Medicare Accept Assignment

This arrangement is called “balance billing” and means that the Medicare patient is financially responsible for the portion of the provider’s charge that is in excess of Medicare’s assigned rate, in addition to standard applicable coinsurance and deductibles for Medicare services.When non-participating providers do not accept assignment, they may not collect reimbursement from Medicare; rather, they bill the Medicare patient directly, typically up front at the time of service.Several protections are in place to ensure that patients are clearly aware of their financial liabilities when seeing a provider under a private contract.

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(Non-participating providers must submit claims to Medicare so that their patients are reimbursed for Medicare’s portion of their charges.) Participating providers also gain the benefit of having electronic access to Medicare beneficiaries’ supplemental insurance status, such as their Medigap coverage.

This information makes it considerably easier for providers to file claims to collect beneficiary coinsurance amounts, as well as easing the paperwork burden on patients.

Surveys conducted by the Physician Payment Review Commission (PPRC), a congressional advisory body and predecessor of the Medicare Payment Advisory Commission (Med PAC), revealed that prior to the participating provider program, beneficiaries often did not know from one physician to the next whether they would face extra out-of-pocket charges due to balance billing and how much those amounts might be.

The establishment of the participating provider program in Medicare instituted multiple incentives to encourage providers to accept assignment for all their patients and become participating providers.

Congress established the participating provider program in the 1984 Deficit Reduction Act (DEFRA) to address two main concerns: confusion among beneficiaries about the fees they were being charged when they saw a doctor and escalating rates of balance billing from charges that exceeded Medicare’s established “usual, customary, and reasonable” rates for their area.

At that time, aside from Medicaid-eligible beneficiaries, Medicare had no limits on the amount that physicians and practitioners could balance bill for their services.Additionally, Medicare helps beneficiaries in traditional Medicare seek and select participating providers by listing them by name with their contact information on Medicare’s consumer-focused website ( Given the strong incentives of the participation program, combined with limits on balance billing (discussed in the next section), it is not surprising that the share of physicians and practitioners electing to be participating providers has risen to high levels across the country.Overall, the rate of providers with participation agreements has grown to 96 percent in 2011, up considerably from about 30 percent in 1986, two years after the start of the participating provider program (Figure 3).Under current law, Medicare has several financial protections in place that are designed to safeguard Medicare beneficiaries—seniors and people with permanent disabilities—from unexpected and confusing charges when they seek care from doctors and other practitioners.These protections include the participating provider program, limitations on balance billing, and conditions on private contracting.This issue brief describes these three protections, explains why they were enacted, and examines the implications of modifying them for beneficiaries, providers, and the Medicare program.Under current law, physicians and practitioners have three options for how they will charge their patients in traditional Medicare.These provider options have direct implications on the charges and out-of-pocket liabilities that beneficiaries face when they receive physician services (Figure 2).They also play a major role in several financial protections in current law—namely, the physician participation program, limitations on balance billing, and conditions for private contracting—which help beneficiaries understand the financial implications of their provider choices and encourage providers to accept Medicare’s standard fees.They may register with Medicare as (1) a participating provider, (2) a non-participating provider, or (3) an opt-out provider who privately contracts with each of his or her Medicare patients for payment (Figure 1).This issue brief describes these three options and then examines three current provisions in Medicare that provide financial protections for Medicare beneficiaries.


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