Balance billing is a practice in which doctors or other health care providers bill you for charges that exceed the amount that will be reimbursed by Medicare for a particular service. Your normal deductible and coinsurance are not counted as balance billing. Balance billing occurs when the doctor sends the patient a bill for more than the normal deductible and coinsurance out-of-pocket costs, and is essentially trying to recoup the portion of the bill written off by Medicare.
If your doctor is a participating provider with Original Medicare, balance billing is forbidden. 93 percent of non-pediatric primary care doctors in the US are participating providers with Original Medicare (if you’re in a Medicare Advantage plan and you stay in-network, balance billing will also be prohibited under the terms of your plan’s contract with the medical provider; Medicare Advantage plans generally include far fewer physicians than Original Medicare’s participating provider system).
Some doctors aren’t participating providers with Medicare, but they also haven’t opted out of Medicare altogether. These non-participating providers can balance bill you, but the total charge can’t be more than 15 percent more than Medicare will pay the doctor (some states further limit this amount). Medicare pays non-participating doctors 95 percent of the regular Medicare rate, and the doctor can increase that amount by up to 15 percent and charge it to the patient (in addition to the normal Medicare deductible and/or coinsurance that applies for the service). This 15 percent cap is known as the limiting charge.
Providers who have opted out of Medicare altogether cannot seek reimbursement from Medicare at all. The patient is fully responsible for paying the entire bill in that case, and there’s no limit to how much the provider can bill. It’s important for patients to understand the difference between a doctor who is non-participating versus a doctor who has opted out altogether, since the Medicare limiting charge doesn’t apply to doctors who have opted out of Medicare. Opting out is rare overall, but fairly common for some specialties. According to Becker’s Hospital Review data, only 1 percent of all doctors have opted out of Medicare, but that rises to 38 percent among psychiatrists.