If you’re enrolled in a Medicare plan, you may have come across the term “Medicare-approved amount.” The Medicare-approved amount is the amount that Medicare pays your provider for your medical services.
In this article, we’ll explore what the Medicare-approved amount means and it factors into what you’ll pay for medical care.
To understand exactly what the Medicare-approved amount refers to, it’s important to also understand the difference between different types of Medicare providers.
A participating provider accepts assignment for Medicare. This means that they are contracted to accept the amount that Medicare has set for your healthcare services. The provider will bill Medicare for your services and only charge you the deductible and coinsurance amount specified by your plan.
The Medicare-approved amount may be less than the participating provider would normally charge. However, when the provider accepts assignment, they agree to take this amount as full payment for the services.
A nonparticipating provider accepts assignment for some Medicare services but not all. Nonparticipating providers may not offer discounts on services the way participating providers do. Even if the provider bills Medicare later for your covered services, you may still owe the full amount upfront.
If you use a nonparticipating provider, they can charge you the difference between their normal service charges and the Medicare-approved amount. This cost is called an “excess charge” and can only be up to an additional 15 percent of the Medicare-approved amount.
When does Medicare pay?
So, when does Medicare pay out this approved amount for your services?
Medicare works the same way as private insurance, which means that it only pays out for medical services once your deductibles have been met. Your Medicare deductible costs will depend on what type of Medicare plan you are enrolled in.
If you have original Medicare, you will owe the Medicare Part A deductible of $1,484 per benefit period and the Medicare Part B deductible of $203 per year. If you have Medicare Advantage (Part C), you may have an in-network deductible, out-of-network deductible, and drug plan deductible, depending on your plan.
Your Medicare-approved services also depend on the type of Medicare coverage you have. For instance:
- Medicare Part A covers you for hospital services.
- Medicare Part B covers you for outpatient medical services.
- Medicare Advantage covers services provided by Medicare parts A and B, as well as prescription drugs, dental, vision, hearing, and other health perks.
- Medicare Part D covers your prescription drugs.
No matter what type of Medicare plan you enroll in, you can use Medicare’s coverage tool to find out if your plan covers a specific service, test, or item. Here are some of the most common Medicare-approved services:
- cardiovascular screenings
- bariatric surgery
- physical therapy
- durable medical equipment
If you want to know your Medicare-approved amount for these specific services, such as chemotherapy or bariatric surgery, speak with your provider directly.
Medicare Part A has a separate fee schedule for hospitalization. These costs kick in after the $1,484 deductible has been met and are based on how many days you spend in the hospital.
Here are the amounts for 2021, which apply for each benefit period:
- $0 coinsurance for days 1 through 60
- $371 coinsurance per day for days 61 through 90
- $742 coinsurance per lifetime reserve day for days 91 and beyond
- 100 percent of the costs once your lifetime reserve days have been used up
Medicare will pay all the approved costs above your coinsurance amounts until you run out of lifetime reserve days.
After you have met your Part B deductible, Medicare will pay its portion of the approved amount. However, under Part B, you still owe 20 percent of the Medicare-approved amount for all covered items and services.
Questions you can ask your doctor that may help lessen costs
You can save money on your Medicare approved costs by asking your doctor the following questions before you receive services:
- Are you a participating provider? Make sure that your provider participates in Medicare has agreed to accept assignment.
- Do you charge any excess charges for your services? Visiting nonparticipating providers who bill excess charges can increase your medical costs.
- Are you an in-network or out-of-network provider for my plan? If you are enrolled in a Medicare Advantage PPO or HMO plan, your services could be more expensive if you go to out-of-network providers.
- Do you offer discounts or incentives for your services? Most Medicare Advantage plans are sold by larger insurance companies and may offer further incentives to utilize their preferred medical centers.
Medigap plans can be beneficial for people who need help paying Medicare costs, such as deductibles, copayments, and coinsurance. But did you know that some Medigap policies also help cover the cost of services above and beyond your Medicare-approved amount?
When a non-participating provider renders services that cost more than the Medicare-approved amount, they can charge you the excess amount. These excess charges can cost up to an additional 15 percent of the Medicare-approved amount. If you have a Medigap plan, this amount may be included in your coverage.
Not all Medigap plans offer this coverage: only plans F and G do. However, Medigap plan F is no longer open to beneficiaries who became eligible for Medicare after January 1, 2020. If you are already enrolled in this plan you can continue to use it, otherwise, you will need to enroll in plan G to cover those excess charges.
The first step in figuring out your Medicare-approved amount is making sure that your doctor or provider accepts assignment. You can use the Medicare physician finding tool to double check.
If your provider accepts assignment, the next step is to make sure that they are a participating provider. If they are a nonparticipating provider, they may still accept assignment for certain services. However, they can charge you up to an additional 15 percent of the Medicare-approved amount for these services.
Finally, the best way to determine the Medicare-approved amount for a service is to ask your provider directly. They can give you all the information you need based on the services you are looking to receive.
The Medicare-approved amount is the amount of money that Medicare has agreed to pay for your services. This amount can differ depending on what services you’re seeking, and who you are seeking them from.
Using a Medicare participating provider can help to lower your out-of-pocket Medicare costs.
Enrolling in a Medigap policy can also help cover some of the additional costs you might face for using nonparticipating providers.
To find out exactly what your Medicare-approved costs are, speak with your provider directly for more details.
This article was updated on November 20, 2020, to reflect 2021 Medicare information.