How Healthcare Providers Bill Medicare for Patient Services

How Medicare billing works for healthcare providers

Medicare billing is a transaction between you as a provider and Medicare — not between you and the patient. You submit a claim to Medicare (or to a Medicare contractor on Medicare's behalf), Medicare reviews it against coverage rules and payment rates, and Medicare pays you directly if the claim is approved. The patient's role is limited: they show their Medicare card at the visit, and Medicare may bill them for their share (copay, coinsurance, or deductible) after you are paid.

The process has three main stages: getting set up to bill Medicare, submitting claims correctly, and handling denials or payment problems. Each stage has specific requirements, and mistakes at any point delay payment or trigger claim rejection.

Key Takeaways

You must enroll with Medicare and obtain a National Provider Identifier (NPI) before you can bill; enrollment takes four to six weeks and requires proof of credentials and malpractice insurance.
Claims go to a Medicare Administrative Contractor (MAC) specific to your state and specialty, not to a single national office.
You must use the correct claim form (CMS-1500 for most providers, UB-04 for facilities), include required modifiers and diagnosis codes, and submit within one year of the date of service.
Medicare pays based on the Medicare Physician Fee Schedule or Outpatient Prospective Payment System (OPPS) rates, which vary by location and service type — not on what you charge patients.
Denied claims can often be resubmitted with corrected information, but you have 365 days from the date of service to do so.

Enrolling as a Medicare provider

Before you bill Medicare, you must be enrolled in the Medicare program. Enrollment is free but mandatory. You will need your Social Security number or Employer Identification Number (EIN), your National Provider Identifier (NPI), proof of your license or credentials, and proof of malpractice insurance coverage. If you do not yet have an NPI, you can request one from the National Plan and Provider Enumeration System (NPPES) at no cost; it arrives by email within two business days.

Enroll through PECOS (Provider Enrollment, Chain, and Ownership System) on the CMS website. You will create an account, fill out the enrollment process (Form CMS-855), and submit supporting documents. Processing takes four to six weeks. Once approved, you receive a Medicare provider number and can begin billing. If you are part of a group practice, the group may enroll as a billing entity, and individual providers enroll under it.

Your enrollment status is public and searchable in the NPPES database. Medicare also maintains a list of excluded providers (those barred from billing Medicare), so verify you are not on that list before you enroll.

Finding your Medicare Administrative Contractor and claim submission requirements

Medicare does not process claims directly. Instead, it contracts with regional Medicare Administrative Contractors (MACs) to handle claims in specific states and for specific provider types. Your MAC depends on where your practice is located and what type of provider you are (physician, therapist, durable medical equipment supplier, and so on). Find your MAC on the CMS MAC locator tool by entering your state and provider type.

Once you know your MAC, you must submit claims in the format your MAC accepts. Most individual providers and small practices use the CMS-1500 form (paper or electronic). Hospitals, ambulatory surgery centers, and other facilities use the UB-04 form. Your MAC's website lists the exact submission method: some accept only electronic submission through a clearinghouse, others accept paper, and many accept both. Submitting to the wrong MAC or in the wrong format delays processing.

Electronic submission is faster and reduces errors. Many practices use medical billing software or a third-party clearinghouse to format and submit claims electronically. If you submit paper claims, mail them to the address your MAC provides; do not send them to a general Medicare office.

What information must be on every claim

Every claim must include the patient's Medicare number (from their card), the date of service, the procedure code (CPT code), the diagnosis code (ICD-10 code), your NPI, your tax ID, and the amount you are charging. Missing or incorrect information is the most common reason claims are denied or delayed.

The procedure code (CPT) describes what you did — for example, 99213 for an established patient office visit, or 97110 for therapeutic exercises. The diagnosis code (ICD-10) explains why — for example, M79.3 for panniculitis, or E11.9 for type 2 diabetes. Both must match the medical record and must be medically necessary for the service. If the diagnosis does not support the procedure, Medicare denies the claim.

You may also need to include modifiers — two-character codes that change the meaning of a CPT code. For example, modifier 25 means a significant, separately identifiable service was performed on the same day as another service. Modifiers are required in specific situations and omitting them causes denials. Your MAC's website lists which modifiers explore to your specialty.

The amount you charge (your "billed amount") does not determine what Medicare pays. Medicare pays according to the Medicare Physician Fee Schedule (for most providers) or the Outpatient Prospective Payment System (for facilities), which are set rates that vary by location and service. You will be paid the Medicare rate, not your billed amount, unless you have a special contract with Medicare.

Understanding Medicare payment rates and what you will be paid

Medicare sets payment rates for nearly every service. For individual providers, the rate is found in the Medicare Physician Fee Schedule, which lists the payment amount for each CPT code in each geographic area (defined by a ZIP code or region). For facility services, the rate comes from OPPS (Outpatient Prospective Payment System) or the Inpatient Prospective Payment System (IPPS), depending on the setting.

You can look up the Medicare payment rate for a specific service using the CMS Physician Fee Schedule Look-Up Tool on the CMS website. Enter the CPT code and your state or ZIP code, and it shows the allowed amount Medicare will pay. This is the maximum you will receive from Medicare for that service in that location. The patient may owe a copay or coinsurance on top of that, but you cannot bill the patient more than the Medicare rate plus their cost-sharing amount.

If you are a non-participating provider (not enrolled in Medicare), you can still bill Medicare, but you must accept assignment on a claim-by-claim basis, and you cannot balance-bill the patient beyond the Medicare rate plus cost-sharing. If you do not accept assignment, you can charge the patient up to 115 percent of the Medicare rate, but you must tell the patient this in writing before the service.

Submitting claims and tracking payment status

Submit claims as soon as possible after the date of service. Medicare requires claims to be submitted within one year (365 days) of the date of service, but submitting sooner reduces the chance of missing records or patient may be able to access changes. Most practices submit within 30 days.

After submission, track your claim status through your MAC's online portal or by calling the MAC directly. Processing time varies but typically ranges from 10 to 30 days for clean claims (those with no errors or missing information). Your MAC will send you an Explanation of Benefits (EOB) or Remittance information (RA) showing what was paid, what was denied, and why.

If a claim is denied, the RA will state the reason — for example, "not medically necessary," "duplicate claim," or "missing diagnosis code." Read the reason carefully. Many denials can be corrected and resubmitted. You have one year from the date of service to resubmit. If you disagree with a denial, you can file an appeal with your MAC; the appeal process has multiple levels and timelines, which your MAC explains in writing.

Common billing mistakes and how to avoid them

The most frequent errors are incorrect or missing diagnosis codes, submitting to the wrong MAC, using outdated CPT codes, and billing for services that are not covered by Medicare. Before submitting any claim, verify the patient's Medicare may be able to access and coverage for that service. You can check may be able to access through your MAC's portal or by calling the MAC.

Verify that the CPT and ICD-10 codes match the medical record and that the diagnosis supports the procedure. If you are unsure whether a service is covered, check the Local Coverage information (LCD) for your MAC — this is a document that lists what your MAC will and will not pay for. LCDs are available on your MAC's website and are specific to your region.

Do not submit claims for services that are not documented in the medical record, and do not code a service at a higher level of complexity than the documentation supports. Medicare audits claims and can demand repayment if it finds overbilling. Keep detailed records of every service, including the time spent, the complexity, and the medical necessity.

Frequently Asked Questions

Do I have to be enrolled in Medicare to bill for Medicare patients?

Yes. You must enroll through PECOS before you can bill Medicare. Enrollment is free and takes four to six weeks. You cannot bill Medicare without an active enrollment status, even if the patient has Medicare coverage.

What is the difference between participating and non-participating providers?

Participating providers enroll in Medicare and agree to accept the Medicare payment rate as payment in full (plus the patient's cost-sharing). Non-participating providers are not enrolled but can still bill Medicare on a claim-by-claim basis; they can charge up to 115 percent of the Medicare rate if they do not accept assignment. Most practices enroll as participating providers because it is simpler and builds patient trust.

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

Clean claims (those with no errors) are typically paid within 10 to 30 days. Payment time depends on your MAC, the complexity of the claim, and whether the claim requires manual review. You can track the status of your claim through your MAC's online portal.

What should I do if Medicare denies my claim?

Read the denial reason on the Remittance information. If the reason is a correctable error (wrong code, missing information), resubmit the claim with the correction within one year of the date of service. If you disagree with the denial, you can file an appeal with your MAC. Your MAC will explain the appeal process and timelines in writing.

Can I bill the patient if Medicare denies the claim?

Only if you gave the patient advance written notice that Medicare might not cover the service and the patient agreed in writing to pay out of pocket. This notice is called an Advance Beneficiary Notice (ABN). Without an ABN, you cannot bill the patient for a denied claim; you must absorb the cost or appeal the denial.

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.