The specific term for when a doctor agrees to accept the payment rate set by Medicare for a covered service is called “Accepting Assignment.” This concept is a fundamental part of the Medicare billing system. A provider who accepts assignment agrees to accept a predetermined fee as full payment. This arrangement directly impacts a patient’s out-of-pocket costs and medical claims processing.
Understanding Accepting Assignment
Accepting assignment signifies a contractual agreement where the provider agrees to accept the Medicare Approved Amount as complete payment for any covered service. The provider cannot charge the patient any amount above the deductible, coinsurance, and copayment. This agreement protects the patient from “balance billing,” which occurs when a provider bills the patient for the difference between their standard charge and the Medicare Approved Amount.
When a provider accepts assignment, they agree to submit the claim directly to Medicare on the patient’s behalf. This streamlines the payment process, as Medicare pays its share directly to the provider. The patient is responsible only for their defined portion, typically 20% of the approved amount after the annual deductible has been met.
Defining the Medicare Approved Amount
The Medicare Approved Amount is the fee schedule established by the Centers for Medicare & Medicaid Services (CMS) for specific services. This amount is often less than the provider’s standard list price. The payment rate is calculated using the Resource-Based Relative Value Scale (RBRVS), which assigns a relative value to each medical service.
The RBRVS formula considers three main factors: the physician’s work, the practice expense, and the professional liability insurance cost. These values are adjusted based on the geographic location to account for regional differences. The resulting figure is multiplied by a fixed dollar amount, called the conversion factor, to determine the final Medicare Approved Amount. Medicare pays the provider 80% of this amount, and the patient is responsible for the remaining 20% coinsurance.
Provider Status and Patient Financial Impact
Healthcare providers are categorized into two primary statuses, which determine their obligation to accept assignment and the patient’s financial liability. A “Participating Provider” has signed an agreement to always accept assignment for all Medicare-covered services. For patients seeing these providers, out-of-pocket costs are predictable, limited to the deductible and the 20% coinsurance of the Medicare Approved Amount.
A “Non-Participating Provider” is enrolled in Medicare but has not signed the agreement to accept assignment for all services; they choose whether to accept assignment on a claim-by-claim basis. If assignment is not accepted, they can charge the patient more than the Medicare Approved Amount, up to a maximum known as the “Limiting Charge.” Federal law restricts this limiting charge to no more than 115% of the Medicare Approved Amount.
If a non-participating provider does not accept assignment, the patient pays the standard 20% coinsurance plus the difference between the Medicare Approved Amount and the Limiting Charge. This total liability can reach up to 35% of the approved amount. These providers may also require the patient to pay the entire bill upfront, requiring the patient to seek reimbursement from Medicare for its 80% share.
A separate category exists for “Opt-Out” providers, who have formally excluded themselves from the Medicare program. These providers can charge any amount, and the patient is responsible for the entire cost since Medicare will not pay for the services.