Medicare reimbursement does vary by state, and sometimes by region within a state

Medicare pays doctors, hospitals, and other providers different amounts depending on where you live. A procedure that costs Medicare $500 in one state might cost $700 in another. These differences are built into how Medicare calculates its payment rates, and they affect which providers accept Medicare and how quickly you can get an appointment.

The variation comes from several sources: the cost of living in your area, the local cost of medical labor and supplies, and adjustments Medicare makes for geographic differences. Your out-of-pocket costs may also shift if you move, because some providers in lower-reimbursement areas may charge higher copays or refuse new Medicare patients.

Key Takeaways

  • Medicare payment rates for the same service can differ by 20 to 40 percent between states, based on local costs and geographic adjustments.
  • Lower Medicare reimbursement in your area does not mean lower quality care, but it can mean fewer providers accepting new Medicare patients.
  • Your Part B deductible and copay amounts are the same nationwide, but what you pay out-of-pocket can vary if providers charge at different rates.
  • If you move to a different state or region, check whether your current doctors still accept Medicare patients there, because provider networks shift with reimbursement rates.

Why Medicare payment rates differ by location

Medicare uses a formula called the Geographic Practice Cost Index (GPCI) to adjust what it pays based on where you receive care. The GPCI accounts for three things: the cost of medical labor in your area, the cost of medical equipment and supplies, and the cost of office rent and overhead. A cardiologist in New York City has higher staff salaries and rent than a cardiologist in rural Montana, so Medicare pays the New York cardiologist more for the same heart exam.

Medicare also adjusts payments based on whether you live in an urban or rural area. Rural areas often receive a higher payment per service to encourage doctors to practice there, even though the local cost of living may be lower. This is meant to prevent rural shortages, though the effect varies by specialty.

These adjustments change each year. Medicare publishes new payment rates in the Federal Register every November for the following year, and the rates reflect updated cost data from the previous year. If your area's costs rise faster than the national average, your local reimbursement rates may increase more than rates in other states.

How reimbursement differences affect your care

When Medicare pays less in your area, some providers may stop accepting new Medicare patients or limit how many they take. This is most common among specialists like orthopedic surgeons and dermatologists, who have more choice about which patients to see. If you live in a state or region with lower Medicare reimbursement, you may have longer waits for appointments or need to travel farther to find a provider.

Lower reimbursement does not mean lower-quality doctors. It means Medicare's payment is lower, not that the care is worse. Many excellent physicians practice in lower-reimbursement areas and accept all Medicare patients. However, the financial pressure can be real, and some practices respond by seeing more patients per day or spending less time with each one.

Your Part B deductible ($240 in 2024) and your copay percentages (usually 20 percent of the Medicare-approved amount) stay the same no matter where you live. But the Medicare-approved amount itself varies by state. If your doctor charges $200 for a visit and Medicare approves $150 in your state, you pay 20 percent of $150, or $30. In another state where Medicare approves $180, you would pay $36. The difference adds up over time, especially if you see specialists regularly.

Which states have the highest and lowest reimbursement rates

Medicare reimbursement rates are highest in urban areas of the Northeast and California, and lowest in rural areas of the South and Great Plains. However, "highest" and "lowest" vary by specialty. Orthopedic surgery reimbursement may be highest in Massachusetts but lowest in Mississippi, while cardiology rates might follow a different pattern.

You can see the specific reimbursement rates for your area by visiting the Centers for Medicare and Medicaid Services (CMS) website and searching for the Medicare Physician Fee Schedule. The fee schedule lists the approved amount for each procedure code by state and sometimes by region within a state. It is updated every January and is free to view online, though the document is technical and may require help from your doctor's office to interpret.

If you are considering moving to a different state in retirement, it is worth checking whether your current doctors practice there and whether Medicare reimbursement rates are similar. A move from a high-reimbursement state to a low-reimbursement state might mean your current doctor stops accepting Medicare patients, forcing you to find someone new.

What happens to your coverage if you move states

Your Medicare coverage itself does not change if you move. Part A and Part B work the same way in every state. However, your provider network may shift significantly. Doctors who accept Medicare in your current state might not accept it in your new state, or they might have a waiting list for new patients.

If you have a Medicare Advantage plan (Part C), moving to a different state almost always means you need a new plan. Medicare Advantage plans are regional, and your current plan may not operate in your new state. You will have a Special Enrollment Period to change plans within 60 days of moving, so you do not have to wait until the annual open enrollment period in the fall.

If you have a Medigap supplemental plan, you can usually keep it when you move, but some insurers do not operate in all states. Contact your Medigap insurer before you move to confirm they cover your new location. If they do not, you may have the right to switch to a different Medigap plan without a waiting period for pre-existing conditions, depending on your state's rules.

How to find out what Medicare pays in your area

The easiest way to see what Medicare pays for a specific service in your area is to ask your doctor's office. They use the Medicare Physician Fee Schedule every day and can tell you the approved amount for your visit or procedure. They can also tell you whether they accept Medicare and whether they are taking new patients.

If you want to look it up yourself, go to the CMS website (cms.gov) and search for "Medicare Physician Fee Schedule." You will need your state and sometimes your specific county or ZIP code. The fee schedule is organized by procedure code, so you will need to know the code for the service you are asking about — your doctor's office can provide this.

Another resource is the Medicare.gov provider search tool. You can search for doctors and hospitals in your area and see whether they accept Medicare. The tool does not show reimbursement rates, but it shows you which providers are in your network and their contact information.

Frequently Asked Questions

If I move to a state with lower Medicare reimbursement, will my copays go down?

Possibly, but not necessarily. Your copay is 20 percent of the Medicare-approved amount, so if the approved amount is lower in your new state, your copay will be lower too. However, some doctors in lower-reimbursement areas charge higher copays to make up for lower Medicare payments, so you may not see a savings. Ask your new doctor's office what they charge before you move.

Can Medicare reimbursement rates change during the year?

No. Medicare reimbursement rates are set once per year and take effect on January 1. They do not change mid-year. However, Congress sometimes passes laws that adjust rates for specific services or regions, so rates can change from year to year.

Do all doctors in the same state get paid the same amount by Medicare?

No. Medicare may pay different rates for the same service depending on whether the doctor practices in an urban or rural area, and sometimes by county within a state. A doctor in a rural area may receive higher reimbursement than a doctor in a nearby city for the same procedure.

Does reimbursement variation affect Medicare Advantage plans differently than Original Medicare?

Medicare Advantage plans use Medicare's reimbursement rates as a starting point, but they can negotiate their own rates with providers. This means a Medicare Advantage plan in one state might pay providers differently than another plan in the same state. Your out-of-pocket costs depend on your specific plan, not just on Medicare's rates.

What should I ask my doctor about Medicare reimbursement before moving?

Ask whether they accept Medicare in your new state, whether they are taking new patients there, and what your copay will be. If they do not practice in your new state, ask for a referral to someone who does. Also ask about any procedures you have scheduled — you want to know whether to complete them before you move or after you arrive.