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Medicare’s Financial Protections for Consumers: Limits on Balance Billing and Private Contracting by Physicians

Summary of Publication

The Medicare program protects consumers by limiting how much physicians and other health professionals can charge Medicare patients. This fact sheet describes Medicare’s “balance billing” rules for physician services and related rules for physicians who choose not to accept Medicare payment and instead have “private contracts” with all their patients who have Medicare.

  • The vast majority of physicians—about 95%—are “participating providers” which means they agree to accept Medicare’s approved payment amounts as full payment for all Medicare-covered services they provide to all Medicare patients they see. Their patients may be billed for any Medicare cost-sharing (such as co-insurance) that applies, but cannot be balance-billed for additional charges.

  • A small proportion of physicians—about 4 percent—accept Medicare but are “nonparticipating providers.”  These providers are allowed to balance-bill patients, but the amount they balance-bill is limited by law.

  • Less than 1 percent of physicians completely opt out of Medicare. Medicare patients who want to use their services must agree to a private contract with the physicians and pay all of the charges.  Physicians who opt out of Medicare and have private contracts must do so for all the Medicare beneficiaries they treat and for all Medicare-covered services.

Medicare’s current rules limited balance billing and private contracts provide important financial protection for consumers. Without these protections, Medicare beneficiaries would likely face higher out-of-pocket costs. Higher costs would be difficult for many people to afford and likely lead to more limited access to physicians for many beneficiaries, as well as greater financial distress.

Read the Fact Sheet (PDF)