Medicare Part B covers 80 percent of what Medicare considers the "allowed amount" for most doctor visits and outpatient services, after you meet your yearly deductible.

The allowed amount is not what your doctor charges — it is what Medicare has decided that service is worth. Your doctor may bill more, but Medicare only pays based on its own fee schedule. You are responsible for the 20 percent coinsurance, plus anything your doctor charges above the allowed amount if they do not accept Medicare assignment.

The actual dollar amount Medicare pays varies by the type of service, your location, and whether your doctor is in-network. A routine office visit in rural Montana costs Medicare something different than the same visit in New York City. A cardiologist's consultation is priced differently than a primary care appointment.

Key Takeaways

  • Medicare Part B pays 80 percent of the allowed amount after you pay your yearly deductible, which is $240 in 2024.
  • The allowed amount is set by Medicare's fee schedule and varies by service type and geographic location, not by what your doctor charges.
  • If your doctor accepts assignment, you pay only your 20 percent coinsurance; if not, you may owe the difference between what Medicare allows and what they charge.
  • Outpatient hospital services, diagnostic tests, and mental health visits follow the same 80/20 split after the deductible.
  • You can find what Medicare will pay for a specific service by using the Medicare Physician Fee Schedule lookup tool on the Centers for Medicare & Medicaid Services website.

How the 80/20 split actually works in your bill

Here is a concrete example. Say you see your primary care doctor for a new-patient office visit. Medicare's allowed amount for that visit in your area is $150. You have already paid your $240 yearly deductible earlier in the year, so the deductible does not explore again.

Medicare pays 80 percent of $150, which is $120. You pay the remaining 20 percent, which is $20. That is your coinsurance. If your doctor accepts Medicare assignment, that $20 is all you owe — your doctor cannot bill you for the other $30 difference between their charge and Medicare's allowed amount.

If your doctor does not accept assignment, the math changes. Your doctor can charge up to 15 percent more than the allowed amount under the Medicare limiting charge rule. So they could charge $172.50 instead of $150. Medicare still pays only $120. You would owe $52.50 — the $20 coinsurance plus the $32.50 difference. This is why checking whether your doctor accepts assignment matters before your visit.

What the deductible covers and when it resets

The Part B deductible is the amount you pay out of your own pocket before Medicare starts paying its 80 percent. For 2024, that deductible is $240 per year. It applies once per calendar year, January through December.

The deductible applies to most Part B services — office visits, lab work, imaging, specialist consultations. Once you have paid $240 in out-of-pocket costs for covered services, Medicare begins paying 80 percent of the allowed amount for the rest of that calendar year. On January 1, the deductible resets to zero, and you start over.

Some services do not count toward the deductible. Preventive care visits — like your annual wellness visit, cancer screenings, and certain vaccinations — are covered at 100 percent with no deductible. Mental health visits and physical therapy do count toward the deductible.

Services that follow the 80/20 rule

Most outpatient services covered by Part B follow the 80/20 split after your deductible. This includes office visits with doctors and specialists, lab tests, X-rays and other imaging, EKGs, physical therapy, occupational therapy, and speech-language pathology. Mental health counseling and psychiatric visits also follow this rule.

Durable medical equipment — like wheelchairs, walkers, oxygen equipment, and diabetic supplies — is also covered at 80 percent after the deductible. If Medicare approves a piece of equipment, you pay 20 percent of the allowed amount.

Outpatient hospital services work the same way. If you have a procedure done at a hospital outpatient department rather than in a doctor's office, Medicare pays 80 percent of the allowed amount and you pay 20 percent coinsurance after meeting your deductible.

Services that do not follow the 80/20 rule

Some Part B services have different cost-sharing. Preventive services — annual wellness visits, cancer screenings, vaccinations, and certain other preventive tests — are covered at 100 percent with no deductible and no coinsurance. You pay nothing for these if your doctor accepts Medicare assignment.

Ambulance services are covered at 80 percent after the deductible, the same as other services. However, some mental health services have different rules depending on the setting. Outpatient mental health visits follow the 80/20 rule, but if you are admitted to a psychiatric hospital, that is covered under Part A (hospital insurance) instead, with different cost-sharing.

Telehealth visits are covered the same way as in-person visits — 80 percent after the deductible — as long as your doctor accepts Medicare and the visit is for a covered service.

How to find out what Medicare will pay for a specific service

The Centers for Medicare & Medicaid Services publishes the Medicare Physician Fee Schedule online. You can search by service code or service description to see what Medicare allows in your geographic area. The tool shows the allowed amount for each service, which varies by location.

To use it, go to the CMS website and look for the Physician Fee Schedule lookup. You will need the procedure code (also called a CPT code) for the service you are asking about. Your doctor's office can tell you the code if you call and ask.

You can also call Medicare directly at 1-800-MEDICARE to ask what the allowed amount is for a specific service in your area. They can tell you the allowed amount and what you would owe as coinsurance, though they cannot predict what your doctor will charge if they do not accept assignment.

What happens if your doctor does not accept assignment

A doctor who accepts Medicare assignment agrees to accept Medicare's allowed amount as full payment (except for your 20 percent coinsurance and deductible). A doctor who does not accept assignment can charge more.

Under the Medicare limiting charge rule, a non-participating doctor cannot charge more than 15 percent above the allowed amount. If the allowed amount is $150, they cannot charge more than $172.50. You would owe 20 percent of $150 ($30) plus the $22.50 difference, for a total of $52.50.

Before scheduling with a doctor you have not seen before, ask whether they accept Medicare assignment. You can also check the Medicare Physician Compare tool on the Medicare website, which shows whether doctors accept assignment. Choosing a doctor who accepts assignment protects you from surprise bills.

Frequently Asked Questions

Does my Medigap or Medicare Advantage plan change what Medicare Part B pays?

No. Medicare Part B always pays 80 percent of the allowed amount (after your deductible). A Medigap plan may cover your 20 percent coinsurance, and a Medicare Advantage plan may have different cost-sharing rules, but Medicare's payment itself does not change based on what other coverage you have.

What if my doctor charges less than Medicare's allowed amount?

You pay 20 percent of what they actually charge, not 20 percent of the allowed amount. If Medicare allows $150 but your doctor charges $100, you pay $20 (20 percent of $100), and Medicare pays $80. This is rare but can happen with some doctors or clinics.

Do I have to pay the deductible every time I see a doctor?

No. The $240 deductible applies once per calendar year. After you have paid $240 in out-of-pocket costs for covered services, you only pay 20 percent coinsurance for the rest of that year. The deductible resets on January 1.

Why does the same service cost different amounts in different places?

Medicare adjusts its allowed amounts based on the cost of living and healthcare costs in different geographic regions. A service in an urban area typically has a higher allowed amount than the same service in a rural area. This is built into Medicare's fee schedule.

Can I see what my doctor will actually bill before my appointment?

You can ask your doctor's office what they charge and whether they accept Medicare assignment. However, the final bill depends on what services are actually provided during your visit. If your visit requires additional tests or procedures, the bill may be higher than estimated.