Medicare Balance Billing: Is This Legal?

What This Means

A bill after Medicare pays is not automatically improper. You may owe a deductible or coinsurance. The issue here is excess billing beyond the amount Medicare’s rules allow the provider to collect. Compare the provider’s charge, the Medicare-approved amount, Medicare’s payment and the patient share on your notice.

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. For most covered professional services, the non-participating provider can charge up to 15% above the Medicare-approved amount (the “limiting charge,” 42 CFR 414.48). A charge above that limit is improper when the rule applies. It does not apply to some supplies and durable medical equipment, so check the item and Medicare’s maximum billable amount before disputing it.
• The provider has opted out of Medicare. A small number of providers formally opt out of Medicare and can set their own fees, but only after you sign a private contract before treatment (42 CFR 405.415); with that contract, Medicare’s limits don’t apply and neither Medicare nor a Medigap plan pays. If you did not sign one and it wasn’t emergency or urgent care, the provider can collect no more than the limiting charge (or, from a non-physician practitioner, only your deductible and coinsurance) — 42 CFR 405.435(b)(5), (7). For emergency or urgent care with no prior contract, the provider must bill Medicare and is limited the same way (42 CFR 405.440).
• 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. Nearly all Medicare claims — 99.7% in 2023 — are paid on assignment.
• 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, and it wasn’t emergency or urgent care. Even if a provider has opted out of Medicare, they can’t charge you freely without a signed private contract in place before the service (42 CFR 405.415). Without one, a doctor can collect no more than the limiting charge, and a non-physician practitioner only your deductible and coinsurance (42 CFR 405.435(b)(5), (7)).

Balance billing IS allowed (with limits) when:

• Your provider does not participate in Medicare but has not opted out. For most covered professional services, the limiting charge is up to 15% above the Medicare-approved amount (Medicare.gov). Some supplies and durable medical equipment are outside that rule; a non-participating DME supplier may charge more when it does not accept assignment.
• Your provider has formally opted out of Medicare AND you signed a private contract before treatment. In this situation, Medicare’s payment limits don’t apply, and you agreed to pay the provider’s full charges. Neither Medicare nor a Medigap plan pays anything for the service (42 CFR 405.415).
• The provider opted out but gave you emergency or urgent care with no prior contract. In that one case, the opt-out rules don’t apply — the provider must bill Medicare and can collect no more than the limiting charge, or, from a non-physician practitioner, only your deductible and coinsurance (42 CFR 405.440).

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 accepted assignment, check whether the bill is only for the deductible and coinsurance Medicare assigned to you. Those amounts can be valid. If it includes extra charges above the Medicare-approved amount for the covered service, ask the billing office in writing to remove the excess and explain the corrected balance.
3. If the provider does not participate, first identify the item or service on your Medicare Summary Notice. For most covered professional services, compare the total charge with the applicable limiting charge, generally 115% of the Medicare-approved amount for the non-participating provider. Some supplies and durable medical equipment are exempt. Check the notice’s “Maximum You May Be Billed” amount, if shown, or ask 1-800-MEDICARE to confirm the limit before treating a charge above 115% as illegal.
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 knowingly and repeatedly violate Medicare billing rules can face civil monetary penalties (a statutory base of $10,000 per violation, adjusted upward for inflation) 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? and Medicare.gov: Your Medicare Benefits — assignment and the limiting charge, including its exception for some supplies and DME.
• CMS: DMEPOS Competitive Bidding Program Updates — non-participating DMEPOS suppliers outside competitive bidding areas may charge any amount when assignment is not required.
• KFF: What to Know About How Medicare Pays Physicians — 99.7% of Medicare claims were paid on assignment (2023) and the 15% limiting charge on non-participating providers.
• KFF: Financial Protections for Medicare Patients When Receiving Physician Services — how assignment and the limiting charge protect Medicare patients from balance billing.
• CMS: Prohibition on Balance Billing Qualified Medicare Beneficiaries — providers may not bill QMBs for any Medicare cost-sharing.
• CMS: No Surprises — Understand Your Rights Against Surprise Medical Bills — the No Surprises Act excludes Medicare and Medicare Advantage, which have their own protections.
• 42 CFR 405.415: Private contracts (opt-out providers) — an opt-out provider must have you sign a private contract before treating you; with a valid contract, Medicare’s limits don’t apply and neither Medicare nor Medigap pays.
• 42 CFR 405.435: Failure to maintain opt-out — without a signed contract, a doctor may collect no more than the limiting charge (405.435(b)(5)) and a non-physician practitioner only the deductible and coinsurance (405.435(b)(7)).
• 42 CFR 405.440: Emergency and urgent care services — an opt-out provider giving emergency or urgent care with no prior contract must bill Medicare and is limited the same way as a non-participating provider.

Frequently Asked Questions