A nonparticipating provider is a provider involved in the Medicare program who has enrolled to be a Medicare provider but chooses to receive payment in a different method and amount than Medicare providers classified as participating. The nonparticipating provider may receive reimbursement for rendered services directly from their Medicare patients. They submit a bill to Medicare so the beneficiary may be reimbursed for the portion of the charges for which Medicare is responsible.
It is important to note that nonparticipating providers may choose to accept assignment, therefore, receiving reimbursement directly from Medicare on a claim-by-claim basis. The amount paid on the rendered services must be reported in Item 29 of the CMS 1500 claim form. This ensures that the beneficiary is reimbursed (if applicable) prior to Medicare sending payment to the provider.
Regardless if a nonparticipating provider chooses to accept assignment on all claims or on a claim-by claim basis, their Medicare reimbursement is five percent less than a participating provider, as reflected in the annual Medicare Physician Fee Schedule.
If a physician chooses not to participate in the Medicare program, there are special rules that must be followed. The following restrictions apply to non-participating providers:
- A Special Charge Limit is Applied - A non-participating physician is limited on the amount he or she can charge Medicare patients for his/her services. The actual charge cannot exceed the limiting charge for the service. The limiting charge applies only on non-assigned claims (see Limiting Charge for additional information). This may cause a provider to create two different fee schedules in which they bill their Medicare and non-Medicare patients.
- A Limit on the Fee Schedule Amount - The fee schedule amount for a nonparticipating physician is five percent less than for a participating physician.
- Special Note on Elective Surgery - If non-emergency surgery, which is expected to cost $500.00 or more is to be performed, and the physician is not planning to accept assignment, the non-participating physician must give the patient a written notice prior to performing the surgery. The notice must include information such as the charge for the surgery, what Medicare is likely to allow and pay and the amount the patient can expect to be their out-of-pocket expense.
- Prohibition for Billing for Services Deemed to Be Not Reasonable and Necessary Non-participating physicians who do not accept assignment for services that are determined to be not reasonable and necessary must refund any amounts collected for those services (including any deductible and coinsurance amounts) to the patient, unless the patient has signed an Advanced Beneficiary Notice (ABN) prior to the service being rendered.
The government requires all Medicare carriers to monitor compliance with the preceding rules and restrictions. The continued failure of a provider to comply with the rules may result in fines, penalties and/or exclusion from the Medicare and Medicaid programs. In spite of these restrictions, many physicians and suppliers still prefer not to participate in the Medicare program. By doing so, they retain their right to choose to accept or not accept assignment on an individual claim basis.
The limiting charge is the maximum dollar amount that the Federal Government allows a non-participating physician to charge Medicare patients for a given service. Effective for services rendered on or after January 1, 1991, the limiting charge applies only to services billed on a non-assigned basis.
Under current legislation, all services listed with relative value units (RVUs) on the Medicare physician fee schedule have limiting charges. The limiting charge for these services is 115% of the non-participating fee schedule amount. Services and supplies such as clinical laboratory tests, ambulance transports, influenza and pneumococcal immunization medications and drugs and biologicals do not have limiting charges, and providers/suppliers must accept assignment.
When reimbursement is based on special payment rules (e.g., facility-based reduction, multiple surgical procedures, assistants-at-surgery) the limiting charge is equal to 115% of the reduced, calculated Medicare allowed amount.
Example: An assistant surgeon will receive payment based on 16% of the fee schedule for the surgical service rendered. To calculate the limiting charge for an assistant-at-surgery:
- Use the non-participating amount from the appropriate locality fee schedule to determine the allowed amount for the surgical procedure: Code – 12345; Allowable – $1,000
- Multiply the allowance for the surgical procedure by 0.16 (16%). This is the allowance for assistant at surgery: $1,000 × 0.16 = $160
- Multiply this amount by 115% to obtain the limiting charge: $160 × 115% = $184
Limiting charges for other services subject to special payment rules would be calculated in a similar manner:
- Facility-based (previously site-of-service) reduction; The limiting charge is 115% of the facility-based non-participating fee schedule amount. The facility-based amounts are included on the current physician fee schedule.
- Multiple surgical procedures performed during the same operative session; Medicare will allow the primary surgical procedure in full and any additional surgical procedures at a reduced rate, e.g., 50% of the value for all subsequent surgical services rendered on the same date to the same beneficiary.) The limiting charge for the additional surgical procedure(s) is 115% of the reduced allowance.
The limiting charge applies when Medicare is the secondary payer, unless the claim to the primary payer is assigned, or the primary payer requires the physician to accept its payment as payment in full. In other words, a non-participating provider may bill a primary insurer, other than Medicare, more than his limiting charge if he accepts the primary payment in full, and does not bill either the beneficiary or Medicare for any difference between the billed amount and the primary payment amount.
Two exceptions to the preceding regulation:
When a physician bills a primary insurer above his limiting charge, but receives no payment because the insurer applies the amount to the patient's deductible, the physician must adjust his bill to the limiting charge or lower and may then bill Medicare. When submitting the bill, the physician must write on the bill that he will collect no more than the limiting charge as payment for covered Medicare services. He must also attach the primary insurer's Explanation of Benefits (EOB) to the claim he submits to Medicare. Example:
CPT Code: Billed Primary: Primary Deductible Applied: Medicare Approved Amount Adjusted Bill to Medicare (Limiting Charge is 115% of Medicare Approved Amount): 12345 $65.00 $65.00 $39.13 $45.00
When a physician bills a primary insurer above his or her limiting charge and receives payment from the primary insurer that is less than the Medicare limiting charge, he/she is not obligated to accept the primary's payment as full payment and therefore, can submit a bill to Medicare. When submitting the bill to Medicare, the physician must write on the bill that he/she will collect no more than the limiting charge as payment for covered Medicare services. The physician must also attach the EOB from the primary insurer.
The CMS requires all Medicare carriers to monitor nonparticipating physicians for compliance with Medicare limiting charges. This review is conducted to establish compliance with Title XVIII of the Social Security Act, Sections 1842(B) and 1842(J) that limit the amount a non-participating physician can charge for services to Medicare beneficiaries. Every two weeks, a report is produced that identifies claims submitted by non-participating physicians.
Non-participating physicians are monitored for compliance with their limiting charges on non-assigned claims only. Physicians who accept assignment on a claim are not required to abide by their limiting charges for that claim, since any amount billed over Medicare's allowed amount is required to be written-off by the physician.
Effective October 1, 1998, the Limiting Charge Exception Reports (LCERs) were no longer mailed to nonparticipating providers, practitioners or suppliers. The limiting charges submitted by nonparticipating providers are still monitored by Medicare staff. In the absence of the limiting charge exception reports, providers, other practitioners and suppliers can use their remittance notices to calculate the limiting charge amounts.
Example: Take approved amount times 115% to get limiting charge amount (maximum amount that may be charged to beneficiary).
- $135.00 (approved amount from remittance advice) × 115% = $155.25 Limiting charge amount
The limiting charge amounts for most physician fee schedule services are listed in the disclosure reports and this constitutes notice of the Medicare charge limits of those services.
The maximum amount that a nonparticipating physician, other practitioner or supplier is permitted to charge for a Medicare beneficiary for unassigned services paid under the physician fee schedule is 115% of the Medicare allowed charge. The submission of a non-assigned physician fee schedule service with a submitted/billed charge in excess of the Medicare limiting charge amount is what constitutes a violation of the charge limit.
The limiting charge provision does not apply to submitted/billed charges of assigned services, but the provider can collect in total (from all payers) no more than the Medicare approved charge for such services.
Refunds of overcharges are required and the remittance advice notice will serve as the provider's notification that a refund must be made. If a provider has any questions regarding limiting charge refunds they should call the Provider Call Center. Providers who elect not to receive remittance statements for non-assigned claims are still required to make refunds of overcharges.
Beneficiaries will continue to be notified on their Medicare Summary Notices (MSNs) when their physician, practitioner, or supplier submits a non-assigned physician fee schedule service approved for payment but the fee billed to Medicare exceeds the limiting charge amount. The MSNs will also inform beneficiaries how much the physician, practitioner or supplier can legally bill for that service.
Services by Non-Physician Providers - Many services provided by IDTFs, independent labs, portable X-ray suppliers, mammography screening providers, independently practicing PTs and OTs, audiologists and psychologists who bill non-assigned claims for these fee schedule items must also comply with the limiting charge as these services are paid on the physician fee schedule.
Notice of Elective Surgery
The Omnibus Budget Reconciliation Act of 1986 (OBRA) requires that when a nonparticipating surgeon does not accept assignment for elective surgery performed on a Medicare beneficiary, he/she must provide certain information, in writing, to the beneficiary before the surgery. This requirement only applies to elective surgery for which charges are $500.00 or more. Elective surgery for Medicare purposes is defined as surgery that can be scheduled in advance, is not an emergency and would not result in death or permanent impairment of health if delayed.
To be considered an emergency, the condition for which surgery is needed must meet the definition of "emergency medical condition", as specified in subsection 1903(v)(3) of the Social Security Act (the Act). Section 1903(v)(3) of the Act defines "emergency medical condition" as "…a medical condition...manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in: (a) placing the patient's health in serious jeopardy; (b) serious impairment to bodily functions; or (c) serious dysfunction of any bodily organ or part.
The surgeon and assistant surgeon must furnish their Medicare patients with a written notice prior to the elective surgery (see sample below). If a surgeon/assistant surgeon does not notify the beneficiary prior to rendering the service, the surgeon must refund any money collected from the beneficiary in excess of the Medicare approved amount. If a surgeon fails to refund the money, he/she may be subject to civil monetary penalties and/or exclusion from the Medicare program.
The surgeon/assistant surgeon must document the beneficiary's receipt and acknowledgment of the required information contained in the notice by having the beneficiary or his/her representative sign and date the notice. Surgeons are required to keep a copy of the notice in their files and produce copies of the notice upon request.
Note: The actual billed or collected charge may not be greater than the limiting charge amount (i.e., 115 percent of the Medicare approved amount for nonparticipating surgeon). The sample letter to the beneficiary and the worksheet shown below should display an amount within the limiting charge. The beneficiary is not financially liable for a higher amount even though he or she agrees to the elective surgery on an unassigned basis. Beneficiaries are entitled to a refund of money billed or collected above the limiting charge.
The following is a worksheet to determine your patient's estimated Medicare payment for elective surgery:
Surgeon's actual charge $____________
Medicare approved amount $____________
The difference between the actual charge and Medicare approved charge $____________
Twenty percent coinsurance (20 × item 2): $____________
Beneficiary's out-of-pocket expense (item 3 and 4) $____________
(Assume $10000 deductible is met)
Include amounts in Items 1, 2 and 5 in your letter to the beneficiary:
Sample Elective Surgery Notice
I do not plan to accept assignment on your surgery. The law requires that where assignment is not taken and the charge is $50000 or more, an estimate of the charge and your liability must be provided prior to surgery. These estimates assume that you have met the $10000 annual Medicare Part B deductible:
Type of surgery:
Estimated charge (item 1):
Medicare estimated approved amount (item 2):
Your estimated payment (item 5):
(Includes your Medicare coinsurance):
Last Updated May 17, 2018