Reasonable Charge Reductions Under Part B of Medicare

GAO examined whether Medicare beneficiaries are being properly reimbursed for doctors' bills under the Medicare program. Part B of the Medicare Program, which primarily covers the cost of physician services, is paying an increasingly smaller portion of the elderly's total cost for physician services. On the average, the charges submitted by doctors are reduced by about 20 percent by the program, because they do not meet Medicare's reasonable charge criteria. The percentage of claims where the program reimburses the beneficiary (unassigned claims) rather than the doctor (assigned claims) has increased from about 35 percent to about 50 percent. Where the program pays the beneficiary, he or she is liable for the difference between the submitted charges and Medicare's reasonable charges in addition to the normal 20 percent coinsurance amounts. On assigned claims, the physician agrees to accept Medicare's allowed charge as full payment, and the beneficiary is liable only for the coinsurance on the allowed charges.