The vast majority of physicians (about 96 percent) are “participating providers,” which means that they agree to accept Medicare’s payment amounts as full payment for all the services they provide to beneficiaries, a practice known as “accepting assignment.”
A small proportion of physicians (about 4 percent) get Medicare payments, but are “nonparticipating” providers. These physicians are allowed to balance-bill patients—that is, to bill for more than the Medicare payment amount. By law, the amount physicians and other clinicians can balance-bill cannot be more than 15 percent of Medicare’s payment amount for nonparticipating providers. The Medicare beneficiary is responsible for paying the balance billing charge in addition to any deductible and standard coinsurance amounts that apply. Medicare does not restrict billing for non-Medicare-covered services, such as cosmetic surgery.
CMS has the authority to sanction any physician who knowingly, willfully, and repeatedly charges in excess of the balance-billing limits. States also may protect some or all beneficiaries from physician balance billing by “mandating assignment”—that is, requiring all physicians to accept Medicare’s approved reimbursement as payment in full.
For Medicare-covered services, physicians and other practitioners are not permitted to bill beneficiaries more than the allowed amounts described above, unless they completely opt out of Medicare and have private contracts with Medicare beneficiaries. Less than 1 percent of doctors opt out of Medicare.
Physicians who enter into private contracts with Medicare beneficiaries must agree, in writing, to forgo all payment from Medicare for at least two years. Under a private contract, the beneficiary must agree to pay all of the physician’s charges for contract services. Physicians who enter into private contracts must do so for all Medicare beneficiaries they treat and for all covered services; they may not pick and choose the patients or services for which they will bill Medicare. When these physicians refer beneficiaries for outside services, such as lab tests, specialists, or hospital stays, Medicare pays for these services. These restrictions reduce the chance of fraudulent billing and prevent doctors from choosing patients based on the severity of their illness.
Traditional Fee-for-Service Medicare/Physician Balance Billing and Private Contracting: Policy
Congress should not expand private contracting for physician services.
Physicians who privately contract with beneficiaries for Medicare-covered services should continue to provide patients with complete information on:
- the lack of Medicare coverage for services provided under the contract,
- the lack of balance-billing limits on charges for those services,
- the cost of the service,
- the nonapplicability of supplemental coverage for contracted services,
- the availability of Medicare payment if the services were provided by a physician who accepts Medicare payment, and
- the physician’s status as a provider who does not accept Medicare payment.