The Medicare-approved amount is the amount that Medicare pays your healthcare professional for your services under Original Medicare (parts A and B).
Healthcare providers who choose to participate in Medicare agree to accept the Medicare-approved amount as full payment. This may also be known as the Medicare allowed amount.
These healthcare providers cannot charge you more than the Medicare-approved amount for treatment and services.
It’s important to understand the difference between different types of Medicare providers to understand exactly what the Medicare-approved amount refers to.
Participating provider
A participating provider accepts assignments for Medicare. This means they are contracted to accept the amount Medicare has set for your healthcare services. The provider will bill Medicare for your services and only charge you the deductible and coinsurance amount specified by your plan.
The Medicare-approved amount may be less than the participating provider would normally charge. However, when the provider accepts the assignment, they agree to take this amount as full payment for the services.
Nonparticipating provider
A nonparticipating provider accepts assignments for some Medicare services but not all. Nonparticipating providers
If you use a nonparticipating provider, they can charge you the difference between their typical service charges and the Medicare-approved amount. This cost is called an “excess charge” and can only be up to an additional 15% of the Medicare-approved amount.
When does Medicare pay?
Medicare works the same way as private insurance, which means that it only pays out for medical services once your deductibles have been met. Your Medicare deductible costs will depend on what type of Medicare plan you are enrolled in.
If you have Original Medicare (parts A and B) in 2025, you will owe the Medicare Part A deductible of $1,676 per benefit period and the Medicare Part B deductible of $257 per year.
If you have Medicare Advantage (Part C), you may have an in-network deductible, an out-of-network deductible, and a drug plan deductible, depending on your plan.
Medicare-approved services
Your Medicare-approved services also depend on the type of Medicare coverage you have. For instance:
- Medicare Part A covers you for inpatient services.
- Medicare Part B covers you for outpatient medical services.
- Medicare Advantage covers services provided by Medicare parts A and B, as well as addition benefits that vary by plan, including:
- Medicare Part D covers your prescription drugs.
No matter what type of Medicare plan you enroll in, you can use Medicare’s coverage tool to find out if your plan covers a specific service, test, or item. Here are some of the most common Medicare-approved services:
If you want to know your Medicare-approved amount for these specific services, such as chemotherapy or bariatric surgery, speak with your provider directly.
Medicare-approved amount and Part A
Medicare Part A has a separate fee schedule for hospitalization. These costs begin after the $1,676 deductible has been met and are based on how many days you spend in the hospital.
Here are the amounts for 2025, which apply for each benefit period:
- $0 coinsurance for days 1 through 60
- $419 coinsurance per day for days 61 through 90
- $838 coinsurance per lifetime reserve day for days 91 and beyond
- 100% of the costs once your lifetime reserve days have been used
Medicare will pay all the approved costs above your coinsurance amounts until you run out of lifetime reserve days.
Medicare-approved amount and Part B
After you have met your Part B deductible, Medicare will pay its portion of the approved amount. However, under Part B, you still owe 20% of the Medicare-approved amount for all covered items and services.
Questions you can ask your doctor that may help lessen costs
You can save money on your Medicare-approved costs by asking your doctor the following questions before you receive services:
Medicare-approved amount and Medigap
Medigap plans can be beneficial for people who need help paying Medicare costs, such as deductibles, copayments, and coinsurance.
When a non-participating provider renders services that cost more than the Medicare-approved amount, they can charge you the excess amount. These excess charges can cost up to an additional 15% of the Medicare-approved amount. If you have a Medigap plan, this amount may be included in your coverage.
Not all Medigap plans offer this coverage. Only plans F and G do. However, Medigap plan F is no longer open to beneficiaries who became eligible for Medicare after January 1, 2020. If you are already enrolled in this plan, you can continue to use it. Otherwise, you will need to enroll in plan G to cover those excess charges.
The actual charge is the amount that your provider bills Medicare. The amount paid is the amount Medicare actually pays your provider, which is typically 80% of the Medicare-approved amount.
Medicare pays 80% of the approved amount unless your provider doesn’t accept the assignment.
The Medicare-approved amount is the amount of money that Medicare has agreed to pay for your healthcare services. This amount can differ depending on what services you’re seeking and the healthcare provider you receive them from.
Using a Medicare participating provider can help lower your out-of-pocket Medicare costs.
Enrolling in a Medigap policy can also help cover some of the additional costs you might face for using nonparticipating providers.
To find out exactly what your Medicare-approved costs are, speak with your provider directly for more details.