Medicare Balance Billing: Is This Legal?

What This Means

You received a bill from a provider asking you to pay the difference between what they charged and what Medicare paid. This practice is called “balance billing,” and for most Medicare patients, it is illegal or strictly limited.

If a provider who participates in Medicare — or even one who does not participate but has not formally opted out — is billing you above Medicare’s rules, you may not owe this money.

Why This Happens

• The provider may not understand Medicare billing rules. Some billing offices mistakenly send balance bills to Medicare patients, especially if they also see patients with private insurance where balance billing rules differ.
• The provider does not participate in Medicare. Non-participating providers are allowed to charge up to 15% above the Medicare-approved amount (the “limiting charge”), but no more. If they are billing above that, it is a violation.
• The provider has opted out of Medicare. A small number of providers formally opt out of Medicare and can set their own fees. However, you must sign a private contract before receiving care. If you did not sign one, the provider cannot balance bill you.
• A billing error occurred. The provider’s billing system may have automatically generated a balance bill that should have been written off.

When Balance Billing Is and Is Not Allowed

Balance billing is NOT allowed when:

• Your provider participates in Medicare (accepts assignment). Participating providers agree to accept the Medicare-approved amount as full payment. They cannot bill you beyond your deductible and coinsurance. About 98% of Medicare providers are participating providers.
• You are a Qualified Medicare Beneficiary (QMB). If you have QMB status through Medicaid, providers are prohibited from billing you for any Medicare cost-sharing — including deductibles, coinsurance, and copays. This is federal law.
• The provider did not have you sign an opt-out contract. Even if a provider has opted out of Medicare, they cannot charge you freely without a signed private contract that was in place before the service.

Balance billing IS allowed (with limits) when:

• Your provider does not participate in Medicare but has not opted out. These non-participating providers can charge up to 15% above the Medicare-approved amount. This is the “limiting charge.” They cannot charge more than this.
• Your provider has formally opted out of Medicare AND you signed a private contract. In this rare situation, you agreed to pay the provider’s full charges. Medicare will not pay anything for the service.

Should You Appeal?

What To Do Next

1. Do not pay the bill yet. Before paying, determine whether the balance bill is legal. Check whether your provider participates in Medicare by searching on Medicare.gov or calling 1-800-MEDICARE.
2. If the provider participates in Medicare, the balance bill is illegal. Contact the provider’s billing office in writing and state that participating providers cannot balance bill Medicare patients. Cite Medicare’s assignment rules.
3. If the provider does not participate, check whether the total charge exceeds the limiting charge (115% of the Medicare-approved amount). If it does, the excess is illegal. You can find the Medicare-approved amount on your Medicare Summary Notice.
4. If you have QMB status, you owe nothing beyond what Medicare pays — no deductible, no coinsurance, no copays. Tell the provider you have QMB status and that billing you is prohibited under federal law.
5. Report illegal balance billing to Medicare. Call 1-800-MEDICARE (1-800-633-4227), available 24 hours a day, 7 days a week. They can investigate and take action against providers who violate billing rules.
6. File a complaint with your state. You can also report the provider to your state’s medical board or attorney general’s office. Providers who repeatedly violate Medicare billing rules face penalties of up to $10,000 per violation and possible exclusion from Medicare.
7. If you already paid, request a refund from the provider in writing. If they refuse, report the situation to 1-800-MEDICARE and your state authorities.

Sources

• Medicare.gov: Does Your Provider Accept Medicare as Full Payment?
• KFF: Financial Protections for Medicare Patients When Receiving Physician Services
• CMS: Prohibition on Balance Billing Qualified Medicare Beneficiaries
• LegalClarity: Medicare Balance Billing Prohibition Rules and Exceptions
• Medicare Resources: What Is Balance Billing?

Frequently Asked Questions