What Does the Medicare-Approved Amount Mean?

It’s important to understand the difference between different types of Medicare providers to understand exactly what the Medicare-approved amount refers to.

Participating provider

A participating provider accepts assignments for Medicare. This means they are contracted to accept the amount Medicare has set for your healthcare services. The provider will bill Medicare for your services and only charge you the deductible and coinsurance amount specified by your plan.

The Medicare-approved amount may be less than the participating provider would normally charge. However, when the provider accepts the assignment, they agree to take this amount as full payment for the services.

Nonparticipating provider

A nonparticipating provider accepts assignments for some Medicare services but not all. Nonparticipating providers may not offer discounts on services the way participating providers do. Even if the provider bills Medicare later for your covered services, you may still owe the full amount upfront.

If you use a nonparticipating provider, they can charge you the difference between their normal service charges and the Medicare-approved amount. This cost is called an “excess charge” and can only be up to an additional 15 percent of the Medicare-approved amount.

When does Medicare pay?

So, when does Medicare pay out this approved amount for your services?

Medicare works the same way as private insurance, which means that it only pays out for medical services once your deductibles have been met. Your Medicare deductible costs will depend on what type of Medicare plan you are enrolled in.

If you have Original Medicare in 2024, you will owe the Medicare Part A deductible of $1,632 per benefit period and the Medicare Part B deductible of $240 per year. If you have Medicare Advantage (Part C), you may have an in-network deductible, out-of-network deductible, and drug plan deductible, depending on your plan.

Your Medicare-approved services also depend on the type of Medicare coverage you have. For instance:

• Medicare Part A covers you for hospital services.
• Medicare Part B covers you for outpatient medical services.
• Medicare Advantage covers services provided by Medicare parts A and B, as well as:
  • prescription drugs
  • dental
  • vision
  • hearing
• Medicare Part D covers your prescription drugs.

No matter what type of Medicare plan you enroll in, you can use Medicare’s coverage tool to find out if your plan covers a specific service, test, or item. Here are some of the most common Medicare-approved services:

• mammograms
• chemotherapy
• cardiovascular screenings
• bariatric surgery
• physical therapy
• durable medical equipment

If you want to know your Medicare-approved amount for these specific services, such as chemotherapy or bariatric surgery, speak with your provider directly.

Medicare-approved amount and Part A

Medicare Part A has a separate fee schedule for hospitalization. These costs kick in after the $1,632 deductible has been met and are based on how many days you spend in the hospital.

Here are the amounts for 2024, which apply for each benefit period:

• $0 coinsurance for days 1 through 60
• $408 coinsurance per day for days 61 through 90
• $816 coinsurance per lifetime reserve day for days 91 and beyond
• 100% of the costs once your lifetime reserve days have been used up

Medicare will pay all the approved costs above your coinsurance amounts until you run out of lifetime reserve days.

Medicare-approved amount and Part B

After you have met your Part B deductible, Medicare will pay its portion of the approved amount. However, under Part B, you still owe 20% of the Medicare-approved amount for all covered items and services.

Questions you can ask your doctor that may help lessen costs

You can save money on your Medicare approved costs by asking your doctor the following questions before you receive services:

• Are you a participating provider? Make sure that your provider participates in Medicare and has agreed to accept assignment.
• Do you charge any excess charges for your services? Visiting nonparticipating providers who bill excess charges can increase your medical costs.
• Are you an in-network or out-of-network provider for my plan? If you are enrolled in a Medicare Advantage PPO or HMO plan, your services could be more expensive if you go to out-of-network providers.
• Do you offer discounts or incentives for your services? Most Medicare Advantage plans are sold by larger insurance companies and may offer further incentives to utilize their preferred medical centers.

Medicare-approved amount and Medigap

Medigap plans can be beneficial for people who need help paying Medicare costs, such as deductibles, copayments, and coinsurance. But did you know that some Medigap policies also help cover the cost of services above and beyond your Medicare-approved amount?

When a non-participating provider renders services that cost more than the Medicare-approved amount, they can charge you the excess amount. These excess charges can cost up to an additional 15 percent of the Medicare-approved amount. If you have a Medigap plan, this amount may be included in your coverage.

Not all Medigap plans offer this coverage; only plans F and G do. However, Medigap plan F is no longer open to beneficiaries who became eligible for Medicare after January 1, 2020. If you are already enrolled in this plan you can continue to use it, otherwise, you will need to enroll in plan G to cover those excess charges.

How do you know what the Medicare-approved amount is for a service?

To find your Medicare-approved amount, check if your provider accepts assignment and is a participating provider. For non-participating providers, additional charges of up to 15% may apply. You can also ask your provider directly to get accurate information on the approved amount for a service.

What is the difference between the Medicare-approved amount, the actual charge, and the amount paid?

The actual charge is the amount that your provider bills Medicare. The amount paid is the amount Medicare actually pays your provider, which is typically 80% of the Medicare-approved amount.

Does Medicare always pay 80% of the approved amount?

Medicare pays 80% of the approved amount unless your provider doesn’t accept the assignment.

The Medicare-approved amount is the amount of money that Medicare has agreed to pay for your services. This amount can differ depending on what services you’re seeking and who you are seeking them from.

Using a Medicare participating provider can help to lower your out-of-pocket Medicare costs.

Enrolling in a Medigap policy can also help cover some of the additional costs you might face for using nonparticipating providers.

To find out exactly what your Medicare-approved costs are, speak with your provider directly for more details.