The limiting charge is the maximum amount that most non-participating providers are allowed to charge for services to a Medicare beneficiary on an unassigned basis. The limiting charge does not apply to participating providers, non-participating providers when assignment is accepted, and some non-physician practitioner specialties that are required to bill on an assigned basis.
- The limiting charge amount for most physician fee schedule services are listed under the WPS Medicare Fees web page. This constitutes "notice" of the Medicare charge limits for those services.
- The limiting charge provision does not apply to assigned services. A provider can collect no more than the Medicare approved amount for such services.
- The limiting charge is 115% of the Medicare allowed amount for services performed by nonparticipating physicians, i.e., 95% of the fee schedule for participating physicians. If the service is reduced in processing to accommodate provisions of the Medicare law (i.e. eRx - Electronic Prescribing; EHR - Electronic Health Record; or PQRS - Physician Quality Reporting System), the limiting charge is 115% of the reduced allowed amount.
- Services that are not separately payable are also subject to limiting charge. The charge for the service is the amount of the limiting charge violation.
- The submission of a non-assigned physician fee schedule service with a charge in excess of the Medicare limiting charge amount constitutes a violation of the limiting charge. A provider who violates the limiting charge is subject to assessments of up to $10,000 per violation plus triple the amount of the charges in violation, and possible exclusion from the Medicare program.
- For non-assigned services, the provider must use the information on the Standard Provider Remittance (SPR) or Electronic Remittance Advice (ERA) to determine if a limiting charge violation has occurred. Providers will automatically receive SPRs or ERAs on non-assigned claims, unless the provider or beneficiary has specifically requested the provider not receive them.
- The SPR/ERA serves as notice to the provider that a refund must be made for an overcharge. If you believe a claim was submitted with an error, or that an error was made in processing, you should request corrections through the appeals process. Providers who choose not to receive SPRs/ERAs for non-assigned claims are still required to refund overcharges.
- Medicare notifies beneficiaries on their Medicare Summary Notices (MSNs) when the limiting charge is exceeded. The MSN also informs beneficiaries how much the provider can legally bill for the service.
Limiting Charge Calculations
While the base for calculating the limiting charge is the non-participating fee schedule amount, it is subject to various claims processing adjustments before it is multiplied by the 115% factor. Some types of adjustments include (but are not limited to):
- Special factors such as increases based on the use and justification of modifier 22 or 50,
- Splitting the global surgery fee between two physicians, or
- Reducing the fee for multiple procedures performed at the same time.
These adjustments change the non-participating fee schedule amount and the corresponding limiting charge for the services involved. Therefore, for the application of limiting charge calculations, it is incorrect to interpret the term "fee schedule amount" to mean a fixed amount.
To calculate the limiting charge, locate the dollar amount shown in the Allowed Amount column on the SPR/ERA and multiply it by 115%. The result is the correct limiting charge for that detail. Subtract the limiting charge amount from your billed amount of the service to determine the overcharge to be refunded to the patient. For a single line claim, this amount will match the amount show on the line identified by American National Standards Institute (ANSI) message CO45 "Charges exceed your contracted/legislated fee arrangement." For a multiple line claim, the CO45 message appears only once with a total of overcharges. Any line item with a zero Allowed amount identified with CO45, is also a limiting charge excess and must be refunded to the patient.
- Billed amount = $92.00
Approved amount of $75.00 x 115% = $86.25 limiting charge
The patient's responsibility is shown on the SPR/ERA as $86.25. The provider has exceeded the limiting charge by $5.75.
- Billed amount = $115.00
Approved amount of $50.00 = $ 57.50 limiting charge
(reduced by 50% due to multiple surgery guidelines) x 115%
The patient's responsibility is shown on the SPR/ERA as $57.50. The provider has exceeded the limiting charge by $57.50.
- Billed amount = $80.00
Approved amount = $0 = $ 0.00 limiting charge
(not separately payable) x 115%
The patient's responsibility is shown on the SPR/ERA as $0. The provider has exceeded the limiting charge by $80.00.
Correction of Limiting Charge Violation
Medicare can request documentation showing correction to a limiting charge violation. Therefore, accurate records of any corrective action regarding a limiting charge violation should be maintained by your office.