In order to make a good decision you have to ask, “What is a Medicare excess charge?”

When you are deciding on what Medicare Supplement you may notice that most of them do NOT cover excess charges.  This sounds ominous and horrible and as a result people often buy those supplements that do cover those charges.  I’ll admit when I first started helping people with Medicare I was pretty adamant that you needed to be covered against excess charges.  

What is a Medicare Excess Charge?

But you need to ask, What is an excess charge?  How often do people get hit with them?  When could I get hit with them?  Remember this is Medicare.  What it is not is a group or individual policy from the under 65 market.  Excess charges from a doctor or hospital are not the same thing as out-of-network charges.  The policies you had in the past had networks and if you went to a doctor that was not in-network you got dinged with higher charges.  How much higher?  The sky’s the limit.

This is NOT the same thing

To make this super simple:  1.  Excess charges are extremely rare.  2.  They are capped at 15% of the Medicare negotiated rate.  3.  Excess charges are extremely rare.

Excess Charges are capped at 15% of the Medicare Allowable rate

Let’s unpack that a little for more detail.  An excess charge is essentially, when a doctor will work with Medicare enrollee’s, but doesn’t accept Medicare’s price sheet.  Medicare’s rules allow this, but with a caveat.  Medicare’s rule is that will pay the doctor/hospital just like they would pay doctors/hospitals that do accept their price sheet.  Then comes the caveat; if you take payment from Medicare then the doctor/hospital can only charge up to a 15% excess charge on top of that.

Let’s say an anesthesiologist billed amount is $3000 for your hour-long surgery.  It doesn’t really matter what they billed because let’s say the Medicare rate is only $1000 (I’m making up numbers for this example).  If this doctor doesn’t accept Medicare’s prices sheet the most you could be billed as an excess charge is $150 (15% of $1000).

Excess Charges are Extremely Rare

As you can see the capped percentage on the excess charge means it will never be some astronomical amount.   Let’s talk about when, or how often people get hit with excess charges?  Here in Tennessee, it is simply highly unlikely.  Nationwide, it is highly unlikely.  The statistic I have heard is that 97% of hospitals and surgical centers take Medicare.  Keep in mind here we are talking about traditional Medicare and a supplement, not Medicare Advanatage plans.  Advantage plans have networks and none of them(that I am aware of) in any market approach 97% acceptance.

Concierge Doctors

You might have heard that fewer doctors are taking Medicare now.  While that is true, it isn’t a widespread phenomenon.  There are some doctors that have moved away from accepting any insurance at all.  They practice what is called concierge medicine.  You pay them a certain amount each month an in return (typically) you can go to see that doctor as often as you want throughout the year.  Is it a good deal?  It’s a good deal for the doctor.  I have read that those doctors make just as much money with half the patient load.

The problem is what you pay that doctor doesn’t help you with hospital bills or specialists.  So when you hear that doctors aren’t taking Medicare anymore…yeah…there’s a few.  Nationwide, doctor’s not working with Medicare is a non-issue.   The one exception to this that I am aware of is some (but not all) of the Mayo Clinics.

Be Careful when it comes to the Mayo Clinic

Some of them accept Medicare’s price sheet, some of them will take Medicare payments, but charge the excess charge, and then some won’t take any money from Medicare at all.  They will help you bill Medicare, the money gets sent to you, and then they get to bill you whatever the heck they want.  Beware of the Mayo Clinic!!

In summary, There’s not much to Fear

In summary, What is an excess charge?  It’s something you don’t shouldn’t worry about too much.  There are more important things to lose sleep over.  Medicare excess charges are very, very rare, and they are capped at 15% of the Medicare rate chart (not 15% of what the doctor bills).  In my opinion,  excess charges are simply not something worth worrying too much about.

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