Medicare becomes the primary payer for federal annuitants for Medicare-covered services, and if you stay enrolled in the Federal Employee Health Benefits (FEHB) program, those plans will pay as the secondary.
Most FEHB plans “wrap around” Medicare, waiving deductibles, copayments, and coinsurance when Medicare is primary, which can result in little or no out-of-pocket costs for covered services.
Roughly 93% of primary care doctors and 98% of all physicians and practitioners who bill Medicare are participating providers. Additionally, about 89% of office-based physicians accept new Medicare patients.
When a physician declines to accept Medicare, it generally indicates one of three possible circumstances: the provider is classified as a non-participating provider, an opt-out provider, or is no longer accepting new Medicare patients. The implications for coverage and out-of-pocket expenses differ depending on the provider’s status.
A non-participating Medicare provider might choose not to accept the Medicare-approved amount on a case-by-case basis due to business and financial considerations. Key factors influencing this decision include:
- Maximizing revenue: By not accepting the Medicare-approved amount (i.e., not accepting “assignment”), the provider can charge the patient up to 15% more than the Medicare-approved amount, which is known as a “limiting charge”. This allows the provider to be reimbursed closer to their standard rate, which is often higher than the Medicare fee schedule amount.
- Covering practice costs: Medicare’s reimbursement rates can be lower than those from private insurers, and these rates might not be sufficient to cover a practice’s operating expenses, such as rent, staff salaries, and new technology purchases. Charging the limiting charge can help offset these potential shortfalls.
- Patient population’s ability to pay: A provider might consider whether their patient base can afford the added out-of-pocket costs (the limiting charge, plus coinsurance and deductibles). They weigh the potential for increased revenue against the risk of bad debt and collection issues from patients who struggle with the higher upfront costs.
- Administrative burden and cash flow: While a non-participating provider can charge more, they may have to collect the full fee directly from the patient at the time of service, and the patient then seeks reimbursement from Medicare. This can create more administrative work and potential cash flow delays for the provider compared to the direct billing and generally faster, albeit lower, payments received by participating providers.
- Specific services: A provider might choose to accept assignment for some services (e.g., preventive care, which is free to the patient when assigned) while applying the limiting charge for other, more complex or costly procedures.
Here is an example of what could happen. If your doctor’s bill comes to $600, and Medicare pays $500. This means you’ll have to pay the $100 difference, plus any copay, out of pocket, assuming your doctor agrees to the program’s reimbursement rates. This could add up quickly over time. However, you may be able to cover these extra expenses through a Medigap insurance policy, aka Medicare Supplement Insurance.
An opt-out provider has formally withdrawn from participation in the Medicare program and instead enters into private contracts with patients. Medicare does not reimburse any portion of the services rendered by these providers. Consequently, patients are personally responsible for the full cost of all services received.
Before treatment, the provider must ensure that the patient signs a written agreement acknowledging that they understand their financial responsibility and that no Medicare payment will be made.
The only time Medicare might pay for services from an opt-out provider is in an emergency. Medigap (Medicare Supplement) plans will not cover the costs of services from an opt-out provider.
Some physicians who participate in Medicare may elect to stop accepting new Medicare patients due to high patient volume, administrative capacity, or other operational considerations. Such providers continue to serve their existing Medicare patients but decline to accept new ones.
If your current physician no longer accepts Medicare, or if you are seeking a new provider who does, the following options are available:
- Use the Medicare Physician Compare Tool: This online resource enables beneficiaries to search for providers in their area who accept Medicare.
- Request a Referral: Your current physician may be able to recommend another provider who participates in the Medicare program.
- Consult a pharmacist: Pharmacists often maintain local networks and can assist with identifying Medicare-accepting physicians, as well as coordinating care during the transition.
- Switch to a Medicare Advantage plan: If your doctor is in a different Medicare Advantage plan’s network, you may be able to switch during the Annual Election Period.
If a participating provider—one who has agreed to accept Medicare’s approved rates as full payment—refuses to submit a claim to Medicare on your behalf, this action may constitute fraudulent behavior. Reports of suspected fraud may be made by contacting 1-800-MEDICARE.
- Medicare is primary for federal annuitants; FEHB acts as secondary, often reducing out-of-pocket costs.
- Non-participating providers may charge up to 15% more than Medicare rates.
- Opt-out providers bill patients directly; Medicare offers no reimbursement, except in emergencies.
- Find Medicare doctors via the Physician Compare Tool or referrals.
- Medigap may cover extra costs but not services from opt-out providers.
