Medicare decides what a reasonable payment is for a medical service. This payment is called the "Medicare-approved amount." Doctors can choose whether or not to agree to accept the Medicare-approved amount as payment in full for his or her services. If a doctor agrees to accept the approved amount, he or she is "accepting assignment."
FYI: Before going to any doctor, find out if he or she accepts assignment. You will generally pay less if your doctor accepts assignment.
If Your Doctor Accepts Assignment
If your doctor accepts assignment, he or she agrees to accept the Medicare approved-amount as payment in full and cannot charge you more. After you have paid your annual deductible ($155 in 2010), Medicare pays 80 percent of the approved amount. You pay 20 percent of the approved amount.
Here is an example:
In January, Joe went to the doctor several times to check on his heart disease. In paying his share of the bill, Joe paid his Part B deductible ($155) for the year. When Joe sees his doctor in May, the Medicare-approved amount for the visit is $200. Since Joe's doctor "accepts assignment," and he has already paid his Part B deductible for the year, Medicare pays $160 (80 percent of $200) and Joe pays $40 (20 percent of $200).
If Joe had not already paid his deductible, he would have had to pay the first $155 of the $200 bill to fulfill his Part B deductible for the year. For the remaining $45, Medicare would pay $36.00 (80 percent of $45) and Joe would pay $9.00 (20 percent of $45) in addition to his $155 deductible.
If Your Doctor Doesn't Accept Assignment
If your doctor doesn't accept assignment, he or she still treats Medicare patients—but does not accept the Medicare-approved amount as payment in full. Your doctor can charge up to 15 percent more than Medicare's approved amount. You must pay 20 percent of the Medicare-approved amount plus all of the additional charges, up to an additional 15 percent of the Medicare-approved amount.
Here is an example:
By June, Susan has already paid her Part B deductible ($155) for the year. In September, she goes to her doctor because of a chronic cough. The doctor charges $200 for the visit, but Medicare's approved amount is $150. Since her doctor doesn't accept assignment, the doctor can "balance bill" and charge Susan 15 percent over Medicare's approved amount—in this case $22.50. That means that Susan will pay $30 coinsurance and $22.50 in balance billing.
FYI: Some states have even stricter limits on what doctors can charge you. Check with Medicare at 1-800-633-4227 or your State Health Insurance Assistance Program (SHIP) to find out if your state is one of them. If you think you are being overcharged, call Medicare at 1-800-633-4227.