Medicare Part B covers services like doctor visits and outpatient care. Providers choose how they will be reimbursed. When a provider agrees to “accept assignment,” they accept the Medicare-approved amount as the full payment for a service. This arrangement simplifies billing and limits the beneficiary’s out-of-pocket costs to their deductible and coinsurance. When a provider chooses not to accept assignment, a beneficiary’s financial responsibility can increase significantly. The Limiting Charge is a protective federal regulation established to prevent these providers from charging Medicare patients excessive amounts. This mechanism places a ceiling on the total cost of a covered service.
Defining the Maximum Charge
The Limiting Charge represents the maximum dollar amount a healthcare provider who does not accept assignment can legally charge a Medicare beneficiary for a Part B covered service. This federal rule applies specifically to unassigned claims, which are those where the provider has not agreed to accept the Medicare-approved amount as payment in full. The maximum charge is calculated using a precise formula: 115% of the Medicare-approved amount for that service. This means a non-participating provider may charge no more than 15% above the amount Medicare has determined to be reasonable for the service provided.
For example, if Medicare determines the approved amount for a specific office visit is $100, the Limiting Charge would be $115. The patient is financially responsible for the deductible, the standard 20% coinsurance on the Medicare-approved amount, and the additional 15% that makes up the Limiting Charge.
In the example of the $100 approved amount, Medicare will pay 80% of the $100, which is $80. The beneficiary is then responsible for the remaining $20 coinsurance plus the $15 excess charge, totaling $35. This total amount, $35, represents the patient’s portion of the $115 Limiting Charge, illustrating how the maximum charge caps the patient’s financial liability for that specific service.
The Role of Non-Participating Providers
Understanding the application of the Limiting Charge requires distinguishing between the three primary ways providers interact with Original Medicare. Participating providers have signed an agreement to always accept assignment for all covered services, meaning they accept the Medicare-approved amount as full payment. They cannot charge patients more than the deductible and 20% coinsurance.
Non-Participating providers have enrolled in Medicare but have not signed the agreement to always accept assignment. They retain the right to decide on a claim-by-claim basis whether or not to accept assignment, and the Limiting Charge only applies when they choose not to accept assignment.
When a Non-Participating provider does not accept assignment, they are still paid 5% less by Medicare than a Participating provider would be for the same service. The patient is directly responsible for paying the provider’s full bill, up to the Limiting Charge amount, and must then wait for Medicare to reimburse their portion. Providers who “Opt-Out” of Medicare entirely have no contract with the program and do not bill Medicare at all, making the Limiting Charge irrelevant to their services. The difference between the Medicare-approved amount and the provider’s actual charge, up to the 115% limit, is known as the “excess charge.”
Patient Protections and Enforcement
The Limiting Charge primarily applies to medical and surgical services covered under Medicare Part B, such as doctor services, outpatient therapy, and diagnostic tests. It does not typically apply to certain items like durable medical equipment or to services not covered by Medicare.
If a Non-Participating provider bills a beneficiary an amount that exceeds the 115% Limiting Charge, that provider is engaging in illegal billing practices. Beneficiaries should review their Medicare Summary Notice (MSN) or Explanation of Benefits (EOB) statements to ensure the total billed amount does not surpass the Limiting Charge for covered services. The MSN will show the Medicare-approved amount and the calculated Limiting Charge.
Patients who suspect they have been overcharged can report the violation by contacting the national Medicare help line at 1-800-MEDICARE. The provider is required to refund any amount collected in excess of the Limiting Charge. Providers who knowingly violate this regulation face significant civil monetary penalties, including fines of up to $10,000 per violation, plus three times the amount of the overcharge, and possible exclusion from the Medicare program.