Medicare Bill Higher Than the Allowed Amount

What This Means

Your Medicare Summary Notice or Explanation of Benefits shows a CO-45 adjustment (“charge exceeds fee schedule/maximum allowable”), 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. This covers nearly all care — 99.7% of Medicare claims were accepted on assignment in 2023.

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 any remaining deductible, 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. Before they treat you, you must sign a private contract acknowledging that Medicare’s limits do not apply to this provider — they can set their own prices, and you agree to pay the full amount yourself. Medicare pays nothing toward the bill, and a Medigap policy pays nothing either, since Medigap only pays after Medicare has paid its share. This is rare. If an opted-out provider gives you emergency or urgent care and you have not already signed a private contract with them, no contract is needed — the provider must bill Medicare and can collect no more than the limiting charge (or only your deductible and coinsurance if they are a non-physician practitioner). If you had already signed a private contract with that provider, its terms still apply even in an emergency (42 CFR 405.440).

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). For services paid under the physician fee schedule, 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 Medicare paid for the wrong service, or your deductible or coinsurance looks miscomputed, request a redetermination from Medicare (your MSN explains how). Disagreeing with Medicare’s rate itself is not appealable. If the provider is charging more than the limiting charge, contact the provider’s billing office first.
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? — assignment, and the 15% limiting charge for non-participating providers
• KFF: What to Know About How Medicare Pays Physicians — 99.7% of Medicare claims accepted on assignment (2023); opt-out rate
• KFF: Financial Protections for Medicare Patients
• X12: Claim Adjustment Reason Codes (CARCs) — official definition of CO-45

Frequently Asked Questions