A non-participating physician provides services to a Medicare patient
A non-participating physician provides services to a Medicare patient who has total charges of $100 (before Medicare’s limiting charge is applied). The physician does not accept assignment, charges the maximum allowable, and submits the claim to Medicare. Assume Medicare’s approved schedule for these services is $80.
What is the maximum amount the physician is allowed to charge the patient?
What is the Medicare portion of the physician payment (which Medicare sends to the patient)?
What is the patient’s portion of the payment to the physician (net of the reimbursement from Medicare in the previous question)?
Would the physician have been better off by accepting assignment on this case? Why or why not?
How do a high percentage of Medicaid (not Medicare) patients influence a hospital’s prices?
Sample Solution
\ Non-Participating Physician and Medicare Billing
Let's break down the scenario and answer your questions:- Maximum Charge to Patient:
- Medicare's approved amount (schedule) = $80
- Non-participating physician limiting charge = 115% of Medicare's approved amount (Important: This is not 15% above the total charges)
- Limiting charge = 1.15 * $80 = $92
- Medicare Payment to Patient:
- Medicare typically reimburses 80% of its approved amount to the patient after they pay their deductible and coinsurance.
- Medicare payment = 80% of $80 = $64
- Patient's Payment to Physician:
- Maximum allowable charge = $92
- Medicare payment = $64
- Patient's responsibility = $92 - $64 = $28
- Accepting Assignment?
- If they accepted assignment, they would have agreed to receive Medicare's approved amount ($80) as full payment.
- By not accepting assignment, they collected an additional $12 ($92 - $80) from the patient.
- High Medicaid Patients and Hospital Prices:
- Cost-shifting: Hospitals may raise prices for services covered by Medicare and private insurance to compensate for lower Medicaid reimbursements.
- Negotiation leverage: If a hospital has a high Medicaid population, it may have less bargaining power when negotiating reimbursement rates with private insurers.
- Uncompensated care: Medicaid may not cover all costs associated with a patient's care, leaving the hospital to absorb some of the financial burden.