Collecting From Medicare Patients

Published 10/11/2022

On assigned claims, the Medicare patients are responsible for:

  • Any unmet deductible
  • Excluded services
  • Any applicable co-insurance amounts
  • Services denied based on medical necessity if an advance notice was provided

On non-assigned claims, the Medicare patients are responsible for:

  • The entire bill up to, but not to exceed, the limiting charge for most services provided by a non-participating physician. The Medicare fee schedule outlines the current allowance including the limiting charge information. More details are provided in the Limiting Charge section below.  

Like most other insurance plans, original Medicare Parts A and B have deductibles that must be satisfied prior to the Medicare making a payment. The deductibles and co-insurance amounts are a cost/shared dollar amount applicable to covered services or supplies.

The Part B deductible is applied to each Medicare patient’s plan on an annual basis. The Part A deductible is applied to every benefit.

Providers must collect the unmet deductible and coinsurance from the patient. Consistently waiving these charges could be construed as program abuse. If the patient is unable to pay, you may ask him or her to sign a waiver outlining their financial hardship. If no waiver is signed, the patient's medical record should reflect that there were normal/reasonable attempts to collect from the patient prior to writing-off the charge.

  • Part B coinsurance amounts are generally 20 percent of the Medicare fee schedule
  • The Medicare patient or the Medicare patient’s supplemental insurance company is responsible for paying the provider the coinsurance amount that Medicare will not pay

Supplemental Insurance
Supplemental insurance or coverage is an insurance policy purchased by a Medicare patient to help pay for those services which Medicare does not cover such as deductibles, coinsurance and non-covered services.

The MSP Contractor is responsible for transferring claim data to supplemental insurers, also known as the "crossover process."

Medigap refers to a privately offered Medicare-supplemental health insurance policy available to those persons entitled to Medicare benefits and is specifically designed to supplement Medicare benefits. It fills in some of the 'gaps' in Medicare coverage by providing payment for some of the charges for which Medicare does not have responsibility due to the applicability of deductibles, coinsurance amounts or other limitations imposed by Medicare.

The crossover process for Medigap claims may occur in one of two ways:

  • Via the automatic eligibility file-based crossover process through the MSP Contractor
  • Via the Medigap claim-based crossover process, which is triggered by information submitted on Medicare claims

Submitting Paper Claims for Medigap
Only certain providers qualify for an exception to the Administrative Simplification Compliance Act (ASCA) Mandatory Electronic Submission of Medicare Claims and are eligible to submit paper claims. All other providers must submit their Medigap claims electronically.

Refer to the Palmetto GBA Interactive CMS-1500 Claim Form for additional assistance in submitting paper claims when a Medigap insurer is involved. Participating physicians and suppliers must include the following Medigap policy information in the designated Items of the CMS-1500 claim form:

Item 9
Enter the last name, first name and middle initial of the enrollee if different than the patient’s name (Block 2) or the word “SAME.”
Item 9a
Enter the policy/group number proceeded by the word “MEDIGAP,” “MG” or “MGAP” (Item 9b must be completed if you enter a policy and/or group number in Item 9a).
Item 9b
Enter the Medigap enrollee’s birth date (MM/DD/CCYY) and sex.
Item 9c
Enter the claim processing address for the Medigap insurer copied from the Medigap enrollee’s Medigap I.D. card (box or house number, street, state, and ZIP Code). May be left blank if unique 5-digit Medigap number is shown in 9d.
Item 9d
Enter the Coordination of Benefits Agreement (COBA) Medigap claim-based Identifier (ID). Note: If the insurer’s COBA Medigap claim based ID appears in item 9d, Item 9c may be left blank.
Item 13
Signature of beneficiary.
All of the information in Item 9 and its subdivisions and Item 13 must be complete and correct. Otherwise, Palmetto GBA cannot forward the claim information to the Medigap insurer.
Reference: For a complete listing of Medigap plans, refer to the CMS website.

Limiting Charge
The limiting charge represents the maximum amount that a nonparticipating physician can legally charge a Medicare beneficiary for services billed on nonassigned claims.

The maximum amount that a non-participating physician, other than practitioner or supplier is permitted to charge a Medicare beneficiary for unassigned service paid under the physician fee schedule is 115 percent of the Medicare allowed charge.

The Medicare Participation Physicians and Supplier Directory (MEDPARD) list of participating physicians, practitioners, and suppliers is available on the Palmetto GBA website. 

All services reimbursed under the physician's fee schedule are subject to the limiting charge. The following services are not subject to limiting charge:

  • Services that are never covered by Medicare
  • Durable medical equipment (DME)
  • Prosthetics or orthotics
  • Portable X-ray companies
  • Independent laboratories
  • Ambulance services

The patients’ Medicare Summary Notice (MSN) advises of their liability and alerts them to any excess billed amounts that must be refunded to them.

Sample Medicare Part B Reimbursement

Participating Provider must always accept assignment

  1. Submitted charge = $125.00
  2. Medicare allowed (participating fee schedule) amount = $100.00
  3. Medicare pays physician 80 percent = $80.00*
  4. Patient is billed for 20 percent coinsurance = $20.00
  5. Provider can collect the 20 percent coinsurance amount ($20.00) from the patient

* Patient previously met annual deductible

Non-Participating Provider Who Does Not Accept Assignment

  1. Submitted charge (Medicare limiting charge) = $109.25
  2. Medicare allowed (non-participating fee schedule) amount = $95.00
  3. Medicare pays patient 80 percent of fee schedule = $76.00
  4. Provider can collect up to limiting charge (A) from patient = $109.25 

Non-participating Provider Who Does Accept Assignment

  1. Submitted charge = $125.00
  2. Medicare allowed (non-participating fee schedule) amount = $95.00
  3. Medicare pays provider 80 percent of fee schedule = $76.00
  4. Patient is billed for 20 percent coinsurance = $19.00
  5. Provider can collect the 20 percent coinsurance amount or $19.00 from the patient

Note: You may bill the beneficiary for all services that are exclusively non-covered by Medicare, any unmet deductible and the 20 percent coinsurance if the claim is not subject to the Medigap provisions on assigned claims.

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