2.2 Medicare Billing Rules — PAR vs Non-PAR, ABN, Limiting Charge

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 participation enrollment window (mid-November through December 31).

PAR vs Non-PAR vs Opt-Out

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 through the Resource-Based Relative Value Scale, which multiplies relative value units (RVUs) by a geographic adjustment and a conversion factor. PAR providers receive payment directly from Medicare, get listed in the Medicare directory, and may collect only the deductible and 20% coinsurance from the patient. Non-PAR providers may take assignment on some claims and decline it on others, claim by claim.

On any assigned claim — PAR or Non-PAR — the provider cannot bill the patient above the approved amount; the limiting charge only applies when a Non-PAR provider does not accept assignment.

The Limiting Charge — Worked Example

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.

Work it step by step on an exam:

1. Start with the PAR allowed amount, say $100.
2. Non-PAR allowed amount = 95% x $100 = $95.
3. Limiting charge = 115% x $95 = $109.25.

So on an unassigned claim, the most this provider may legally bill the patient is $109.25. Medicare pays 80% of the $95 non-PAR amount ($76) and the patient owes the difference up to the limiting charge. A provider may not bill above the limiting charge; doing so is a compliance violation and can trigger refunds and penalties.

Opt-Out Providers

An opt-out provider has formally withdrawn from Medicare by filing an opt-out affidavit, valid for two years and automatically renewing. They treat Medicare patients only under a signed private contract that the patient acknowledges, no claim is filed, and the patient cannot seek Medicare reimbursement for those services. Emergency and urgent care are the narrow exceptions where an opt-out physician may still bill Medicare for a patient with whom no private contract exists.

The exam distinction to keep straight: Non-PAR providers are still in Medicare (they just take reduced payment), while opt-out providers are entirely out of Medicare and bill the patient whatever the private contract states.

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 (for example, a screening exceeding frequency limits); 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. An ABN must be given far enough in advance for the patient to decide, must be specific about the service and the reason for expected denial, and must not be a blanket form.

ABN Modifiers

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. The classic exam trap pairs GX (voluntary, statutorily excluded) against GA (mandatory, medical-necessity denial) — match the modifier to whether the service is never covered versus usually covered but expected to be denied this time.

A memory hook many billers use: GA = "Got the ABN, can bill"; GZ = "Zero ABN, zero billing"; GY = statutorily excluded (Medicare never pays, generates a fast denial so a secondary plan can be billed); GX = voluntary notice on an excluded item.

ABNs apply to Original Medicare (Parts A and B), not to Medicare Advantage plans, which use their own denial and appeal notices. An ABN is also not a substitute for medical necessity documentation — if the underlying ICD-10-CM diagnosis does not support the CPT/HCPCS service under a National or Local Coverage Determination (NCD/LCD), the claim is denied regardless of the ABN, and only a properly executed mandatory ABN shifts the cost to the patient.