Traditional Medicare Physician Balance Billing and Private Contracting


About 95 percent of physicians and other clinicians across the country who take Medicare (and about 99 percent of physicians do) are Medicare participating providers, which means that they agree to accept Medicare’s payment rate as full payment for all the services they provide to Medicare beneficiaries. This practice is known as accepting assignment.

The other 5 percent nonparticipating providers are allowed to “balance-bill” Medicare patients—that is, to bill them up to 15 percent more than the amount Medicare pays non-participating providers. 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 (which is 95 percent of the payment amount for participating providers). The Medicare beneficiary is responsible for paying the balance-bill amount, 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.

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 do so. Physicians who opt out forgo all payment from Medicare for at least two years. Under a private contract, the beneficiary agrees 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.


Balance billing

In this policy: FederalState

Centers for Medicare & Medicaid Services should closely monitor and vigorously enforce balance-billing limits.

Private contracting

In this policy: Federal

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 physician’s status as a provider who does not accept Medicare payment;
  • the lack of Medicare coverage for services provided under the contract, the availability of Medicare payment if the services were provided by a physician who accepts Medicare payment;
  • the lack of balance-billing limits on charges for those services; and
  • the cost of the service, the non-applicability of supplemental coverage for contracted services.