People with Medicare coverage do not pay upfront for their healthcare when they choose a Medicare-enrolled provider. Instead, Medicare will usually pay the healthcare provider for treatment directly.
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 will explain how payments and reimbursement processes work within the different parts of Medicare.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Typically, an individual does not need to file a claim if they choose a healthcare provider that works with Medicare. Some Medicare Advantage plans require that an individual chooses an in-network provider.
If an individual opts for a non-participating 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 non-participating provider.
- The individual will pay the full cost of the services to the healthcare provider 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 submitting a claim personally.
- The individual will receive a Medicare Summary Notice (MSN) in the mail every 3 months, which outlines any claims for reimbursements. 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 healthcare 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.
Traditional Medicare includes Part A insurance, which covers in-hospital care, and Part B, which covers medical costs.
When an individual has traditional Medicare, they will generally never see a bill from a healthcare 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.
In some cases, an individual may need to pay upfront and submit a claim for reimbursement, depending on the Medicare status of their doctor.
The cost for the individual will depend on the type of healthcare provider.
Types of provider and how they assign out-of-pocket expenses
A healthcare 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 non-participating 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 healthcare 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 healthcare provider means that a person is only responsible for the relevant out-of-pocket cost.
Private insurance companies administer Medicare Advantage, or Part C, plans. These insurers have a contract with Medicare to provide benefits from parts A and B.
As with traditional 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 healthcare providers within the plan’s network. These plans include health maintenance organization and preferred provider organization plans.
If an individual chooses a service provider outside the network, they may have to pay the full cost — except in medical emergencies.
Medicare Part D covers prescription drugs. Private insurance companies also administer these plans.
An individual will 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.
Medicare supplement insurance, or Medigap, is a privately administered plan that may help an individual with traditional Medicare meet their out-of-pocket expenses. However, new Medigap plans do not cover the Part B deductible.
There are 10 standardized Medigap insurance plans. An individual can compare different Medigap plans on the Medicare website. The states of Massachusetts, Minnesota, and Wisconsin standardize their plans differently.
If an individual has traditional Medicare and a Medigap plan, the law requires that a healthcare provider files claims for their services. An individual should not need to file a claim for reimbursement.
People should present their Medicare and Medigap cards together when they receive a healthcare service. Medicare must approve the traditional Medicare claim first before they approve pay from Medigap.
If the provider does not submit a claim, an insured person must submit a Medigap claim. To do so, they should:
- 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 reimbursement, as the healthcare provider is responsible for filing a claim with Medicare.
However, under certain circumstances, an individual may have to fill in and file a claim for reimbursement.