A Medicare beneficiary who assumes the program’s approved rate is the final price can be caught off guard by a bill that runs higher. Doctors who do not accept Medicare’s terms in full are allowed to charge up to 15 percent above the Medicare-approved amount, a markup known as an excess charge. It applies only to certain providers under specific rules, a handful of states outlaw it entirely, and a common Medigap policy erases it for those who carry one. Understanding which category a doctor falls into is the difference between paying Medicare’s rate and paying a surcharge on top of it.
Assignment and what “accepting” Medicare really means
The key concept is assignment, the agreement a provider makes about how much to charge. A provider who accepts assignment agrees to accept the Medicare-approved amount as full payment and cannot bill the patient for anything beyond the normal deductible and coinsurance. The large majority of doctors who treat Medicare patients are participating providers who accept assignment on every claim, which is why most beneficiaries never encounter an excess charge at all.
A smaller group takes a different path. Non-participating providers still treat Medicare patients and submit claims to Medicare, but they have not agreed to accept assignment on every service, which gives them the option to bill above the approved amount. Medicare explains the mechanics of assignment and provider participation in detail, including how the approved amount itself is set slightly lower for these providers. The distinction is not about whether a doctor takes Medicare, but about the terms under which they do.
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How the 15 percent excess charge works
When a non-participating provider chooses not to accept assignment on a service, federal rules cap how much extra they can charge. The limit is 15 percent above the Medicare-approved amount for non-participating providers, and that additional amount is the excess charge the patient can be billed for. On a service where Medicare’s approved figure is modest, the surcharge may be small, but on a larger procedure the 15 percent can add up to a meaningful sum that the patient pays out of pocket.
The excess charge sits on top of the ordinary cost-sharing a beneficiary already owes, such as the coinsurance percentage Medicare leaves to the patient. Medicare’s overview of what beneficiaries pay lays out how the approved amount, the coinsurance, and any excess charge stack together to form the final bill. Because the surcharge is legal only up to that 15 percent ceiling, a provider cannot bill an unlimited markup; the cap is a real protection, even if it still leaves the patient paying more than Medicare’s base rate.
The arithmetic carries a subtlety that softens the surcharge slightly. The Medicare-approved amount used for a non-participating provider is itself set a few percentage points below the amount a participating provider would receive for the same service, and the 15 percent ceiling, often called the limiting charge, is applied to that lower figure rather than to the standard one. The effect is that the true maximum a patient can be billed sits somewhat under a straight 15 percent markup on the ordinary approved amount, though it still runs above what an assignment-accepting doctor could ever charge. The distinction is easy to miss on a bill, where the excess charge appears simply as an added line rather than as a calculation off a reduced base.
The charge also appears more often in some specialties and settings than others, since a provider’s decision to accept assignment can vary from one service to the next. A beneficiary can ask a provider’s office directly whether they accept assignment before a visit, which surfaces the potential for an excess charge in advance rather than after the bill arrives.
State bans and the Medigap policies that erase the charge
Geography plays a decisive role, because a few states have simply outlawed the excess charge. In those states, laws bar providers from billing Medicare patients above the approved amount regardless of participation status, so a beneficiary living there is protected from the surcharge by default. A person who moves or travels should not assume the same rule follows them, since the protection is written into individual state law rather than federal Medicare policy.
For beneficiaries in states that allow the charge, supplemental coverage offers a way to neutralize it. Medigap policies, sold by private insurers to fill gaps in Original Medicare, come in standardized letter plans, and two of them cover excess charges specifically. Plan G and the older Plan F both pay the Part B excess charge in full, meaning a beneficiary with either policy does not feel the 15 percent surcharge even when a non-participating provider applies it. Plan G has become the more widely available of the two, since Plan F is closed to people who became eligible for Medicare more recently.
The interaction between these protections shapes a practical decision for older Americans weighing supplemental coverage. Someone who lives in a state that bans excess charges and rarely sees non-participating providers may place little value on that particular Medigap feature, while someone in a state that allows the surcharge and sees specialists who do not accept assignment may find real financial security in a plan that covers it. Confirming a provider’s assignment status ahead of time, checking whether the state prohibits the charge, and knowing whether a Medigap policy already absorbs it are the three levers that determine whether the surcharge ever reaches the beneficiary’s wallet.
This article was researched and drafted with the assistance of artificial intelligence.
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