was processed. The statement you will receive is called a Medicare Summary Notice (MSN).
This link will give you a comprehensive explanation of how to read an MSN:
It’s very important to be able to read and understand an MSN so that you can spot possible billing errors. Honest mistakes at medical provider offices happen all the time, and it’s up to you to point them out.
Most providers do not have the staff to conduct routine audits of their own claims.
If your doctor or supplier tells you to “call Medicare” about a claim what they mean is, you need to call the MAC that processed your claim and that number should be on the MSN.
Medicare Supplemental Insurance
While not strictly a part of Medicare, “Medigap” plans are worth a brief mention. They are sold by private insurers in every state, and their main function is to pick up the 20 percent Medicare coinsurance. More extensive information on them is available on the Medicare website at this tab.
Filing an Appeal
An appeal is an action you can take if you disagree with the way your claim was processed. If you believe a service or item was denied in error, or you disagree with the amount of payment, you have the right to appeal. You may also appeal if Medicare stops paying for an item or service that you are currently receiving and believe you still need.
If you decide to appeal Medicare’s decision, there are multiple resources that can help you. There will be information on your MSN. This page is also a good place to start.