Q: Under Medicare the hospital submits a medical claim for payment to Medicare. I receive notice of the co-payment for 20% of the hospital bill. Upon further examination I find that Medicare has paid a very small portion of the bill. I interpret that amount as 80% of Medicare`s approved charge. I thought I was required to pay only 20% of the Medicare approved amount, rather than 20% of the hospital bill which is higher. I have reservations about paying more than 20% of the Medicare approved charge. 
-A.C., Schaumburg, IL

A: For most outpatient services, Medicare pays 80% of the Medicare approved amount and you pay the remaining 20%. But until very recently, if you received outpatient services at a hospital, you were responsible not for 20% of the Medicare approved amount, but 20% of whatever amount the hospital decided to charge. Medicare recipients have paid on average 50% of hospital outpatient costs.

Under a new system, the 20% of the Medicare approved amount rate is to be phased in for Medicare beneficiaries. The co-payment amount that the hospital may charge per service, is also limited to not more than the Medicare hospital inpatient deductible, $792 in 2001.

For more information call (800) MEDICARE [(800) 633-4227] or check online at http://www.medicare.gov.

Editor`s note: TSCL remains concerned that recent changes limiting hospital outpatient overcharges are not being implemented quickly enough, costing beneficiaries millions per year in excessive co-payments. Although the law mandating the change was signed in 1997, it may take another 4 years to phase in the 20% beneficiary co-payment. Although in 2001 hospitals are limited to charging no more than $792 per service, a hospital is allowed to bill up to $792 during subsequent visits or for different services.

In addition, the government is currently investigating billing practices that indicate Medicare is paying inflated prices for certain drugs administered through hospital outpatient clinics. If Medicare is paying inflated prices, it would stand to reason that Medicare patients may also be paying inflated co-payments for these drugs as well.

If you would like to read more on Medicare from our website, click on this link: http://www.tscl.org/Medicare.asp.

June 2001