Balance billing in Medicare happens when a doctor or other provider charges you more than the Medicare-approved amount for a service and bills you for the difference. If Medicare approves $70 for a visit but your provider charges $100, that extra $30 is a balance bill. Whether a provider can actually do this depends on their relationship with Medicare, and federal law caps how much extra they can charge.
How Medicare’s Approved Amount Works
For every covered service under Part B, Medicare sets an approved amount based on its physician fee schedule. Medicare pays 80% of that approved amount, and you pay the remaining 20% as coinsurance. That’s the straightforward part. The question of balance billing arises when a provider’s actual charge exceeds the approved amount, and whether they can pass that difference on to you.
The answer depends entirely on which of three categories your provider falls into: participating, non-participating, or opted out of Medicare altogether.
Participating vs. Non-Participating Providers
Participating providers have signed an agreement with Medicare to accept assignment on every Part B claim. “Accepting assignment” means they agree to take the Medicare-approved amount as full payment. They collect your 20% coinsurance and whatever Medicare pays, and that’s it. They cannot balance bill you for anything above the approved amount. About 96% of physicians accept Medicare assignment.
Non-participating providers have not signed that blanket agreement, but they still work within the Medicare system. They can choose on a claim-by-claim basis whether to accept assignment. When they don’t accept assignment, they can charge you more than the Medicare-approved amount. However, federal law limits how much more they can charge. Since 1993, non-participating providers have been capped at 115% of the Medicare fee schedule amount for non-participating providers (which itself is set at 95% of the participating provider rate). This cap is called the “limiting charge.”
Here’s what that looks like in practice. Say the Medicare-approved amount for a participating provider is $100. A non-participating provider’s fee schedule amount would be $95 (95% of $100). The limiting charge is 115% of $95, which equals $109.25. So the most a non-participating provider can charge you for that service is $109.25. The difference between the Medicare-approved amount and what the non-participating provider charges is called a “Part B excess charge,” and you’re responsible for paying it out of pocket.
Providers Who Opt Out of Medicare
A third category exists: providers who have formally opted out of Medicare entirely. Under rules established by the 1997 Balanced Budget Act, doctors can file an opt-out affidavit with Medicare and enter into private contracts with patients. Once they opt out, the limiting charge cap no longer applies. They can charge whatever they want, and Medicare will not reimburse any portion of the bill.
If you see an opted-out provider, you sign a private contract acknowledging that you’re responsible for the full cost and that neither you nor the provider can submit the claim to Medicare. The provider is locked out of billing Medicare for any beneficiary for two years after opting out. This arrangement is relatively uncommon, but it’s worth asking any new provider about their Medicare status before scheduling an appointment.
States That Ban Excess Charges
Eight states have gone further than the federal limiting charge rule and prohibit non-participating providers from charging any Part B excess charges at all. If you live in one of these states, non-participating providers must accept the Medicare-approved amount as payment in full, just like participating providers do. Those states are Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont.
How Medicare Advantage Handles Balance Billing
If you have a Medicare Advantage plan (Part C) instead of Original Medicare, the rules work differently. Medicare Advantage plans operate like private insurance with provider networks. In-network providers have agreed to the plan’s negotiated rates, so balance billing doesn’t apply. For out-of-network care, your plan’s terms govern what you owe, and many Medicare Advantage plans either restrict or don’t cover out-of-network services at all (except for emergencies).
CMS notes that people with Medicare are already protected against surprise medical bills from participating providers and facilities, a protection that existed before the No Surprises Act of 2022. The No Surprises Act primarily added protections for people with private insurance, since Medicare’s own rules already limited what providers could charge beneficiaries.
How Medigap Covers Excess Charges
If you have Original Medicare and are concerned about excess charges from non-participating providers, certain Medigap (Medicare Supplement) plans can help. Medigap Plans F and G cover 100% of Part B excess charges, meaning you wouldn’t pay anything above the Medicare-approved amount even if your provider doesn’t accept assignment. Plan F is only available to people who became eligible for Medicare before January 1, 2020.
Other Medigap plans (A, B, C, D, K, L, M, and N) do not cover Part B excess charges. If you have one of these plans and see a non-participating provider who doesn’t accept assignment, you’ll pay the excess charge out of your own pocket, up to the limiting charge cap.
How to Protect Yourself
The simplest way to avoid balance billing is to see participating providers. You can search Medicare’s provider directory at Medicare.gov to verify whether a doctor accepts assignment. Before any appointment with a new provider, ask directly whether they participate in Medicare or accept assignment for the services you need.
If you’re in Original Medicare and regularly see non-participating providers, a Medigap Plan F or G can absorb those excess charges. If you live in one of the eight states that ban excess charges, this is less of a concern, though it still matters if you receive care across state lines.
For services like lab work and imaging, the rules can get more complex. Lab tests billed under Part B have their own payment rules, and radiology services are subject to anti-markup limitations that prevent billing entities from inflating charges when they outsource the actual test to another provider. In practice, most lab and imaging facilities accept assignment, but it’s still worth confirming before any scheduled procedure.