How Healthcare Providers Bill Medicare for Patient Care

Medicare billing basics for healthcare providers

If you are a healthcare provider—a doctor, therapist, hospital, or other medical professional—you bill Medicare by submitting a claim that describes the service you gave, who you gave it to, and what it cost. Medicare then pays you directly based on their fee schedule, which sets a fixed price for each type of service. The process differs depending on whether you are an individual provider, part of a group practice, or a facility, and whether you have enrolled in Medicare as a participating provider.

The core requirement is that you must be enrolled with Medicare before you can bill them. Enrollment takes several weeks and requires you to verify your credentials, tax ID, and practice location. Once enrolled, you submit claims through a Medicare Administrative Contractor (MAC)—a private company that processes Medicare claims in your region—either on paper or electronically. Most providers now submit electronically because it is faster and reduces errors.

Key Takeaways

You must enroll with Medicare and receive a National Provider Identifier (NPI) before you can submit any claims for payment.
Claims go to your regional Medicare Administrative Contractor (MAC), not directly to Medicare, and most providers submit them electronically through billing software or a clearinghouse.
Medicare pays based on their fee schedule, which varies by service type and your geographic location, and you must use the correct billing codes (CPT and ICD-10) for each service.
Participating providers accept Medicare's payment as full payment and cannot bill the patient the difference, while non-participating providers can charge patients more but face lower reimbursement rates.
Claims typically process within 14 to 30 days, but you should track them and follow up on denials, which often result from coding errors or missing documentation.

Enrolling as a Medicare provider

To bill Medicare, you must first enroll through the PECOS system (Provider Enrollment, Chain, and Ownership System), which is Medicare's official enrollment database. You will need your Social Security number or Employer Identification Number (EIN), your National Provider Identifier (NPI), proof of licensure, and information about your practice location and ownership. If you do not yet have an NPI, you can request one free from the National Plan and Provider Enumeration System (NPPES) before you start the Medicare enrollment process.

Enrollment can take 30 to 60 days. During this time, Medicare verifies your credentials and checks for any history of fraud or sanctions. Once approved, you receive a Medicare provider number and can begin submitting claims. If you are part of a group practice, the practice itself may enroll as a billing entity, and individual providers within it enroll separately but bill under the group's tax ID.

You must decide whether to enroll as a participating provider or non-participating provider. Participating providers agree to accept Medicare's payment as the full fee and cannot bill patients for the difference. Non-participating providers can charge patients more than Medicare pays, but Medicare reimburses them at a lower rate (typically 5 percent less). Most individual providers and practices choose participating status because the higher reimbursement rate and patient trust outweigh the billing restrictions.

Submitting claims to Medicare

Once enrolled, you submit claims to your regional Medicare Administrative Contractor (MAC). There are 15 MACs nationwide, each covering specific states and regions. Your MAC processes claims, determines payment, and handles appeals. You can find your MAC on the Medicare website by entering your state and provider type.

Most providers submit claims electronically using one of three methods: directly through billing software that connects to the MAC, through a clearinghouse (a company that reformats and submits claims on your behalf), or through your Electronic Health Record (EHR) system if it has billing integration. Electronic submission is faster, reduces errors, and gives you tracking information. Paper claims are still accepted but take longer to process and are more prone to rejection due to formatting errors.

Each claim must include the correct CPT codes (Current Procedural Terminology codes that describe the service you provided) and ICD-10 codes (diagnosis codes that explain why the service was medically necessary). Using the wrong codes is the most common reason claims are denied. Many providers use coding reference tools or hire medical coders to may support accuracy. You must also include the patient's Medicare number, the date of service, and your provider number.

Understanding Medicare fee schedules and payment rates

Medicare does not pay the same amount for every service everywhere. Instead, they use the Medicare Physician Fee Schedule (for doctors and other practitioners) or the Hospital Outpatient Prospective Payment System (for hospital services), which set a fixed price for each CPT code based on geographic location, practice expense, and other factors. These rates change every year, usually in January.

The fee schedule is public, and you can look up what Medicare will pay for a specific service in your area using the Medicare Physician Fee Schedule Look-Up Tool on the CMS website. This helps you understand what to expect before you submit a claim. If you are a participating provider, this is the amount you will receive. If you are non-participating, Medicare pays you 95 percent of this amount, and you can bill the patient the remaining 5 percent plus any difference between your actual charge and Medicare's allowed amount (up to a limit called the limiting charge).

What happens after you submit a claim

After you submit a claim, the MAC processes it and sends you an Explanation of Benefits (EOB) or Remittance information (RA), which shows whether the claim was approved, denied, or partially paid. This usually arrives within 14 to 30 days for electronic claims and longer for paper claims. The RA includes the reason for any denial—for example, "missing documentation," "incorrect code," or "service not covered."

If a claim is denied, you have the right to appeal. The first step is usually to contact the MAC and ask what information is missing or what error occurred. Many denials are fixable: you can resubmit with the correct code, add missing documentation, or clarify medical necessity. If the MAC denies the appeal, you can request a reconsideration, and if that is also denied, you can request a hearing before an administrative law judge.

Medicare pays you directly to the bank account or address you provided during enrollment. If you are a participating provider, the patient cannot be billed for any difference between your charge and Medicare's payment. If you are non-participating, you can bill the patient for the difference, but you must inform them in writing before providing the service using a form called an Advance Beneficiary Notice (ABN).

Billing requirements and compliance

Medicare has strict rules about billing. You cannot bill a Medicare patient for a covered service unless the patient is not may be able to access (for example, they have not met their deductible and you are non-participating), or unless you gave them an ABN before the service and they signed it. You also cannot bill for services that Medicare considers not medically necessary, even if the patient asks you to.

You must keep detailed records of every service you provide, including the date, time, type of service, codes used, and documentation of medical necessity. Medicare audits claims randomly and also investigates patterns that suggest fraud—for example, billing for services that were not provided or using codes that do not match the service. Violations can result in repayment demands, fines, or exclusion from the Medicare program.

If you are a group practice, you must also track which provider within the group delivered the service, because Medicare pays based on individual provider credentials and location. Billing under the wrong provider number is a common error that causes claim denials.

Common billing problems and how to avoid them

The most frequent reasons Medicare claims are denied are incorrect CPT or ICD-10 codes, missing or incomplete documentation, services billed as urgent or emergent when they were routine, and billing for services that are not covered under the patient's plan. To avoid these, use a coding reference tool or hire a medical coder, keep thorough notes that explain why the service was medically necessary, and check your MAC's local coverage determinations (LCDs) to see which services they cover in your region.

Another common problem is billing for multiple services on the same day when Medicare considers them a single service. For example, if you see a patient for a follow-up visit and also do a minor procedure, you may not be able to bill for both separately. Your billing software or coder should flag these bundling issues, but it is worth reviewing your claim before you submit it.

Timely filing is also important. Medicare has a important date—usually one year from the date of service—by which you must submit a claim. After that, they will not pay it. Keep a log of submitted claims and follow up on any that do not appear on your RA within 30 days.

Frequently Asked Questions

Do I have to use electronic billing, or can I still submit paper claims?

Paper claims are still accepted, but Medicare and most MACs encourage electronic submission because it is faster and more accurate. If you submit paper claims, expect processing to take 30 to 45 days instead of 14 to 30 days. Most billing software now includes electronic submission, so switching is usually straightforward.

What is the difference between a CPT code and an ICD-10 code?

A CPT code describes the service or procedure you provided (for example, 99213 is an office visit). An ICD-10 code describes the patient's diagnosis or reason for the visit (for example, E11.9 is type 2 diabetes). You need both on every claim so Medicare understands what you did and why it was medically necessary.

Can I bill a patient for the difference between my charge and what Medicare pays?

Only if you are a non-participating provider and you gave the patient an Advance Beneficiary Notice (ABN) before the service. If you are participating, you cannot bill the patient for any difference. Even as non-participating, you can only charge up to the limiting charge, which is 115 percent of Medicare's allowed amount.

What should I do if Medicare denies a claim?

First, read the Remittance information to see the reason for denial. If it is a coding error or missing documentation, contact your MAC and ask how to resubmit. If the denial is for medical necessity, you may need to provide additional clinical notes. You can appeal any denial, and the first appeal is usually free.

How long does it take to get paid after I submit a claim?

Electronic claims typically process within 14 to 30 days. Paper claims take 30 to 45 days. Payment goes directly to your bank account or mailing address. If you do not receive payment within 45 days of submission, contact your MAC to check the status.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.