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What are Medicare Reimbursement Rates?

By Ken Black
Updated: Feb 05, 2024

Medicare reimbursement rates are the rates paid to medical professionals for performing a certain procedure. For example, those who go to the doctor for a regular checkup, and are on Medicare, will be covered for a certain amount under the policy. That is the payment the healthcare provider can expect. While the system is relatively straightforward and simple, there is also some controversy associated with reimbursement rates, and some medical professionals feel that the rates fail to meet their expenses.

All healthcare professionals have the opportunity to decide whether or not they want to participate in the Medicare program. Even those who do not officially list themselves as Medicare providers may be able to see patients and submit claims for them. If this happens, the amount of reimbursement that professional receives will be somewhat less than those a participating doctor receives. Therefore, those who decide to opt out of the system normally will not see Medicare patients at all.

In the past, the Medicare reimbursement rate was dependent on a complex formula that included the cost of living in the local area. A healthcare professional in a rural state with a lower cost of living and, it is assumed, lower expenditures, would not be paid the same amount as one in a metropolitan area, even if the family practice was similar. That led to many rural professionals protesting the reimbursement, saying that no matter where they lived, they still had significant expenses, including student loans, that were on par with their big city counterparts. Further, the U.S. government realized its policy was discouraging professionals from setting up practices in under-served areas. As a result, there is now a more uniform payment distribution.

Other things may affect the rates as well. The amount a hospital gets will generally be more than a doctor's office. This is because the expenses of a hospital to perform the same procedure are generally greater than for a doctor in private practice with the same capability.

Those healthcare providers who will accept Medicare patients have no choice but to accept Medicare reimbursement for any procedure they offer. They cannot pick and choose. Further, they cannot charge the patient additional co-pays to make up for what a private insurance carrier might be willing to pay for the same procedure. While these may be considered disadvantages, the benefit comes in having access to a greater number of patients. Many of these patients will require increasing numbers of visits to the medical professional as they age, thus providing a steady stream of income.

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Discussion Comments
By mutsy — On Nov 13, 2010

Suntan12-Medicaid is a welfare program offered to low income families in order to help them with their health care costs.

The program varies per individual state and you would have to check with the welfare office of your individual state to see if you qualify.

This can cover the difference that Medicare does not cover if the senior qualifies for Medicaid. Medicaid can also help with co payments and the purchase of prescription drugs.

By suntan12 — On Nov 13, 2010

Moldova-This is what happens in many countries that offer socialized medicine.

I wanted to add that Medicare and Medicaid are two different programs. Medicare is an entitlement program offered to seniors that have paid into Social Security once they reach the age of 65, in order to cover part of the cost of their health care.

This program is not based on need and is offered to all seniors that fit the criteria. The federal government through the Social Security office offers this program. However, this program does not cover the costs of prescription drugs.

By Moldova — On Nov 13, 2010

Comfyshoes-With the new health care bill, the Medicare physician reimbursement rates will decline 23% which will mean that many doctors will accept Medicare patients and have to follow the Medicare guidelines in order to process Medicare claims.

Many doctors will leave the profession if this health care bill is actually implemented. A recent survey found that over 43% would leave the profession especially due to these new Medicare guidelines.

If this happens you will see a lot of nurse practitioners, who are not doctors take the place of doctors in minor medical situations.

You will probably see an increase of medical clinics throughout the country with nurse practitioners running them. This will cause a rationing of health care services among physicians that are left, that many people will face long waits for necessary surgeries.

By comfyshoes — On Nov 13, 2010

Anon 106904- I know that Medicare benefits for physical therapy include 100% up to the first twenty days.

This is if you are in a rehab facility. If you need continued rehab beyond that Medicare guidelines would pay up to 80% of your stay from the 21st day until the 100th day.

If you have a secondary insurance carrier like AARP, they will pay the remaining 20%. If you only have something like Aetna Medicare, then you would pay an average of $135 per day on most rehab centers.

This is only for centers in which you would be staying full time. For outpatient therapy the amounts are less.

By anon106904 — On Aug 27, 2010

I need to know the typical Medicare allowance for PT services. How can I get it? Thanks

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