The Medicare-approved amount is the amount of money that Medicare will pay a health care provider for a medical service or item.
After you meet your Medicare Part B deductible ($198 per year in 2020), you will typically pay a percentage of the Medicare-approved amount for services and items covered by Medicare Part B.
But what exactly is the Medicare-approved amount? When do you have to pay it and do you ever have to pay more than that amount?
If a doctor or supplier accepts Medicare assignment, this means that they agree to accept the Medicare-approved amount for a service or item as payment in full.
The Medicare-approved amount could potentially be less than the actual amount a doctor or supplier charges, depending on whether or not they accept Medicare assignment.
If a provider agrees to accept Medicare assignment (they are called a “Medicare participating provider”), they agree to accept the Medicare-approved amount as payment in full for any service they provide (assuming it is covered by Medicare).
However, some providers may accept Medicare as insurance, but not accept the Medicare-approved amount as payment in full. These providers are non-participating providers (though they still accept Medicare).
You are responsible for paying any remaining difference between the Medicare-approved amount and the amount that your provider charges. This difference in cost is called a Medicare Part B excess charge.
By law, a provider who does not accept Medicare assignment can only charge you up to 15 percent over the Medicare-approved amount.
Let’s consider an example:
You’ve been feeling some pain in your shoulder, so you make an appointment with your primary care doctor. This appointment will be covered by Medicare Part B, and you have already satisfied your annual Part B deductible.
Your primary care doctor accepts Medicare assignment, which means they have agreed to accept Medicare as full payment for their services. Because you have met your deductible for the year, you will split the Medicare-approved amount with Medicare in order to pay your doctor for the appointment.
Typically, you will pay 20 percent of the Medicare-approved amount, and Medicare will pay the remaining 80 percent. Your 20 percent amount is called Medicare Part B coinsurance.
Let’s say your doctor decides to refer you to a specialist to have your shoulder further examined. The specialist you visit agrees to treat Medicare patients but does not agree to accept the Medicare-approved amount as full payment.
You still only pay 20 percent of the Medicare-approved amount for your primary care doctor appointment. But because your specialist does not agree to the Medicare-approved amount as full payment for their services, they can then charge you up to 15 percent more for the services they perform. You are responsible for paying the difference.
As you can see from the example above, it’s important to ask your health care providers if they accept Medicare assignment and how much you can expect to pay before receiving any medical services.
Some Medicare Supplement Insurance plans (also called Medigap) provide coverage for the Medicare Part B excess charges that may result when a health care provider does not accept Medicare assignment.
To learn more about Medicare Supplement Insurance plans, read our Medigap plan comparison guide.