How does Medicare pay for medical services?

Hospitals and community mental health centers are paid a set amount of money (called the payment rate) to give some outpatient services to people with Medicare. The payment rate includes:

Medicare’s payment amount for the service you receive
Your yearly Medicare Part B deductible if you haven’t already paid it for the year. This amount can change each year.
Your co-payment amount or co-insurance

The payment rate is not the same for all hospitals and community mental health centers. The payment rate for a hospital or community mental health center is a national rate adjusted to reflect what people are paid to work in hospitals in the area where you get services. Each January 1, Medicare updates the payment rates to keep up with changes in the cost of providing services.