Medicare Part B billing

Part B is one component of Original Medicare, sitting alongside Part A (hospital insurance). Understanding how the program is divided helps clarify which claims belong to Part B and which do not; the broader division is described in how Medicare is structured. In general terms, Part B is associated with professional and outpatient services rather than inpatient facility stays, which are typically handled under Medicare Part A billing.

The categories of service commonly associated with Part B include physician and practitioner services, outpatient hospital and clinic care, laboratory and diagnostic services, durable medical equipment, certain preventive services, and drugs and biologicals administered in a clinical setting. Several of these have their own dedicated billing considerations, such as Part B drugs and biologicals, preventive services billing, telehealth billing, and the conditions that decide what qualifies as durable medical equipment. The precise list of covered services, and the conditions attached to each, is defined by CMS and can change by effective date.

Before a provider can submit Part B claims, they must obtain Medicare billing privileges through the enrollment process. The appropriate application in the CMS-855 family is submitted to the designated Medicare contractor, either on the CMS-approved paper form or through PECOS, the CMS electronic enrollment system. The overall process is covered in Medicare enrollment and billing privileges, and enrollment is distinct from, though related to, credentialing and provider enrollment with commercial payers.

Enrollment also establishes whether a provider participates in Medicare and accepts assignment, which affects payment mechanics. The relationship between participation status and payment is described in assignment and participation. Certain arrangements, such as services furnished by clinical staff under a physician's supervision, follow specific rules explained in incident-to and split/shared billing. These rules are set by CMS and can vary by setting and date.

Most Part B professional claims are submitted electronically in the standard professional format, the electronic counterpart to the paper CMS-1500. Claims travel to the Medicare Administrative Contractor whose jurisdiction covers the area where the service was furnished, the regional entity CMS contracts with to process Part B claims for that jurisdiction. Claims must identify the beneficiary using the Medicare Beneficiary Identifier (MBI), the identifier issued to each beneficiary.

1. 01

   Verify eligibility and identity

   Confirm active Part B coverage and the correct MBI before service; see verifying Medicare eligibility. Eligibility can change by month and situation.
2. 02

   Confirm coverage policy

   Check whether the service is addressed by national or local coverage policy and whether medical necessity documentation supports it.
3. 03

   Assign codes accurately

   Report services and diagnoses using the applicable maintained code sets. Descriptor text and specific codes are maintained by their respective owners and are not reproduced here.
4. 04

   Submit to the MAC

   Transmit the professional claim to the MAC with jurisdiction over the area where the service was furnished, within the applicable timely filing window.

Whether Part B will pay for a service depends heavily on coverage policy and documented medical necessity. Coverage is governed by national coverage determinations and, within each jurisdiction, by a local coverage determination (LCD). The interaction between the two is explained in national and local coverage determinations. Because LCDs are contractor-specific, the same service may be treated differently across jurisdictions and may be revised on a going-forward basis.

When a provider expects Medicare may not cover an item or service, a beneficiary notice may be appropriate. The Advance Beneficiary Notice (ABN) is the mechanism for informing a beneficiary in advance of potential non-coverage; its use is detailed in the Advance Beneficiary Notice. Certain services may also carry a prior authorization requirement, though which services do varies and is defined by CMS.

National coverage determination

A nationwide CMS policy stating whether Medicare covers a particular item or service.

Local coverage determination

A determination by a MAC whether a particular item or service is covered on a contractor-wide basis within its jurisdiction, applying Medicare's reasonable-and-necessary standard.

Medical necessity

The requirement that a service be reasonable and necessary for the diagnosis or treatment of the patient's condition, as reflected in documentation.

Part B payment amounts are generally derived from published fee schedules rather than negotiated individually; the concept is covered in Medicare fee schedules explained. After adjudication, the MAC issues a remittance advice explaining what was paid, adjusted, or denied. Reading these documents is addressed in reading the Medicare remittance and MSN.

When another payer is primary, coordination of benefits rules apply and Medicare may pay as the secondary payer. Those situations follow Medicare Secondary Payer (MSP) rules, covered in Medicare Secondary Payer billing. Payments received in error or in excess may be subject to recovery, as described in Medicare overpayments and recoupment, and claims that are rejected or denied may follow the patterns in common Medicare billing denials.