When does Medicare pay less than 80% of approved amount

A

Alan215

New Member
I have a question regarding the meaning of "Medicare Approved Amount" on Medicare Summary Notices (MSN). On the MSN, Medicare Approved Amount is defined as "the amount a provider can be paid for a Medicare service. I had thought that this was the amount the provider not only CAN be paid, but WILL be paid (80% from Medicare and 20% from me, after I've satisfied my deductible).

However, I have a couple of cases where the total amount the provider is getting is less than the "Medicare Approved Amount" and I'm wondering why. I'm not concerned about my payments. I just want to understand my Medicare Summary Notices and what the phrase Medicare Approved Amount means.

Here are the details from the MSNs on two cases. (Let me know if you want me to attach all or part of the MSNs.)

First case, visit in a doctor's office.

Service Approved? Yes
Amount Provider Charged: $72.00
Medicare Approved Amount: $69.48
Amount Medicare Paid: $54.47 (78.4% of approved amount)
Maximum You May Be Billed: $13.90 (20% of approved amount)

Second case, physical therapy at an outpatient clinic associated with a hospital.

Service Approved? Yes
Amount Facility Charged: $143.66
Medicare Approved Amount: $143.66
Amount Medicare Paid: $42.35 (29.5% of approved amount)
Maximum You May be Billed: $10.80 (7.5% of approved amount)

Note that of the total amount paid to the provider (42.35+10.80), my part was approximately, but not exactly 20%.

I have some additional hospital outpatient MSNs simlar to the one above with a large difference between the Medicare Approved Amount and the actual amount paid. Howevr, in these cases, my part was exactly 20% of the total paid.

I recall reading that the 80/20 division does not necessarily apply in hospital outpatient clinics. However, I still don't understand what Medicare Approved Amount means.

Many thanks for any insights you can give me.

- Alan
 
I had exactly the same question and called Medicare TWICE to try to get an answer. Both people seemed only to be able to explain how Medicare doesn't pay whatever the provider asks. I KNOW THAT... I said, politely. I want to know what the "Medicare-approved amount" means if it doesn't mean that Medicare will normally pay 80% of this amount.

I had two charges. In one case the provider charged 347 and Medicare APPROVED 347. And Medicare paid 67.00. In the other the provide charged 355. Medicare approved 355. And medicare paid 31.53. In both case "maximum you may be billed" was negligible. I'm not a fan of the way hospitals set their prices, and I'm very glad, in principle, that Medicare is putting a lid on it. But this looks like doctors might be right... that they can't live on what Medicare pays. I'd be interested to hear other thoughts.

LAS

*******************************
Alan215 said:
I have a question regarding the meaning of "Medicare Approved Amount" on Medicare Summary Notices (MSN). On the MSN, Medicare Approved Amount is defined as "the amount a provider can be paid for a Medicare service. I had thought that this was the amount the provider not only CAN be paid, but WILL be paid (80% from Medicare and 20% from me, after I've satisfied my deductible).

However, I have a couple of cases where the total amount the provider is getting is less than the "Medicare Approved Amount" and I'm wondering why. I'm not concerned about my payments. I just want to understand my Medicare Summary Notices and what the phrase Medicare Approved Amount means.

Here are the details from the MSNs on two cases. (Let me know if you want me to attach all or part of the MSNs.)

First case, visit in a doctor's office.

Service Approved? Yes
Amount Provider Charged: $72.00
Medicare Approved Amount: $69.48
Amount Medicare Paid: $54.47 (78.4% of approved amount)
Maximum You May Be Billed: $13.90 (20% of approved amount)

Second case, physical therapy at an outpatient clinic associated with a hospital.

Service Approved? Yes
Amount Facility Charged: $143.66
Medicare Approved Amount: $143.66
Amount Medicare Paid: $42.35 (29.5% of approved amount)
Maximum You May be Billed: $10.80 (7.5% of approved amount)

Note that of the total amount paid to the provider (42.35+10.80), my part was approximately, but not exactly 20%.

I have some additional hospital outpatient MSNs simlar to the one above with a large difference between the Medicare Approved Amount and the actual amount paid. Howevr, in these cases, my part was exactly 20% of the total paid.

I recall reading that the 80/20 division does not necessarily apply in hospital outpatient clinics. However, I still don't understand what Medicare Approved Amount means.

Many thanks for any insights you can give me.

- Alan
Click to expand...
 
LAS said:
I had exactly the same question and called Medicare TWICE to try to get an answer. Both people seemed only to be able to explain how Medicare doesn't pay whatever the provider asks. I KNOW THAT... I said, politely. I want to know what the "Medicare-approved amount" means if it doesn't mean that Medicare will normally pay 80% of this amount.

I had two charges. In one case the provider charged 347 and Medicare APPROVED 347. And Medicare paid 67.00. In the other the provide charged 355. Medicare approved 355. And medicare paid 31.53. In both case "maximum you may be billed" was negligible. I'm not a fan of the way hospitals set their prices, and I'm very glad, in principle, that Medicare is putting a lid on it. But this looks like doctors might be right... that they can't live on what Medicare pays. I'd be interested to hear other thoughts.

LAS
Click to expand...

Want to know about how hospitals set prices? Read excellent study by Steven Brill Why Medicare Bills are Killing Us .
By the way, author claims the Medicare prices (i.e. what government pays for Medicare) are probably the fairest one ...
 
Alan215 said:
I have a question regarding the meaning of "Medicare Approved Amount" on Medicare Summary Notices (MSN). On the MSN, Medicare Approved Amount is defined as "the amount a provider can be paid for a Medicare service. I had thought that this was the amount the provider not only CAN be paid, but WILL be paid (80% from Medicare and 20% from me, after I've satisfied my deductible).

However, I have a couple of cases where the total amount the provider is getting is less than the "Medicare Approved Amount" and I'm wondering why. I'm not concerned about my payments. I just want to understand my Medicare Summary Notices and what the phrase Medicare Approved Amount means.

Here are the details from the MSNs on two cases. (Let me know if you want me to attach all or part of the MSNs.)

First case, visit in a doctor's office.

Service Approved? Yes
Amount Provider Charged: $72.00
Medicare Approved Amount: $69.48
Amount Medicare Paid: $54.47 (78.4% of approved amount)
Maximum You May Be Billed: $13.90 (20% of approved amount)

Second case, physical therapy at an outpatient clinic associated with a hospital.

Service Approved? Yes
Amount Facility Charged: $143.66
Medicare Approved Amount: $143.66
Amount Medicare Paid: $42.35 (29.5% of approved amount)
Maximum You May be Billed: $10.80 (7.5% of approved amount)

Note that of the total amount paid to the provider (42.35+10.80), my part was approximately, but not exactly 20%.

I have some additional hospital outpatient MSNs simlar to the one above with a large difference between the Medicare Approved Amount and the actual amount paid. Howevr, in these cases, my part was exactly 20% of the total paid.

I recall reading that the 80/20 division does not necessarily apply in hospital outpatient clinics. However, I still don't understand what Medicare Approved Amount means.

Many thanks for any insights you can give me.

- Alan
Click to expand...

Effective 4/1/2013 due to the sequestration federal budget cuts, provider reimbursements are reduced by 2%. For example, if medicare approved amount is $100, the 80% reimbursement of $80 to the provider is reduced to $78 and the beneficiary would still be responsible for 20% or $20. If the provider accepts assignment, no balance billing is allowed for the 2% reduction.
 
Could Medicare make it any more confusing? The real issue here is that providers are the one's that are suffering. Whether you agree with that or not, the result will end up being that less providers are going to take Medicare or at least Medicare Assignment. That change will greatly impact Medicare beneficiaries!
 
Steven48 said:
Alan215 said:
I have a question regarding the meaning of "Medicare Approved Amount" on Medicare Summary Notices (MSN). On the MSN, Medicare Approved Amount is defined as "the amount a provider can be paid for a Medicare service. I had thought that this was the amount the provider not only CAN be paid, but WILL be paid (80% from Medicare and 20% from me, after I've satisfied my deductible).

However, I have a couple of cases where the total amount the provider is getting is less than the "Medicare Approved Amount" and I'm wondering why. I'm not concerned about my payments. I just want to understand my Medicare Summary Notices and what the phrase Medicare Approved Amount means.

Here are the details from the MSNs on two cases. (Let me know if you want me to attach all or part of the MSNs.)

First case, visit in a doctor's office.

Service Approved? Yes
Amount Provider Charged: $72.00
Medicare Approved Amount: $69.48
Amount Medicare Paid: $54.47 (78.4% of approved amount)
Maximum You May Be Billed: $13.90 (20% of approved amount)

Second case, physical therapy at an outpatient clinic associated with a hospital.

Service Approved? Yes
Amount Facility Charged: $143.66
Medicare Approved Amount: $143.66
Amount Medicare Paid: $42.35 (29.5% of approved amount)
Maximum You May be Billed: $10.80 (7.5% of approved amount)

Note that of the total amount paid to the provider (42.35+10.80), my part was approximately, but not exactly 20%.

I have some additional hospital outpatient MSNs simlar to the one above with a large difference between the Medicare Approved Amount and the actual amount paid. Howevr, in these cases, my part was exactly 20% of the total paid.

I recall reading that the 80/20 division does not necessarily apply in hospital outpatient clinics. However, I still don't understand what Medicare Approved Amount means.

Many thanks for any insights you can give me.

- Alan
Click to expand...

Effective 4/1/2013 due to the sequestration federal budget cuts, provider reimbursements are reduced by 2%. For example, if medicare approved amount is $100, the 80% reimbursement of $80 to the provider is reduced to $78 and the beneficiary would still be responsible for 20% or $20. If the provider accepts assignment, no balance billing is allowed for the 2% reduction.
Click to expand...

Steven48's post was an eye-opener for me that helped greatly in understanding "Medicare math." Allow me, however, to make a small correction in the example.

He correctly stated that (emphasis mine) "reimbursements are reduced by 2%." Thus it's the $80 that's reduced by 2%. So in the example, the $80 to the provider is reduced not by $2, but by $1.60 (2% of $80) to $78.40.

The net result is that Medicare now reimburses providers 78.4% of the approved amount. Note this agrees with case one in Alan's original post.

Hope this helps.


PS: The provider swallows the missing 1.6%.
 
I have no answer but examples.....

Approved amount $310.00

Medicare paid provider $80.00

You may be billed $20.00

In the above example clearly 20% of the Medicare approved amount would be $62.00 right? So why $20.00. Because providers take what was paid and mark it up 20% to either get paid for procedures which were denied, or were not filed properly so there is at least some recovery from patients. I have several examples of this.

Also check your original bills. There are some that are balanced billed to meet the Medicare EOBS. Example..

charge fully approved $20,000.00
Write off by Hospital $15.000.00
Approved amount $3255.00 (*20% is $651.00)
Medicare paid $3000.00
You may be billed $1000.00

Math make sense? Of course not. Here is how it was done. Take the full charge and subtract the write off. Then make the amount Medicare paid match the difference. I.E. $3000.00 + $2000 = $5000.00 X 20% = The Maximum $1000.00 you may be billed. And all the lines on your MSN are stars because one or more of the procedures was denied by Medicare. You get a bill from the provider for $1000,00 and you can't fight because there is no proof of anything wrong.

I have several of these examples and no one can explain anywhere. If you guys have a way to get to the bottom of this and fix it lets do it.
 
medicofused said:
I have no answer but examples.....

Approved amount $310.00

Medicare paid provider $80.00

You may be billed $20.00

In the above example clearly 20% of the Medicare approved amount would be $62.00 right? So why $20.00. Because providers take what was paid and mark it up 20% to either get paid for procedures which were denied, or were not filed properly so there is at least some recovery from patients. I have several examples of this.

Also check your original bills. There are some that are balanced billed to meet the Medicare EOBS. Example..

charge fully approved $20,000.00
Write off by Hospital $15.000.00
Approved amount $3255.00 (*20% is $651.00)
Medicare paid $3000.00
You may be billed $1000.00

Math make sense? Of course not. Here is how it was done. Take the full charge and subtract the write off. Then make the amount Medicare paid match the difference. I.E. $3000.00 + $2000 = $5000.00 X 20% = The Maximum $1000.00 you may be billed. And all the lines on your MSN are stars because one or more of the procedures was denied by Medicare. You get a bill from the provider for $1000,00 and you can't fight because there is no proof of anything wrong.

I have several of these examples and no one can explain anywhere. If you guys have a way to get to the bottom of this and fix it lets do it.
Click to expand...
 
I didn't know about the percentage reduction of 2%. Interesting they don't simple say they are only going to pay 78%. I too, have wondered about this question. The other end of it is it looks to me by comparing the amount my supplemental pays that the providers are getting doubly shafted. It looks like the supplementals are paying only 80% of what Medicare pays.
How fair is that?
 
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