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One of the more difficult transitions for many retirees when they go on Medicare is having to find a new doctor. In fact, just mastering the language describing how American physicians participate (or do not participate) in the Medicare Program can take a little effort.
Accepting Medicare Assignment
When you have private health insurance, typically you are provided coverage for doctors "in-network" and "out-of-network."
Health insurance pays a higher percentage, typically 80% to 100%, of a doctor's fee if the doctor is on an approved list of medical providers who have agreed to accept fixed rates of compensation for a list of procedures and diagnoses.
Private health insurance usually pays a lower percentage, usually 60%, when you see a doctor who is "out-of-network." These are physicians who have not agreed to take a fixed fee from the insurance company for pre-defined procedures and diagnoses, or they are doctors who practice outside the service area covered by your policy.
Medicare uses a different terminology for in-network and out-of-network care. The "in-network" physicians for Medicare are those who have agreed to "accepting Medicare assignment." The "out-of-network" physicians for Medicare are those who "not accepting assignment."
A Very Simple Payment System, in Some Cases
When a doctor agrees to accept assignment from Medicare, he or she has signed an agreement to fixed charges determined by the Medicare program. Since everyone who has Medicare has Part A coverage, and Part A covers 80% of the cost of covered services, the doctor gets 80% of the predetermined office charge automatically from your Part A coverage.
If you also have supplemental coverage, the provider gets the other 20% of the fee from the company that carries the supplemental policy. If you only have Part A coverage, you may be liable for 20% of the bill, but the total bill is limited to what Medicare allows for the service you receive. You may have to pay part of the doctor's charge, but you don't have to file any paperwork.
Doctors who accept Medicare cannot charge whatever they want. The government dictates their charges. Medicare reimbursement has gotten lower and lower, with the result that some doctors no longer accept Medicare assignment, sometimes opting out of Medicare altogether.