Medicare Agents as well as clients need to understand the differences between participating vs non-participating providers. This is a choice that can greatly impact the costs of the beneficiary’s healthcare. We will go over what each one means and the potential impact they can have.
Participating providers
Participating providers have agreed to accept Medicare and take assignment. This means the provider agrees to Medicare’s approved amount as full payment for covered healthcare services. In other words, these providers are contracted with Medicare and have agreed to their payment terms.
Why this benefits patients
Lower Out-of-Pocket Costs
Because participating providers accept Medicare’s approved amount, in may cases, beneficiaries only pay a standard 20% coinsurance after they meet their annual deductible. This can save beneficiaries hundreds of dollars.
Easier Billing
When a beneficiary works with a participating provider, the provider bills Medicare and the insurnace company directly. This takes the burden off the patient and helps expedite the process.
No Balance Billing
Beneficiaries are not charged any more than the Medicare-approved amount for covered services. This practice ensures there are no unwanted surprise bills for beneficiares to pay.
For example: If a beneficiary visits a participating provider for a medical treatment and Medicare approves a fee of $100, the beneficiary is responsible for paying 20% coinsurnace ($20). As long as they have already met their annual Part B deductible. The provider bills Medicare for the remaining $80.
Non-Participating providers
Non-particiating providers do not have a contract with Medicare. Therefore, they do not have to accept Medicare’s approved amount for medical charges as payment in full. In some instances, they may choose to accept Medicare on a case-by-case basis.
What this means for patients
Higher Costs
Non-participating providers can charge patients up to 15% over the Medicare-approved amount. This is called the “limiting charge.” When this occurs, beneficiaries could pay up to 35% of Medicare’s approved amount for healthcare services as opposed to the 20% they would pay using a provider who accepts assignment.
Billing concerns
In some cases, patients may need to pay the cost of medical care upfornt and then request reimbursement from Medicare. Usually Medicare reimburses 80% of the Medicare approved payment amount. This does not include the excess charges. The pateint will have to deal with all the paperwork and it will take time for Medicare to process.
For example, if an enrollee sees a non-participating provider and the Medicare-approved amount for the service is $100, the provider could charge up to $115. Medicare would reimburse the enrollee 80% of the $100 ($80) and the enrollee would be responsible for paying the remaining $35 ( 20% coinsurance ($20) plus the $15 limiting charge).
Opt-Out Providers
Just to make things more interesting, there’s a third category of providers called opt-out providers. These providers have opted out of Medicare entirely. These providers sign an agreement to be excluded from Medicare for two years and can charge their own rates. Using one of these providers is the most expensive choice a benficiary can make. When this is the case, Medicare will not cover any of the medical costs, and patients must pay out-of-pocket for the entire fee.
Choosing which type of provider to use
Choosing between participating and non-participating providers depends on many factors:
- Cost: If managing costs is important, participating providers are generally the better choice since they do not charge more than the Medicare-approved amount.
- Provider Preference: In some cases, the doctor or specialist a patient prefers to use might be a non-participating provider. When this happens, patients need to consider the additional cost and decide if the benefit the doctor provides is worth it.
- Convenient billing: If the patient does not want the hassle of the billing paperwork and waiting for reimbursement, using a participating provider streamlines the process significantly.
Understanding the differences between participating vs non-participating providers is crucial for effective healthcare planning. Participating providers offer predictability and lower out-of-pocket costs, while non-participating providers may offer more flexibility at potentially higher costs and administrative burden.
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