People with Medicare coverage do not pay upfront for their healthcare when they choose a Medicare-enrolled provider. Instead, Medicare usually pays healthcare professionals directly for treatment.
However, an insured person must meet their out-of-pocket expenses before Medicare pays for medical services.
Typically, an individual does not have to submit a claim to Medicare for reimbursement of their healthcare costs.
This article explains how payments and reimbursement processes work within the different parts of Medicare.
Glossary of Medicare terms
We may use a few terms in this article that can be helpful to understand when selecting the best insurance plan:
- Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
People do not usually need to file a claim if they choose a healthcare professional who works with Medicare. However, some Medicare Advantage plans require they choose an in-network provider.
If an individual opts for a nonparticipating provider, they may have to file a claim and advise Medicare of the costs.
A person would be responsible for the portion of the costs above what Medicare would usually cover, as well as any applicable out-of-pocket expenses.
The claiming process
Anyone who needs to pay for healthcare upfront and claim for reimbursement can expect to go through the following steps:
- An individual will receive a healthcare service from a nonparticipating provider.
- The individual will pay the full cost of the services to the healthcare professional directly.
- The provider has 1 year to submit a bill for their services to a Medicare Administrative Contractor on behalf of the individual.
- If the provider does not file within the time limit, an individual must complete the Patient Request for Medical Payment Form CMS-1490S by following the instructions on the form. They must also provide itemized bills and a letter explaining why they are personally submitting a claim.
- The individual will receive a Medicare Summary Notice (MSN) in the mail every 3 months, outlining any reimbursement claims. An individual can also log into MyMedicare.gov to check the status of any claims.
- Medicare Part B will reimburse 80% of the Medicare-approved amount for the healthcare services the individual received.
Medicare allows out-of-network providers to charge up to 15% more than the approved amount for their services. Medicare calls this the limiting charge.
Some states set a lower limiting charge. For example, in the state of New York, the limiting charge is 5%.
An individual may be responsible for a 20% coinsurance and expenses over the agreed amount.
Original Medicare includes Part A insurance, which covers in-hospital care, and Part B, which covers medical costs.
When a person has Original Medicare, they will generally never see a bill from a provider. Instead, the law states that providers must send the claim directly to Medicare.
Medicare then reimburses the medical costs directly to the service provider.
Usually, the insured person will not have to pay the bill for medical services upfront and then file for reimbursement. Providers have an agreement with Medicare to accept the Medicare-approved payment amount for their services.
However, out-of-pocket costs may still apply.
Exceptions
Depending on their doctor’s Medicare status, a person may need to pay upfront and submit a claim for reimbursement in some cases.
The cost for the individual will depend on the type of provider.
Types of providers and how they assign out-of-pocket expenses
A provider can have one of the following statuses in relation to Medicare reimbursement:
- A Medicare-certified provider: Providers can accept assignments from Medicare and submit claims to the government for payment of their services. If an individual chooses a participating provider, they must pay a 20% coinsurance.
- A nonparticipating provider: These providers have not signed an agreement with Medicare to accept assignments, but they can choose to accept individual patients. They can choose to charge more than the Medicare reimbursement amount for a particular service.
- An opt-out provider: An individual may still be able to visit a provider who does not accept Medicare. However, they may have to pay the full cost of treatment upfront and out of pocket.
Choosing a Medicare-approved provider means a person is only responsible for the relevant out-of-pocket cost.
Learn more about Medicare’s out-of-pocket costs and entitlements.
Private insurance companies administer Medicare Advantage (Part C) plans. These insurers have a contract with Medicare to provide benefits from parts A and B.
As with original Medicare, an individual generally does not need to file a claim for medical expenses. Medicare will pay the insurance company to administer an individual’s benefits each month. The individual remains responsible for out-of-pocket expenses.
Some Medicare Advantage plans expect the insured individual to use providers within the plan’s network, such as health maintenance organization (HMO) and preferred provider organization (PPO) plans.
If an individual chooses a service provider outside the network, they may have to pay the total cost — except in medical emergencies.
Learn more about Medicare Advantage.
Medicare Part D covers prescription drugs. Private insurance companies also administer these plans.
An individual will usually pay a monthly insurance premium for their Part D coverage. They must purchase their prescription medications from an agreed network of pharmacies.
Medicare reimburses eligible prescription drug costs directly. An insured person claiming for medications under Part D only needs to meet out-of-pocket expenses.
Learn more about Medicare Part D.
Medicare supplement insurance, or Medigap, is a privately administered plan that may help an individual with original Medicare meet their out-of-pocket expenses. However, most new Medigap plans do not cover the Part B deductible.
There are 10 standardized Medigap insurance plans. People can compare different Medigap plans on the Medicare website. The states of Massachusetts, Minnesota, and Wisconsin standardize their plans differently.
If an individual has original Medicare and a Medigap plan, the law requires that a provider file claims for their services. An individual should not need to file a claim for reimbursement.
When receiving healthcare services, people should present their Medicare and Medigap cards together. Medicare must approve the original Medicare claim first before it approves pay from Medigap.
If the provider does not submit a claim, an insured person must submit a Medigap claim. To do so, they can:
- Request a claim form from the insurance company.
- Complete the form and attach copies of itemized bills from the service provider.
- Include a copy of the MSN, which details the bills.
- Submit the claim to the private insurance company that administers the Medigap plan.
Generally, an individual should not need to claim for Medicare reimbursement, as the provider is responsible for filing a claim.
However, under certain circumstances, a person may have to complete and file a claim for reimbursement.