PAR vs Non-PAR: A 2025 Medical Billing Guide for Healthcare Professionals

Choosing whether to become a Participating (PAR) or Non-Participating (Non-PAR) Medicaid provider is one of the most critical decisions a practice may face. However, many physicians and billing professionals underestimate its impact on payment, claim processing, and patient satisfaction. According to CMS, over 97% of Medicare-participating physicians in 2024 chose PAR status, mostly to avoid income delays and compliance concerns.

The choice affects much more than reimbursement rates. PAR clinicians earn 5% more reimbursements than non-PAR physicians and are immediately featured in Medicare directories such as Physician Compare, which improves patient access. Non-PAR providers, on the other hand, can charge up to 115% of the Medicare-approved cost when not accepting assignment; still, they must manage more direct patient billing and frequently face slower cash flow.

This blog discusses the operational, financial, and regulatory differences between PAR and non-PAR providers in 2025. It contains real-world billing implications, new CMS revisions, and useful tips for healthcare providers, billing teams, and compliance officers assessing provider participation strategies.

What Does PAR vs Non-PAR Mean in Health Insurance?

Understanding the difference between PAR and non-PAR provider categories is critical for accurate billing, payer compliance, and claims processing. Each status affects how physicians get paid and how much patients spend out of pocket.

What Is a PAR Provider in Medical Billing?

A (participating provider) is a healthcare practitioner or organization that has signed a participation agreement with Medicare or a commercial insurance company. This agreement compels the provider to take the insurer’s authorized amount in full for covered services.

PAR providers:

Must accept assignments on all Medicare claims.

Clients cannot be billed more than their allowable deductible and coinsurance.

Receive a direct reimbursement from Medicare for 80% of the authorized price.

They are included in Medicare directories, which improves patient access and referral prospects.

In Medicare’s pricing schedule, PAR clinicians are typically reimbursed 5% more than non-PAR providers.

What Is a Non-PAR Provider in Medical Billing?

A Non-PAR provider declines to enter into a full participation agreement with Medicare. Instead, they keep the option to accept or reject assignments on a claim-by-claim basis.

Non-PAR providers:

You can accept or refuse an assignment per service.

Patients can be billed up to 115% of the Medicare-approved amount for unassigned claims (this is known as the limitation fee).

Patients are frequently required to pay upfront before filing claims to Medicare for partial payment.

Accepting assignments allows them to get 95% of the Medicare-approved rate.

They are not included in the Medicare Physician Compare directory or most payer network directories.

Key Differences Between PAR and Non-PAR Providers in Medical Billing

Understanding the key differences between PAR and non-PAR providers helps billing teams, coders, and compliance officers minimize claim errors, reduce rejections, and ensure proper compensation. This section discusses the key differences in payment structure, assignment, patient costs, and administrative tasks.

Criteria	PAR Provider	Non-PAR Provider
Assignment	Must accept the assignment on all claims	Can accept or refuse assignments on a case-by-case basis.
Reimbursement Rate	100% of Medicare-approved amount (80% by Medicare, 20% by patient/Medigap)	95% of the Medicare-approved cost if accepting the assignment
Limiting Charge	Not applicable	May charge up to 115% of the Medicare-approved amount on non-assigned claims.
Payment Flow	Medicare pays providers directly.	The patient may pay in advance; Medicare pays the patient.
Claim Submission	Must submit all claims to Medicare	Must submit all claims to Medicare
Patient Billing	Can only bill the patient for the deductible and coinsurance	May collect full charges from the patient before accepting the assignment
Directory Listing	Listed in Medicare’s Physician Compare and Payer directories	Not included in the Medicare directories
Administrative Workload	Lower-streamlined with payer	Higher = more patient coordination and billing follow-up.
Cash Flow Predictability	More predictable: direct reimbursement from Medicare.	Less predictable: depends on patient payment and claim turnaround.
Modifier Use	GA, GY, GZ as required for services not covered.	Requires strict modifier usage on unassigned services to comply with Medicare requirements.

Pros and Cons of PAR and Non-PAR Status for Providers

Choosing between PAR and Non-PAR status has implications for provider reimbursement, patient billing, and compliance risk. Each solution has trade-offs that affect financial planning and daily tasks.

Benefits of PAR Status

Higher Reimbursement Rate: PAR providers earn 5% more from Medicare than non-PAR physicians.

Direct Payment from Medicare: Medicare pays 80% of the permitted amount directly to the physician, with the remaining 20% paid by Medigap or invoiced to the patient.

Medigap Crossover: Medicare regularly transmits secondary claims to Medigap insurers, reducing the patient A/R burden.

Simplified Collections: Fewer upfront patient payments. Practices only collect deductibles and coinsurance.

Directory Listings: Providers are included in Medicare’s Physician Compare and payer directories, which improves patient access.

Advantages of Non-PAR Status

Control over assignment: Non-PAR providers can accept or reject an assignment.

Higher Billing Limit: For unassigned Medicare claims, providers can charge up to 115% of the Medicare-approved amount.

Patient-Pay Flexibility: Full payment may be collected before, and reimbursement handled by the patient.

Fewer Payer Restrictions: Due to Medicare laws, PAR status is less contract-bound.

Disadvantages and Risks of Each Status

PAR Drawbacks:

Charges are locked up at Medicare-approved rates, with no possibility for adjustment.

Accept assignment on all Medicare claims, without exception.

Higher patient volumes may not always compensate for decreased rates.

Non-PAR Drawbacks:

Lower reimbursement rate (95% of the Medicare-approved amount).

Clear patient communication is required, as is the use of ABNs for non-assigned services.

Increased administrative effort to collect payments and explain benefits.

Conclusion

Understanding the differences between PAR and non-PAR statuses is crucial for accurate medical billing and ensuring Medicare compliance. These classifications have a direct impact on provider reimbursement, patient financial responsibilities, and administrative processes. PAR providers often receive more, have shorter claim cycles, and are simpler for patients to find. Non-PAR providers, on the other hand, may have more price control, but they must deal with additional paperwork and slower cash flow. Selecting the proper status needs an in-depth review of your billing priorities, patient base, and contractual commitments. Making a wise choice helps to avoid claim denials and ensures your practice’s financial stability.