Medicare Bill Higher Than the Allowed Amount

What This Means

Your Medicare Summary Notice or Explanation of Benefits shows a CO-45 adjustment, meaning the provider charged more than the amount Medicare approves for this service. Medicare has a fee schedule — a set price it will pay for each service. When a provider charges more, Medicare adjusts the payment down to its approved amount.

Whether you owe any of the difference depends on whether your provider “accepts assignment” (agrees to accept Medicare’s price as full payment).

Why This Happens

• Providers often bill above Medicare’s rates. Most providers set their standard charges higher than what Medicare pays. This is normal. The CO-45 code simply means Medicare reduced the charge to its approved amount.
• Medicare has a fixed fee schedule. Medicare sets approved amounts for every covered service. These amounts are updated annually and are usually lower than what providers charge commercially.
• The adjustment is usually handled between Medicare and the provider. If your provider accepts assignment, the difference is written off — not billed to you.

How Assignment and Limiting Charges Work

There are three scenarios that determine what you may owe:

1. Participating provider (accepts assignment): The provider accepts Medicare’s approved amount as full payment. You owe only your deductible and coinsurance (typically 20%). The provider cannot bill you for the difference. About 98% of providers participate in Medicare.

2. Non-participating provider (doesn’t accept assignment): The provider can charge up to 15% above the Medicare-approved amount. This cap is called the “limiting charge.” For example, if Medicare approves $100, the provider can charge up to $115. You would owe your coinsurance on the Medicare-approved amount plus the extra amount up to the limiting charge.

3. Provider who has opted out of Medicare: A small number of providers have formally opted out of Medicare entirely. They can set their own prices and you pay the full amount. Medicare will not pay anything. This is rare and requires you to sign a private contract before receiving care.

Should You Appeal?

What To Do Next

1. Check if your provider accepts assignment. If they do, you should not owe more than your deductible and 20% coinsurance on the Medicare-approved amount. The CO-45 adjustment amount should be written off by the provider.
2. If your provider does not accept assignment, verify they are not charging more than the limiting charge (15% above Medicare’s approved amount). The limiting charge is the legal maximum.
3. Review your bill carefully. Compare the provider’s charge, Medicare’s approved amount, what Medicare paid, and what you are being asked to pay. If the numbers don’t add up, contact the provider’s billing office.
4. If you are being billed above the limiting charge, this may be illegal. Contact 1-800-MEDICARE (1-800-633-4227) to report the issue.
5. For future visits, ask providers whether they accept Medicare assignment before you receive services. You can search for participating providers on Medicare.gov.

Sources

• Medicare.gov: Does Your Provider Accept Medicare as Full Payment?
• CMS: 2026 Medicare Parts A & B Premiums and Deductibles
• KFF: Financial Protections for Medicare Patients
• MedSole RCM: CO-45 Denial Code Complete Guide

Frequently Asked Questions