What You Need to Know About Medicare Assignment

If you are one of the more than 63 million Americans enrolled in Medicare and are on the lookout for a new provider, you may wonder what your options are. A good place to start? Weighing the pros and cons of choosing an Original Medicare plan versus a Medicare Advantage plan—both of which have their upsides.

Let’s say you decide on an Original Medicare plan, which many U.S. doctors accept. In your research, however, you come across the term “Medicare assignment.” Cue the head-scratching. What exactly does that mean, and how might it affect your coverage costs?

What is Medicare Assignment?

It turns out that Medicare assignment is a concept you need to understand before seeing a new doctor. First things first: Ask your doctor if they “accept assignment”—that exact phrasing—which means they have agreed to accept a Medicare-approved amount as full payment for any Medicare-covered service provided to you. If your doctor accepts assignment, that means they’ll send your whole medical bill to Medicare, and then Medicare pays 80% of the cost, while you are responsible for the remaining 20%.

A doctor who doesn’t accept assignment, however, could charge up to 15% more than the Medicare-approved amount for their services, depending on what state you live in, shouldering you with not only that additional cost but also your 20% share of the original cost. Additionally, the doctor is supposed to submit your claim to Medicare, but you may have to pay them on the day of service and then file a reimbursement claim from Medicare after the fact.

Worried that your doctor will not accept assignment? Luckily, 98% of U.S. physicians who accept Medicare patients also accept Medicare assignment, according to the U.S. Centers for Medicare & Medicaid Services (CMS). They are known as assignment providers, participating providers, or Medicare-enrolled providers.

It can be confusing. Here’s how to assess whether your provider accepts Medicare assignment, and what that means for your out-of-pocket costs:

The 3 Types of Original Medicare Providers

1. Participating providers, or those who accept Medicare assignment

These providers have an agreement with Medicare to accept the Medicare-approved amount as full payment for their services. You don’t have to pay anything other than a copay or coinsurance (depending on your plan) at the time of your visit. Typically, Medicare pays 80% of the cost, while you are responsible for the remaining 20%, as long as you have met your deductible.

2. Non-participating providers

“Most providers accept Medicare, but a small percentage of doctors are known as non-participating providers,” explains Caitlin Donovan, senior director of public relations at the National Patient Advocate Foundation (NPAF) in Washington D.C. “These may be more expensive,” she adds. Also known as non-par providers, these physicians may accept Medicare patients and insurance, but they have not agreed to take assignment Medicare in all cases. That means they’re not held to the Medicare-approved amount as payment in full. As a reminder, a doctor who doesn’t accept assignment can charge up to 15% more than the Medicare-approved amount, depending on what part of the country you live in, and you will have to pay that additional amount plus your 20% share of the original cost.

What does that mean for you? Besides being charged more than the Medicare-approved amount, you might also be required to do some legwork to get reimbursed by Medicare.

• You may have to pay the entire bill at the time of service and wait to be reimbursed 80% of the Medicare-approved amount. In most cases, the provider will submit the claim for you. But sometimes, you’ll have to submit it yourself.
• Depending on the state you live in, the provider may also charge you as much as 15% more than the Medicare-approved amount. (In New York state, for example, that add-on charge is limited to 5%.) This is called a limiting charge—and the difference, called the balance bill, is your responsibility.

There are some non-par providers, however, who accept Medicare assignment for certain services, on a case-by-case basis. Those may include any of the services—anything from hospital and hospice care to lab tests and surgery—available from any assignment-accepting doctor, with a key exception: If a non-par provider accepts assignment for a particular service, they cannot bill you more than the regular Medicare deductible and coinsurance amount for that specific treatment. Just as it’s important to confirm whether your doctor accepts assignment, it’s also important to confirm which services are included at assignment.

3. Opt-out providers

A small percentage of providers do not participate in Medicare at all. In 2020, for example, only 1% of all non-pediatric physicians nationwide opted out, and of that group, 42% were psychiatrists. “Some doctors opt out of providing Medicare coverage altogether,” notes Donovan.“In that case, the patient would pay privately.” If you were interested in seeing a physician who had opted out of Medicare, you would have to enter a private contract with that provider, and neither you nor the provider would be eligible for reimbursement from Medicare.

How do I know if my doctor accepts Medicare assignment?

The best way to find out whether your provider accepts Medicare assignment is simply to ask. First, confirm whether they are participating or non-participating—and if they are non-participating, ask whether they accept Medicare assignment for certain services.

Also, make sure to ask your provider exactly how they will be billing Medicare and what charges you might expect at the time of your visit so that you’re on the same page from the start.

Is seeing a non-participating provider who accepts Medicare assignment more expensive?

The short answer is yes. There are usually out-of-pocket costs after you’re reimbursed. But it may not cost as much as you think, and it may not be much more than if you see a participating provider. Still, it could be challenging if you’re on a fixed income.

For example, let’s say you’re seeing a physical therapist who accepts Medicare patients but not Medicare assignment. Medicare will pay $95 per visit to the provider; but your provider bills the service at $115. In most states, you’re responsible for a 15% limiting charge above $95. In this case, your bill would be 115% of $95, or $109.25.

Once you get your $95 reimbursement back from Medicare, your cost for the visit—the balance bill—would be $14.25 (plus any deductibles or copays).

In some states, the maximum cap on the limiting charge is less than 15%. As mentioned earlier, New York state, for instance, allows only a 5% surcharge, which means that physical therapy appointment would cost you just $4.75 extra.

Bottom line: Medicare assignment providers and non-participating providers who agree to accept Medicare assignment are both viable options for patients. So if you want to see a particular provider, don’t rule them out just because they’re non-par.

While seeing a non-participating provider may still be affordable, ultimately, the biggest headache may be keeping track of claims and reimbursements, or simply setting aside the right amount of money to pay for your visit up front.

Before you schedule a visit, be sure to ask how much the service will cost. You can also estimate the payment amount based on Medicare-approved charges. A good place to start is this out-of-pocket expense calculator provided by the CMS.

What if I see a provider who opts out of Medicare altogether?

An opt-out provider will create a private contract with you, underscoring the terms of your agreement. But Medicare will not reimburse either of you for services.

Seeing a provider who does not accept Medicare will likely be more expensive. And your visits won’t count toward your deductible. But you may be able to work out paying reduced fees on a sliding scale for that provider’s services, all of which would be laid out in your contract.