2.2 Medicare Billing Rules — PAR vs Non-PAR, ABN, Limiting Charge
Key Takeaways
- Participating (PAR) providers accept assignment on all claims and are reimbursed 100% of the Medicare Physician Fee Schedule (MPFS) amount.
- Non-participating (Non-PAR) providers are paid 95% of the MPFS amount and, on unassigned claims, may bill the patient up to the limiting charge of 115% of the non-PAR fee.
- Opt-out providers receive no Medicare payment and bill patients directly through a private contract.
- An Advance Beneficiary Notice (ABN) must be issued before a service that Medicare is likely to deny, so the patient can choose to accept financial responsibility.
- ABN-related modifiers communicate notice status: GA (ABN on file), GX (voluntary ABN), GY (statutorily excluded), and GZ (no ABN, expect denial).
Participation Status Drives Reimbursement
Quick Answer: PAR providers accept assignment and get 100% of the Medicare fee schedule. Non-PAR providers get 95% and can charge a patient up to 115% of the non-PAR amount on unassigned claims — the limiting charge. Opt-out providers leave Medicare entirely and use private contracts.
Every Medicare biller must know the provider's participation status, because it controls how much Medicare pays and how much the patient can be billed. A provider chooses status each year during the annual open enrollment window.
PAR vs Non-PAR vs Opt-Out
| Status | Accepts Assignment | Medicare Payment | Patient Billing Limit |
|---|---|---|---|
| Participating (PAR) | Always | 100% of MPFS allowed amount | Deductible + 20% coinsurance only |
| Non-Participating (Non-PAR) | Case by case | 95% of MPFS (the non-PAR fee) | Up to the limiting charge on unassigned claims |
| Opt-Out | Never (no Medicare claim) | $0 — Medicare pays nothing | Whatever the private contract states |
Accepting assignment means the provider agrees to accept the Medicare-approved amount as payment in full. The Medicare Physician Fee Schedule (MPFS) sets that approved amount.
The Limiting Charge
Because Non-PAR providers are paid only 95% of the fee schedule, Medicare allows them to recover some of that reduction on unassigned claims. The limiting charge is 115% of the non-PAR amount — and the non-PAR amount is itself 95% of the PAR fee schedule. A provider may not bill the patient above the limiting charge; doing so is a compliance violation.
Opt-Out Providers
An opt-out provider has formally withdrawn from Medicare. They treat Medicare patients only under a signed private contract, no claim is filed, and the patient cannot seek Medicare reimbursement. Emergency and urgent care are the narrow exceptions.
The Advance Beneficiary Notice (ABN)
The Advance Beneficiary Notice of Noncoverage (ABN, Form CMS-R-131) is given to a Medicare beneficiary before a service that Medicare is likely to deny as not medically necessary or not covered. The ABN lets the patient make an informed choice to receive the service and accept financial responsibility. A mandatory ABN is required when a normally covered service may be denied; a voluntary ABN may be issued for services Medicare never covers, simply as a courtesy.
The Notice of Exclusion from Medicare Benefits (NEMB) is an older voluntary notice for statutorily excluded items; CMS now allows a voluntary ABN to serve that purpose.
ABN Modifiers
| Modifier | Meaning |
|---|---|
| GA | Waiver of liability statement issued; a mandatory ABN is on file |
| GX | Voluntary ABN issued for a service that is statutorily excluded |
| GY | Item or service is statutorily excluded or not a Medicare benefit |
| GZ | Expected to be denied as not reasonable and necessary; no ABN was obtained |
A GZ claim signals that no ABN was collected, so the provider cannot bill the patient and the denied amount is written off. Appending GA preserves the right to bill the patient if Medicare denies the service.
A Non-PAR provider does not accept assignment on a claim. What is the maximum the provider may charge the patient?
Which modifier indicates that a mandatory ABN is on file for a service expected to be denied as not medically necessary?