What is Medicare Reimbursement?

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  • Written By: Ken Black
  • Edited By: Bronwyn Harris
  • Last Modified Date: 24 September 2019
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Medicare reimbursement is the name applied to the payments that physicians and hospitals receive for services rendered to patients who are covered under the Medicare program. The money will go directly to the billing provider, but Medicare insurance does not pay the full amount. Due to the rates set by Medicare, the Medicare reimbursement program can often be very contentious and a hotbed for political exploitation.

Those physicians who want to participate in the Medicare reimbursement program have a couple of options. One of those options is to look at the fee schedule and accept assignment. Any participating physician that accepts assignment must accept the rate Medicare sets as the price for that service. Medicare will take that amount and pay 80 percent of it. The patient will be responsible for the rest.

Once a physician becomes a participating physician in the Medicare reimbursement program, all fee schedules for the services offered must be accepted. This does not mean the physician will be required to accept all Medicare patients, however. Once a physician becomes a participating physician, he or she is usually locked into that role for a year.


Some physicians do not feel they can adequately make a profit based on the fee schedule provided through the Medicare reimbursement policy and therefore may opt out of the program. These non-participating physicians can then accept Medicare fee schedules on a case-by-case basis. They can then charge 115% percent of that fee schedule, and are reimbursed 95% of the approved fee.

The best way to illustrate what this means for the patient and doctor is to use an example. If a procedure performed has an acceptable fee of $200 US Dollars (USD) to Medicare, the Medicare coverage will pay 80% of that, or $160 USD. The patient is responsible for the additional $40 USD. If the physician is a non-participant performing this procedure for Medicare, he or she can charge 115% of the 95% that Medicare approves, or $218.50 USD. Medicare will then pay $152 USD, leaving the remaining $66.50 up to the patient or secondary insurance coverage. The physician also has the option of not putting in a Medicare reimbursement claim, if he or she is a non-participating physician.

Some physicians claim that the Medicare reimbursement fee schedules are inadequate and they cannot make a profit or even break even if they were to use them. That is one reason many may opt not to participate. In other cases, they may simply limit the number of Medicare patients they see.


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Post 2

In my opinion at least, medicare reimbursement rates are one of many problems with privatized health care. While this nationalizes, or attempts to do so, health care for the elderly or people with chronic problems, it does so in a way that causes problems for both patients and physician.

If, instead of medicare, these people- and everyone else- were just on insurance of varying degrees, paid by the state, a doctor could charge what he or she felt was a fair price for treatment and then people with better insurance options might end up paying less after the fact, but the doctor would get the same.

At least, that's how I understood it.

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