How is the limiting charge for a nonpar provider determined?

A non-participating (non-PAR) provider using the Medicare limited fee schedule means the doctor or clinic is enrolled in Medicare but has not signed a standard participation agreement, meaning they are paid at 95% of the standard Medicare-approved amount and can choose how to bill each claim.

How Non-PAR Billing Works

• Lower reimbursement rate: Medicare sets the non-PAR fee schedule amount at 95% of what participating providers receive for the same service.
• Claim-by-claim choice: The provider can decide on a case-by-case basis whether to accept Medicare assignment (accepting the 95% rate as full payment for that specific visit) or not.
• The limiting charge: If the provider does not accept assignment on an unassigned claim, they can legally charge you up to 15% more than the non-PAR fee schedule amount (known as the limiting charge, which totals 115% of the non-PAR allowance).
• Patient costs: You may have to pay the provider upfront in full, and Medicare will reimburse you directly for its share of the covered amount.

To learn more about how a specific doctor bills, you can check the official Medicare Provider Lookup tool.

If a doctor or facility is a non-participating (non-par) provider for Medicare, they are enrolled in Medicare but do not agree to accept the Medicare-approved amount as full payment for all services.

How Non-Participating Providers Work

• Case-by-Case Assignment: They can choose whether to "accept assignment" (take the Medicare-approved amount as full payment) for each individual patient or service.
• Lower Reimbursement: Medicare reimburses non-participating providers at 95% of the Medicare Physician Fee Schedule, which is 5% less than participating providers.
• Mandatory Claim Submission: They are still legally required to submit claims to Medicare for covered services.

Financial Impact on You

• The Limiting Charge: If the provider does not accept assignment for your visit, they can charge you up to 15% more than the Medicare-approved amount. This extra cost is called a limiting charge.
• Higher Out-of-Pocket Costs: You are responsible for the standard 20% Medicare coinsurance plus any extra amount up to that 15% limiting charge (some Medigap supplemental plans help cover these excess charges).
• Upfront Payments: They may ask you to pay the entire bill at the time of your appointment, and Medicare will then reimburse you your portion later.

Note: A non-participating provider is different from an opt-out provider, who rejects Medicare entirely, or an out-of-network provider under a private or Medicare Advantage plan.

A provider's fee schedule—representing the allowed amounts or reimbursement rates for medical services—is ultimately determined by the third-party payer (such as private insurance companies, Medicare, or Medicaid), though internal charge structures are initially set by the provider's practice.

Key Determinants of Fee Schedules

• Third-Party Payers: Government programs like the Centers for Medicare and Medicaid Services (CMS) or private commercial insurers establish the approved reimbursement amounts and contracted rates for covered services.
• Relative Value Units (RVUs): Programs like Medicare calculate rates using resource costs, work values, and practice expenses mapped through relative value scales.
• Practice Management: In clinical administrative contexts (such as medical assistant exam questions), the office manager or provider sets the baseline standard charges and fee master based on operating costs and market research, but actual paid reimbursement schedules are dictated by the insurer.

The Medicare payment rate for non-participating (non-PAR) providers is 95% of the standard Medicare Physician Fee Schedule (MPFS) allowed amount for participating providers.

Key Payment and Billing Details

• Reimbursement Rate: Medicare pays non-participating providers 5% less than the approved amount for participating providers.
• Assignment Rules: Non-participating providers do not sign a universal agreement and can choose whether or not to accept Medicare assignment on a claim-by-claim basis.
• Limiting Charge: If a non-participating provider does not accept assignment for a service, they can charge the patient a maximum of 115% of the non-PAR fee schedule amount (which equals about 9.25% above the standard participating fee schedule).
• Upfront Costs: Patients may be required to pay the full bill upfront, and Medicare will then reimburse the patient 80% of the approved non-PAR amount (after the deductible is met).

A Medicare limiting charge is the absolute maximum amount a non-participating provider can legally charge you for a covered service when they do not accept Medicare assignment.

How It Works

• The 15% Cap: This charge is capped at 15% above the amount Medicare approves for non-participating providers (which is 95% of the standard Medicare-approved fee schedule).
• Balance Billing: When a doctor does not accept assignment, they can "balance bill" you for the extra amount past what Medicare pays, but they can never go higher than the limiting charge.
• Your Total Cost: You are responsible for your standard Part B coinsurance (typically 20%) plus the extra percentage allowed by the limiting charge, up to 15% more.

Key Rules and Exceptions

• Applies to Part B: It applies strictly to Original Medicare Part B services handled by non-participating doctors who haven't completely opted out of Medicare.
• Supplies and Equipment: The limiting charge does not apply to medical equipment or supplies.
• Opt-Out Providers: It does not apply to doctors who have entirely opted out of Medicare and signed private contracts; those providers face no federal billing limits.
• State Restrictions: Some states (like New York) set lower caps, restricting excess charges to 5% instead of 15%.