Understanding Medicare Participation: Key Points for Providers

Once a year, practices that bill Medicare get a chance to revisit a decision that is easy to forget. From mid-November through December 31, providers can decide whether to participate in Medicare for the following year. As of October 27, 2026, CMS had not yet posted the 2027 Letter to Medicare Providers. Check the CMS participation page for the official announcement before making a decision.

This article covers what the choice means, how it works, and what a practice should look at before the window closes. It does not repeat the fee schedule discussion.

Participating and Non-Participating, in Plain Terms

A participating provider signs an agreement, Form CMS-460, to accept the Medicare-approved amount as full payment for covered Part B services and supplies. “Full payment” here means the approved amount, including what Medicare pays and the patient’s deductible and coinsurance. The practice may not bill the patient for more than the applicable cost-sharing amount.

In return, a participating provider’s approved amount under the Medicare Physician Fee Schedule is 5% higher than the non-participating amount. Participating providers are also listed in the Medicare Participating Physicians and Suppliers Directory.

A non-participating provider has not agreed to accept assignment on all claims. The allowed amount is 5% lower, even on claims where assignment is accepted. For services subject to the limiting-charge rules, a non-participating provider who does not accept assignment may charge up to 115% of the non-participating fee schedule amount. This is the limiting charge.

CMS reported a 98% Medicare participation rate in 2024. Most providers participate. That is a fact about the market, not an argument for or against any individual practice’s choice.

An Illustration of the Arithmetic

The figures below are hypothetical and meant only to show how the numbers relate. They are not a forecast. Suppose the participating Medicare Physician Fee Schedule allowed amount for a service is $100. The corresponding non-participating allowed amount is $95. For an unassigned claim subject to the limiting charge, the maximum charge is 115% of $95, or $109.25. These are allowed amounts or billing limits, not necessarily the amount Medicare pays directly to the practice. For a typical covered Part B service, after the deductible has been met, Medicare generally pays 80% of the applicable allowed amount, and the patient is responsible for the remaining cost-sharing amount.

For an unassigned claim, Medicare generally reimburses the beneficiary rather than the provider. The patient may have to pay the provider at the time of service and then receive the Medicare reimbursement. The maximum charge of $109.25 is 9.25% above the $100 participating allowed amount. Whether that higher billing ceiling is worth the additional collection effort and potential unpaid balances depends on the practice and its patient mix. To size the stakes for your own practice, apply the 5% difference to your actual Medicare allowed amounts by service. A practice with a large Medicare caseload will see a larger absolute difference than one with a few Medicare patients.

How the Process Works

Doing nothing keeps your current status. The participation agreement renews automatically each year.
To become participating, complete Form CMS-460 and mail a copy to the Medicare contractor responsible for your enrollment processing.
To leave participation, send written notice to each of those MACs, postmarked before December 31, stating that you are terminating participation effective January 1.
For already-enrolled providers, this annual window is the opportunity to change participation status for the following year.
New enrollees are the exception. They can submit the participation agreement with their Medicare enrollment application, and it becomes effective on their Medicare effective date.

Opting out of Medicare entirely is a different mechanism, with its own paperwork and private-contract rules. It is outside the scope of this article.

What to Review Before Deciding

These are points to check. They are not findings about any particular practice.

Your own numbers. Take your Medicare claims for the last full year and calculate what the 5% difference would have meant for your service mix. If your revenue is concentrated in a few high-volume codes, the answer may differ from a simple average.

Collection on unassigned claims. If you would not accept assignment, think through who collects the balance, when, and how. Consider the cost of billing patients directly and the likelihood that some balances will not be collected.

Patient and referral relationships. Consider how patients and referring practices might react to a change in status. This is a question for your own front desk and referral partners; the effect will depend on your patient population and services.

State rules. State law may impose additional limits on what non-participating physicians may charge. Check the requirements that apply in your state before changing your billing policy.

Contracts and listings. Review payer, network, and hospital agreements for provisions tied to Medicare participation status.

Staffing changes. If physicians are joining or leaving the practice in 2027, confirm how each person’s status will be set. New enrollees can submit the participation agreement at enrollment, as noted above.

Logistics. Confirm the correct mailing address for every MAC to which you send Part B claims. Mail early, use a method that provides proof of mailing, and keep a copy of the form or notice. For a termination, the postmark date is what counts.

A Simple Calendar

Late October and early November: check the CMS participation page for the official 2027 announcement and provider letter.

Mid-November: the annual window generally opens.

Late November to early December: finish your analysis and have the decision approved by the person with authority.

Early December: mail any form or notice and keep proof of mailing.

December 31: the postmark deadline for a termination effective January 1.

January 1: the new participation status takes effect.

Questions that Come Up

What if we do nothing? Your current status continues.
Can we change midyear? For providers already enrolled in Medicare, the annual participation window is the opportunity to change participation status for the next year.
Do we send one form or several? Send the agreement or termination notice to each MAC to which you submit Part B claims, as applicable.
Does this affect our 2027 prior authorization or interoperability work? They are separate matters.

The decision may well come out as “no change.” It should still be a decision made before the window closes, rather than a status that renewed itself without anyone reviewing it.

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