Accepting Assignment - A provider agrees to accept the carrier's determination of the approved amount as the full fee for the service rendered. The provider also agrees to collect only the difference between the Medicare approved amount and the actual Medicare payment made to the provider for the service. For example, Medicare pays 80% of the approved amount for inpatient psychological services. Therefore, the Medicare beneficiary is responsible for the remaining 20% of the approved amount.

Actual Charge - A provider's usual fee, i.e., what one normally charges when not limited by contract with a third party insurer. In dealing with Medicare, psychologist can indicate this amount on the HCFA 1500 form, but may not collect any amount above the Medicare approved amount or limiting charge.

Approved Amount - Entire payment Medicare will "approve" for collection. This includes the payment made by Medicare and the amount owed by the beneficiary, but does not necessarily reflect the balance of the bill (this is assuming the psychologist's actual charge is more than Medicare's approved amount).

Carriers - Private insurance organizations under contract with HCFA to process Medicare Part B claims.

Clinical Psychologist (CP) - Psychologist recognized by Medicare as qualified to provide both therapeutic and diagnostic services to Medicare beneficiaries.

Coinsurance/Copayment - Medicare Part B requires beneficiaries to pay 20% of the approved amount under most circumstances. In the case of outpatient therapy (which is subjected to the outpatient mental health treatment limitation), patients pay 50% of the approved amount.

Fiscal Intermediaries/Intermediaries - Private insurance organizations under contract with HCFA to process Medicare Part A claims.

HCFA - Health Care Financing Administration. The federal agency within the Department of Health and Human Services responsible for administering the Medicare program.

Independently-Practicing Psychologist - Psychologist recognized by Medicare as qualified to provide only diagnostic services to Medicare beneficiaries.

Limiting Charge Restriction - Cap on the actual amount a non-participating 'independently-practicing psychologists' may collect. The limiting charge is 115% of the Medicare non-participating approved amount (which is 95% of the participating provider fee schedule amount) when the 'independently-practicing psychologist' does not accept assignment of the claim.

Non-Participating Provider - An 'independently-practicing psychologist' who chooses not to sign a participation agreement. These providers can choose to accept assignment on a case-by-case basis, however services that are unassigned are subjected to the "limiting charge" restriction.

Outpatient Mental Health Treatment Limitation - Statutory provision limiting Medicare payment for outpatient therapeutic services to 62.5% of the allowed amount thereby shifting payment responsibility for 37.5% of the allowed amount to beneficiaries. This results in a 50/50 split between Medicare and the beneficiary.

Part A - Hospital Insurance Benefits. Hospital insurance covers institutional services for inpatients that are then billed by the hospital to the Medicare fiscal intermediary. Individual providers do not submit claims for Part A services.

Part B - Medical Insurance Benefits - Medical insurance coverage which helps to pay for all physician services that are medically necessary, outpatient hospital care and some other medical services that Part A doesn't cover.

Participating Provider - A provider who agrees to "accept assignment" for all services provided to all Medicare patients for the following year. Because "clinical psychologists" MUST accept assignment, they are considered "participating providers".

Resource-Based Relative Value Scale (RBRVS) - Medicare's reimbursement system for physician services. This system considers actual resources used in the provision of services when determining payment levels.

Return to Top
Return to Table of Contents