We've heard horror stories from clients that have Medicare and a Medigap plan about getting large bills for services received from providers that either do not participate in Medicare, have opted out of Medicare, or have withdrawn from Medicare entirely. Understanding how Medicare contracts with providers will keep you from falling into this trap.
There are three types of medical providers recognized by Medicare, and one type that is not: Participating, Non-Participating, Opt-Out, and Non-Enrolled or Withdrawn/Excluded. Participating providers accept Medicare assignment - meaning they accept Medicare's payment rate, and they must submit the claim to Medicare on your behalf. For example, if a physician bills $150 for a service but Medicare allows only $100 for that service, the provider will reduce their bill to the $100. Medicare will pay 80% which equals $80 (if you have met your Part B deductible) and then 20% or $20 will be automatically sent to your Medigap company for payment – leaving you with no payment responsibility (Plan G or F).
If you are using a Non-Participating provider, that means they do not accept Medicare assignment (payment rates). They may ask for full payment from you for the services provided, and you would then have to file a claim for reimbursement from Medicare, Medicare pays these providers 95% of their fee schedule amount, and these providers can bill you 15% more than Medicare's approved amount. Ultimately, that leaves 20% in excess charges that would be paid by your Medigap plan (Plan G or F) leaving you with no payment responsibility, providing you had met your Part B deductible.
Now, if you are seeing a provider that has opted out of Medicare, Medicare will not pay for any services you receive from that provider (except in emergencies) regardless of who bills Medicare for the services. Providers who have opted out can still order tests, home health services, and provide orders for durable medical equipment, and Medicare will pay for those things at the Medicare-approved rates from participating service providers.
If a provider has Withdrawn or been Excluded from the Medicare program entirely, Medicare will not pay for ANY services provided or anything ordered (tests, equipment, etc.) for you by that provider. Not understanding your provider's status can lead to very large bills dropping into your mailbox. For example, if your provider has withdrawn and they send you for an MRI, the imaging center will bill Medicare and the claim will be denied by both Medicare and your Medigap plan leaving you with a bill for $3000+.
Providers are required to inform you of their status prior to providing services. You can search for a provider's status on Medicare.gov, There are two different search tools; one shows if a provider is Participating or Non-Participating and one shows if they've opted out. If you don't find them listed at all, chances are they have not enrolled in Medicare or have withdrawn or been excluded from the program. If in doubt, talk it out BEFORE receiving services.