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What is Medicare assignment and how does it work?

Kimberly Lankford,

​Because Medicare decides how much to pay providers for covered services, if the provider agrees to the Medicare-approved amount, even if it is less than they usually charge, they’re accepting assignment.

A doctor who accepts assignment agrees to charge you no more than the amount Medicare has approved for that service. By comparison, a doctor who participates in Medicare but doesn’t accept assignment can potentially charge you up to 15 percent more than the Medicare-approved amount.

That’s why it’s important to ask if a provider accepts assignment before you receive care, even if they accept Medicare patients. If a doctor doesn’t accept assignment, you will pay more for that physician’s services compared with one who does.

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How much do I pay if my doctor accepts assignment?

If your doctor accepts assignment, you will usually pay 20 percent of the Medicare-approved amount for the service, called coinsurance, after you’ve paid the annual deductible. Because Medicare Part B covers doctor and outpatient services, your $240 deductible for Part B in 2024 applies before most coverage begins.

All providers who accept assignment must submit claims directly to Medicare, which pays 80 percent of the approved cost for the service and will bill you the remaining 20 percent. You can get some preventive services and screenings, such as mammograms and colonoscopies , without paying a deductible or coinsurance if the provider accepts assignment. 

What if my doctor doesn’t accept assignment?

A doctor who takes Medicare but doesn’t accept assignment can still treat Medicare patients but won’t always accept the Medicare-approved amount as payment in full.

This means they can charge you up to a maximum of 15 percent more than Medicare pays for the service you receive, called “balance billing.” In this case, you’re responsible for the additional charge, plus the regular 20 percent coinsurance, as your share of the cost.

How to cover the extra cost? If you have a Medicare supplement policy , better known as Medigap, it may cover the extra 15 percent, called Medicare Part B excess charges.

All Medigap policies cover Part B’s 20 percent coinsurance in full or in part. The F and G policies cover the 15 percent excess charges from doctors who don’t accept assignment, but Plan F is no longer available to new enrollees, only those eligible for Medicare before Jan. 1, 2020, even if they haven’t enrolled in Medicare yet. However, anyone who is enrolled in original Medicare can apply for Plan G.

Remember that Medigap policies only cover excess charges for doctors who accept Medicare but don’t accept assignment, and they won’t cover costs for doctors who opt out of Medicare entirely.

Good to know. A few states limit the amount of excess fees a doctor can charge Medicare patients. For example, Massachusetts and Ohio prohibit balance billing, requiring doctors who accept Medicare to take the Medicare-approved amount. New York limits excess charges to 5 percent over the Medicare-approved amount for most services, rather than 15 percent.

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How do I find doctors who accept assignment?

Before you start working with a new doctor, ask whether he or she accepts assignment. About 98 percent of providers billing Medicare are participating providers, which means they accept assignment on all Medicare claims, according to KFF.

You can get help finding doctors and other providers in your area who accept assignment by zip code using Medicare’s Physician Compare tool .

Those who accept assignment have this note under the name: “Charges the Medicare-approved amount (so you pay less out of pocket).” However, not all doctors who accept assignment are accepting new Medicare patients.

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What does it mean if a doctor opts out of Medicare?

Doctors who opt out of Medicare can’t bill Medicare for services you receive. They also aren’t bound by Medicare’s limitations on charges.

In this case, you enter into a private contract with the provider and agree to pay the full bill. Be aware that neither Medicare nor your Medigap plan will reimburse you for these charges.

In 2023, only 1 percent of physicians who aren’t pediatricians opted out of the Medicare program, according to KFF. The percentage is larger for some specialties — 7.7 percent of psychiatrists and 4.2 percent of plastic and reconstructive surgeons have opted out of Medicare.

Keep in mind

These rules apply to original Medicare. Other factors determine costs if you choose to get coverage through a private Medicare Advantage plan . Most Medicare Advantage plans have provider networks, and they may charge more or not cover services from out-of-network providers.

Before choosing a Medicare Advantage plan, find out whether your chosen doctor or provider is covered and identify how much you’ll pay. You can use the Medicare Plan Finder to compare the Medicare Advantage plans and their out-of-pocket costs in your area.

Return to Medicare Q&A main page

Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at  Kiplinger’s Personal Finance  and has written for  The Washington Post  and  Boston Globe . She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.

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Medicare Assignment

Home / Medicare 101 / Medicare Costs / Medicare Assignment

Summary: If a provider accepts Medicare assignment, they accept the Medicare-approved amount for a covered service. Though most providers accept assignment, not all do. In this article, we’ll explain the differences between participating, non-participating, and opt-out providers. You’ll also learn how to find physicians in your area who accept Medicare assignment. Estimated Read Time: 5 min

What is Medicare Assignment

Medicare assignment is an agreement by your doctor or other healthcare providers to accept the Medicare-approved amount as the full cost for a covered service. Providers who “accept assignment” bill Medicare directly for Part B-covered services and cannot charge you more than the applicable deductible and coinsurance.

Most healthcare providers who opt-in to Medicare accept assignment. In fact, CMS reported in its Medicare Participation for Calendar Year 2024 announcement that 98 percent of Medicare providers accepted assignment in 2023.

Providers who accept Medicare are divided into two groups: Participating providers and non-participating providers. Providers can decide annually whether they want to participate in Medicare assignment, or if they want to be non-participating.

Providers who do not accept Medicare Assignment can charge up to 15% above the Medicare-approved cost for a service. If this is the case, you will be responsible for the entire amount (up to 15%) above what Medicare covers.

Below, we’ll take a closer look at participating, non-participating, and opt-out physicians.

Medicare Participating Providers: Providers Who Accept Medicare Assignment

Healthcare providers who accept Medicare assignment are known as “participating providers”. To participate in Medicare assignment, a provider must enter an agreement with Medicare called the Participating Physician or Supplier Agreement. When a provider signs this agreement, they agree to accept the Medicare-approved charge as the full charge of the service. They cannot charge the beneficiary more than the applicable deductible and coinsurance for covered services.

Each year, providers can decide whether they want to be a participating or non-participating provider. Participating in Medicare assignment is not only beneficial to patients, but to providers as well. Participating providers get paid by Medicare directly, and when a participating provider bills Medicare, Medicare will automatically forward the claim information to Medicare Supplement insurers. This makes the billing process much easier on the provider’s end.

Medicare Non-Participating Providers: Providers Who Don’t Accept Assignment

Healthcare providers who are “non-participating” providers do not agree to accept assignment and can charge up to 15% over the Medicare-approved amount for a service. Non-participating Medicare providers still accept Medicare patients. However they have not agreed to accept the Medicare-approved cost as the full cost for their service.

Doctors who do not sign an assignment agreement with Medicare can still choose to accept assignment on a case-by-case basis. When non-participating providers do add on excess charges , they cannot charge more than 15% over the Medicare-approved amount. It’s worth noting that providers do not have to charge the maximum 15%; they may only charge 5% or 10% over the Medicare-approved amount.

When you receive a Medicare-covered service at a non-participating provider, you may need to pay the full amount at the time of your service; a claim will need to be submitted to Medicare for you to be reimbursed. Prior to receiving care, your provider should give you an Advanced Beneficiary Notice (ABN) to read and sign. This notice will detail the services you are receiving and their costs.

Non-participating providers should include a CMS-approved unassigned claim statement in the additional information section of your Advanced Beneficiary Notice. This statement will read:

“This supplier doesn’t accept payment from Medicare for the item(s) listed in the table above. If I checked Option 1 above, I am responsible for paying the supplier’s charge for the item(s) directly to the supplier. If Medicare does pay, Medicare will pay me the Medicare-approved amount for the item(s), and this payment to me may be less than the supplier’s charge.”

This statement basically summarizes how excess charges work: Medicare will pay the Medicare-approved amount, but you may end up paying more than that.

Your provider should submit a claim to Medicare for any covered services, however, if they refuse to submit a claim, you can do so yourself by using CMS form 1490S .

Opt-Out Providers: What You Need to Know

Opt-out providers are different than non-participating providers because they completely opt out of Medicare. What does this mean for you? If you receive supplies or services from a provider who opted out of Medicare, Medicare will not pay for any of it (except for emergencies).

Physicians who opt-out of Medicare are even harder to find than non-participating providers. According to a report by KFF.org, only 1.1% of physicians opted out of Medicare in 2023. Of those who opted out, most are physicians in specialty fields such as psychiatry, plastic and reconstructive surgery, and neurology.

How to Find A Doctor Who Accepts Medicare Assignment

Finding a doctor who accepts Medicare patients and accepts Medicare assignment is generally easier than finding a provider who doesn’t accept assignment. As we mentioned above, of all the providers who accept Medicare patients, 98 percent accept assignment.

The easiest way to find a doctor or healthcare provider who accepts Medicare assignment is by visiting Medicare.gov and using their Compare Care Near You tool . When you search for providers in your area, the Care Compare tool will let you know whether a provider is a participating or non-participating provider.

If a provider is part of a group practice that involves multiple providers, then all providers in that group must have the same participation status. As an example, we have three doctors, Dr. Smith, Dr. Jones, and Dr. Shoemaker, who are all part of a group practice called “Health Care LLC”. The group decides to accept Medicare assignment and become a participating provider. Dr. Smith decides he does not want to accept assignment, however, because he is part of the “Health Care LLC” group, he must remain a participating provider.

Using Medicare’s Care Compare tool, you can select a group practice and see their participation status. You can then view all providers who are part of that group. This makes finding doctors who accept assignment even easier.

To ensure you don’t end up paying more out-of-pocket costs than you anticipated, it’s always a good idea to check with your provider if they are a participating Medicare provider. If you have questions regarding Medicare assignment or are having trouble determining whether a provider is a participating provider, you can contact Medicare directly at 1-800-633-4227. If you have questions about excess charges or other Medicare costs and would like to speak with a licensed insurance agent, you can contact us at the number above.

Announcement About Medicare Participation for Calendar Year 2024, Centers for Medicare & Medicaid Services. Accessed January 2024

https://www.cms.gov/files/document/medicare-participation-announcement.pdf

Annual Medicare Participation Announcement, CMS.gov. Accessed January 2024

https://www.cms.gov/medicare-participation

Does Your Provider Accept Medicare as Full Payment? Medicare.gov. Accessed January 2024

https://www.medicare.gov/basics/costs/medicare-costs/provider-accept-Medicare

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Ashlee Zareczny

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Medicare Assignment: Understanding How It Works

Medicare assignment is a term used to describe how a healthcare provider agrees to accept the Medicare-approved amount. Depending on how you get your Medicare coverage, it could be essential to understand what it means and how it can affect you.

What is Medicare assignment?

Medicare sets a fixed cost to pay for every benefit they cover. This amount is called Medicare assignment.

You have the largest healthcare provider network with over 800,000 providers nationwide on Original Medicare . You can see any doctor nationwide that accepts Medicare.

Understanding the differences between your cost and the difference between accepting Medicare and accepting Medicare assignment could be worth thousands of dollars.

Doctors that accept Medicare

Your healthcare provider can fall into one of three categories:

Medicare participating provider and Medicare assignment

Medicare participating providers not accepting medicare assignment, medicare non-participating provider.

More than 97% of healthcare providers nationwide accept Medicare. Because of this, you can see almost any provider throughout the United States without needing referrals.

Let’s discuss the three categories the healthcare providers fall into.

Participating providers are doctors or healthcare providers who accept assignment. This means they will never charge more than the Medicare-approved amount.

Some non-participating providers accept Medicare but not Medicare assignment. This means you can see them the same way a provider accepts assignment.

You need to understand that since they don’t take the assigned amount, they can charge up to 15% more than the Medicare-approved amount.

Since Medicare will only pay the Medicare-approved amount, you’ll be responsible for these charges. The 15% overcharge is called an excess charge. A few states don’t allow or limit the amount or services of the excess charges. Only about 5% of providers charge excess charges.

Opt-out providers don’t accept Original Medicare, and these healthcare providers are in the minority in the United States. If healthcare providers don’t accept Medicare, they won’t be paid by Medicare.

This means choosing to see a provider that doesn’t accept Medicare will leave you responsible for 100% of what they charge you. These providers may be in-network for a Medicare Advantage plan in some cases.

Avoiding excess charges

Excess charges could be large or small depending on the service and the Medicare-approved amount. Avoiding these is easy. The simplest way is to ask your provider if they accept assignment before service.

If they say yes, they don’t issue excess charges. Or, on Medicare.gov , a provider search tool will allow you to look up your healthcare provider and show if they accept Medicare assignment or not.

Medicare Supplement and Medicare assignment

Medigap plans are additional insurance that helps cover your Medicare cost-share . If you are on specific plans, they’ll pay any extra costs from healthcare providers that accept Medicare but not Medicare assigned amount. Most Medicare Supplement plans don’t cover the excess charges.

The top three Medicare Supplement plans cover excess charges if you use a provider that accepts Medicare but not Medicare assignment.

Medicare Advantage and Medicare assignment

Medicare assignment does not affect Medicare Advantage plans since Medicare Advantage is just another way to receive your Medicare benefits. Since your Medicare Advantage plan handles your healthcare benefits, they set the terms.

Most Medicare Advantage plans require you to use network providers. If you go out of the network, you may pay more. If you’re on an HMO, you’d be responsible for the entire charge of the provider not being in the network.

Do all doctors accept Medicare Supplement plans?

All doctors that accept Original Medicare accept Medicare Supplement plans. Some doctors don’t accept Medicare. In this case, those doctors won’t accept Medicare Supplements.

Where can I find doctors who accept Medicare assignment?

Medicare has a physician finder tool that will show if a healthcare provider participates in Medicare and accepts Medicare assignments. Most doctors nationwide do accept assignment and therefore don’t charge the Part B excess charges.

Why do some doctors not accept Medicare?

Some doctors are called concierge doctors. These doctors don’t accept any insurance and require cash payments.

What is a Medicare assignment?

Accepting Medicare assignment means that the healthcare provider has agreed only to charge the approved amount for procedures and services.

What does it mean if a doctor does not accept Medicare assignment?

The doctor can change more than the Medicare-approved amount for procedures and services. You could be responsible for up to a 15% excess charge.

How many doctors accept Medicare assignment?

About 97% of doctors agree to accept assignment nationwide.

Is accepting Medicare the same as accepting Medicare assignment?

No. If a doctor accepts Medicare and accepts Medicare assigned amount, they’ll take what Medicare approves as payment in full.

If they accept Medicare but not Medicare assignment, they can charge an excess charge of up to 15% above the Medicare-approved amount. You could be responsible for this excess charge.

What is the Medicare-approved amount?

The Medicare-approved amount is Medicare’s charge as the maximum for any given medical service or procedure. Medicare has set forth an approved amount for every covered item or service.

Can doctors balance bill patients?

Yes, if that doctor is a Medicare participating provider not accepting Medicare assigned amount. The provider may bill up to 15% more than the Medicare-approved amount.

What happens if a doctor does not accept Medicare?

Doctors that don’t accept Medicare will require you to pay their full cost when using their services. Since these providers are non-participating, Medicare will not pay or reimburse for any services rendered.

Get help avoiding Medicare Part B excess charges

Whether it’s Medicare assignment, or anything related to Medicare, we have licensed agents that specialize in this field standing by to assist.

Give us a call, or fill out our online request form . We are happy to help answer questions, review options, and guide you through the process.

Related Articles

• What are Medicare Part B Excess Charges?
• How to File a Medicare Reimbursement Claim?
• Medicare Defined Coinsurance: How it Works?
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What You Need to Know About Medicare Assignment

If you are one of the more than 63 million Americans enrolled in Medicare and are on the lookout for a new provider, you may wonder what your options are. A good place to start? Weighing the pros and cons of choosing an Original Medicare plan versus a Medicare Advantage plan—both of which have their upsides.

Let’s say you decide on an Original Medicare plan, which many U.S. doctors accept. In your research, however, you come across the term “Medicare assignment.” Cue the head-scratching. What exactly does that mean, and how might it affect your coverage costs?

What is Medicare Assignment?

It turns out that Medicare assignment   is a concept you need to understand before seeing a new doctor. First things first: Ask your doctor if they “accept assignment”—that exact phrasing—which means they have agreed to accept a Medicare-approved amount as full payment for any Medicare-covered service provided to you. If your doctor accepts assignment, that means they’ll send your whole medical bill to Medicare, and then Medicare pays 80% of the cost, while you are responsible for the remaining 20%.

A doctor who doesn’t accept assignment, however, could charge up to 15% more than the Medicare-approved amount for their services, depending on what state you live in, shouldering you with not only that additional cost but also your 20% share of the original cost. Additionally, the doctor is supposed to submit your claim to Medicare, but you may have to pay them on the day of service and then file a reimbursement claim from Medicare after the fact.

Worried that your doctor will not accept assignment? Luckily, 98% of U.S. physicians who accept Medicare patients also accept Medicare assignment, according to the U.S. Centers for Medicare & Medicaid Services (CMS). They are known as assignment providers, participating providers, or Medicare-enrolled providers.

It can be confusing. Here’s how to assess whether your provider accepts Medicare assignment, and what that means for your out-of-pocket costs:

The 3 Types of Original Medicare Providers

1. participating providers, or those who accept medicare assignment.

These providers have an agreement with Medicare to accept the Medicare-approved amount as full payment for their services. You don’t have to pay anything other than a copay or coinsurance (depending on your plan) at the time of your visit. Typically, Medicare pays 80% of the cost, while you are responsible for the remaining 20%, as long as you have met your deductible.

2. Non-participating providers

“Most providers accept Medicare, but a small percentage of doctors are known as non-participating providers,” explains Caitlin Donovan, senior director of public relations at the National Patient Advocate Foundation (NPAF) in Washington D.C. “These may be more expensive,” she adds. Also known as non-par providers, these physicians may accept Medicare patients and insurance, but they have not agreed to take assignment Medicare in all cases. That means they’re not held to the Medicare-approved amount as payment in full. As a reminder, a doctor who doesn’t accept assignment can charge up to 15% more than the Medicare-approved amount, depending on what part of the country you live in, and you will have to pay that additional amount plus your 20% share of the original cost.

What does that mean for you? Besides being charged more than the Medicare-approved amount, you might also be required to do some legwork to get reimbursed by Medicare.

• You may have to pay the entire bill at the time of service and wait to be reimbursed 80% of the Medicare-approved amount. In most cases, the provider will submit the claim for you. But sometimes, you’ll have to submit it yourself.
• Depending on the state you live in, the provider may also charge you as much as 15% more than the Medicare-approved amount. (In New York state, for example, that add-on charge is limited to 5%.) This is called a limiting charge—and the difference, called the balance bill, is your responsibility.

There are some non-par providers, however, who accept Medicare assignment   for certain services, on a case-by-case basis. Those may include any of the services—anything from hospital and hospice care to lab tests and surgery—available from any assignment-accepting doctor, with a key exception: If a non-par provider accepts assignment for a particular service, they cannot bill you more than the regular Medicare deductible and coinsurance amount for that specific treatment. Just as it’s important to confirm whether your doctor accepts assignment, it’s also important to confirm which services are included at assignment.

3. Opt-out providers

A small percentage of providers do not participate in Medicare at all. In 2020, for example, only 1% of all non-pediatric physicians nationwide opted out, and of that group, 42% were psychiatrists. “Some doctors opt out of providing Medicare coverage altogether,” notes Donovan.“In that case, the patient would pay privately.” If you were interested in seeing a physician who had opted out of Medicare, you would have to enter a private contract with that provider, and neither you nor the provider would be eligible for reimbursement from Medicare.

How do I know if my doctor accepts Medicare assignment?

The best way to find out whether your provider accepts Medicare assignment is simply to ask. First, confirm whether they are participating or non-participating—and if they are non-participating, ask whether they accept Medicare assignment for certain services.

Also, make sure to ask your provider exactly how they will be billing Medicare and what charges you might expect at the time of your visit so that you’re on the same page from the start.

Is seeing a non-participating provider who accepts Medicare assignment more expensive?

The short answer is yes. There are usually out-of-pocket costs after you’re reimbursed. But it may not cost as much as you think, and it may not be much more than if you see a participating provider. Still, it could be challenging if you’re on a fixed income.

For example, let’s say you’re seeing a physical therapist who accepts Medicare patients but not Medicare assignment. Medicare will pay $95 per visit to the provider; but your provider bills the service at $115. In most states, you’re responsible for a 15% limiting charge above $95. In this case, your bill would be 115% of $95, or $109.25.

Once you get your $95 reimbursement back from Medicare, your cost for the visit—the balance bill—would be $14.25 (plus any deductibles or copays) .

In some states, the maximum cap on the limiting charge is less than 15%. As mentioned earlier, New York state, for instance, allows only a 5% surcharge, which means that physical therapy appointment would cost you just $4.75 extra.

Bottom line: Medicare assignment providers and non-participating providers who agree to accept Medicare assignment are both viable options for patients. So if you want to see a particular provider, don’t rule them out just because they’re non-par.

While seeing a non-participating provider may still be affordable, ultimately, the biggest headache may be keeping track of claims and reimbursements, or simply setting aside the right amount of money to pay for your visit up front.

Before you schedule a visit, be sure to ask how much the service will cost. You can also estimate the payment amount based on Medicare-approved charges. A good place to start is this  out-of-pocket expense calculator  provided by the CMS.

What if I see a provider who opts out of Medicare altogether?

An opt-out provider will create a private contract with you, underscoring the terms of your agreement. But Medicare will not reimburse either of you for services.

Seeing a provider who does not accept Medicare will likely be more expensive. And your visits won’t count toward your deductible. But you may be able to work out paying reduced fees on a sliding scale for that provider’s services, all of which would be laid out in your contract.

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Paying a Visit to the Doctor: Current Financial Protections for Medicare Patients When Receiving Physician Services

Cristina Boccuti Published: Nov 30, 2016

• Issue Brief

Under current law, Medicare has several financial protections in place that are designed to safeguard Medicare beneficiaries—seniors and people with permanent disabilities—from unexpected and confusing charges when they seek care from doctors and other practitioners.  These protections include the participating provider program, limitations on balance billing, and conditions on private contracting.  This issue brief describes these three protections, explains why they were enacted, and examines the implications of modifying them for beneficiaries, providers, and the Medicare program.

Main Findings

• The participating provider program was enacted in 1984 for two purposes: (1) to assist Medicare patients with identifying and choosing providers who charge Medicare-approved rates; and (2) to encourage providers to accept these rates. Given this program’s strong provider incentives, the number of participating providers grew rapidly across all states and today, the vast majority (96%) of eligible physicians and practitioners are “participating providers”—agreeing to charge Medicare’s standard fees when they see beneficiaries.
• The Congress instituted limitations on balance billing in 1989, in conjunction with implementation of the Medicare physician fee schedule. This financial protection limits the amount that “non-participating” providers may charge beneficiaries through balance billing—whereby beneficiaries are responsible for the portion of the provider’s charge that exceeds Medicare’s fee-schedule rate. Total out-of-pocket liability from balance billing has declined significantly over the past few decades dropping from $2.5 billion in 1983 ($5.65 billion in 2011 dollars) to $40 million in 2011.
• In 1997, the Congress codified several conditions for private contracting that apply to physicians and practitioners who “opt out” of Medicare and see beneficiaries only under individual private contracts. These restrictions were instituted to ensure that beneficiaries are aware of the financial ramifications of entering into these private contracts, and to safeguard patients and Medicare from fraud and abuse.  In general, private contracting is relatively rare with only 1 percent of practicing physicians opting out of Medicare.

Background: Current Provider Options for Charging Medicare Patients

Under current law, physicians and practitioners have three options for how they will charge their patients in traditional Medicare.  They may register with Medicare as (1) a participating provider, (2) a non-participating provider, or (3) an opt-out provider who privately contracts with each of his or her Medicare patients for payment (Figure 1).  This issue brief describes these three options and then examines three current provisions in Medicare that provide financial protections for Medicare beneficiaries.

Participating providers:   Physicians and practitioners who register with Medicare as participating providers agree to “accept assignment” for all of their Medicare patients. Accepting assignment entails two conditions: agreeing to accept Medicare’s fee-schedule amount as payment-in-full for a given service and collecting Medicare’s portion directly from Medicare, rather than the patient. Therefore, when Medicare patients see participating providers, they can be certain that these providers will not charge fees higher than Medicare’s published fee-schedule amount and that they will not face higher out-of-pocket liability than the maximum 20-percent coinsurance for most services. The vast majority (96%) of providers who provide Medicare-covered services are participating providers.

Non-participating providers:   Non-participating providers do not agree to accept assignment for all of their Medicare patients; instead they may choose—on a service-by-service basis—to charge Medicare patients higher fees, up to a certain limit. When doing so, their Medicare patients are liable for higher cost sharing to cover the higher charges. This arrangement is called “balance billing” and means that the Medicare patient is financially responsible for the portion of the provider’s charge that is in excess of Medicare’s assigned rate, in addition to standard applicable coinsurance and deductibles for Medicare services.  When non-participating providers do not accept assignment, they may not collect reimbursement from Medicare; rather, they bill the Medicare patient directly, typically up front at the time of service. Non-participating providers must submit claims to Medicare on behalf of their Medicare patients, but Medicare reimburses the patient, rather than the nonparticipating provider, for its portion of the covered charges.  A small share (4%) of providers who provide Medicare-covered services are non-participating providers.

Opt-out providers, privately contracting:   Physicians and practitioners who choose to enter into private contracts with their Medicare patients “opt-out” of the Medicare program entirely. These opt-out providers may charge Medicare patients any fee they choose. Medicare does not provide any reimbursement—either to the provider or the Medicare patient—for services provided by these providers under private contracts. Accordingly, Medicare patients are liable for the entire cost of any services they receive from physicians and practitioners who have opted out of Medicare. Several protections are in place to ensure that patients are clearly aware of their financial liabilities when seeing a provider under a private contract.  An extremely small portion of physicians (less than 1% of physicians in clinical practice) have chosen to “opt-out” of the Medicare program, of whom 42 percent are psychiatrists.

These provider options have direct implications on the charges and out-of-pocket liabilities that beneficiaries face when they receive physician services (Figure 2).  They also play a major role in several financial protections in current law—namely, the physician participation program, limitations on balance billing, and conditions for private contracting—which help beneficiaries understand the financial implications of their provider choices and encourage providers to accept Medicare’s standard fees.

Figure 1: Physician/Practitioner Billing Options in Traditional Medicare

Figure 2: Medicare reimbursement and beneficiary cost-sharing for a $100 fee-schedule service

Medicare’s Participating Provider Program

Medicare’s participating provider program includes several incentives (both financial and nonfinancial) to encourage physicians and practitioners to “accept assignment” for all of their Medicare patients.  When providers accept assignment, they agree to accept Medicare’s fee-schedule amount as payment-in-full for a given service and are allowed to bill Medicare directly for its portion of the reimbursement.  Physicians and practitioners who agree to accept assignment on all services that they provide to Medicare patients are “participating providers” and are listed in Medicare provider directories.  Beneficiaries who select a participating provider are assured that, after meeting the deductible, their coinsurance liability will not exceed 20 percent of the charge for the services they receive (Figure 2).

Congress established the participating provider program in the 1984 Deficit Reduction Act (DEFRA) to address two main concerns: confusion among beneficiaries about the fees they were being charged when they saw a doctor and escalating rates of balance billing from charges that exceeded Medicare’s established “usual, customary, and reasonable” rates for their area. 1 At that time, aside from Medicaid-eligible beneficiaries, Medicare had no limits on the amount that physicians and practitioners could balance bill for their services. Surveys conducted by the Physician Payment Review Commission (PPRC), a congressional advisory body and predecessor of the Medicare Payment Advisory Commission (MedPAC), revealed that prior to the participating provider program, beneficiaries often did not know from one physician to the next whether they would face extra out-of-pocket charges due to balance billing and how much those amounts might be. 2   By 1984, beneficiaries’ payment for balance billing reached 27 percent of total Medicare Part B out-of-pocket liability and was jeopardizing their access to affordable physician services. 3

The establishment of the participating provider program in Medicare instituted multiple incentives to encourage providers to accept assignment for all their patients and become participating providers.  For example, Medicare payment rates for participating providers are 5 percent higher than the rates paid to non-participating providers.  Also, participating providers may collect Medicare’s reimbursement amount directly from Medicare, in contrast to non-participating providers who may not collect payment from Medicare and typically bill their Medicare patients upfront for their charges.  (Non-participating providers must submit claims to Medicare so that their patients are reimbursed for Medicare’s portion of their charges.) Participating providers also gain the benefit of having electronic access to Medicare beneficiaries’ supplemental insurance status, such as their Medigap coverage. This information makes it considerably easier for providers to file claims to collect beneficiary coinsurance amounts, as well as easing the paperwork burden on patients.  Additionally, Medicare helps beneficiaries in traditional Medicare seek and select participating providers by listing them by name with their contact information on Medicare’s consumer-focused website (www.Medicare.gov).

Given the strong incentives of the participation program, combined with limits on balance billing (discussed in the next section), it is not surprising that the share of physicians and practitioners electing to be participating providers has risen to high levels across the country. Overall, the rate of providers with participation agreements has grown to 96 percent in 2011, up considerably from about 30 percent in 1986, two years after the start of the participating provider program (Figure 3). 4   As a result, across all states, most beneficiaries now encounter predictable expenses for Medicare-covered services, and are never responsible for Medicare’s portion of the fee (Appendix 1).

Figure 3: Strong incentives in Medicare have led to a high rate of “participating providers”

Medicare’s Balance Billing Limitations

Despite the incentives to become participating providers, a small share (4%) of physicians and practitioners who are registered with Medicare are non-participating providers. These providers can—on a service-by-service basis—charge patients in traditional Medicare higher fees than Medicare’s fee-schedule amount, up to a specified maximum. When charging higher fees, beneficiaries are responsible for the difference between Medicare’s approved amount and the providers’ total charge—essentially the balance of the bill remaining after accounting for Medicare’s reimbursement. This higher cost-sharing arrangement is called “balance billing” and means that the Medicare patient is financially liable for not only the applicable coinsurance and deductible, but also for any amount in which the provider’s charge exceeds Medicare’s assigned rate. Providers may not balance bill Medicare beneficiaries who also have Medicaid coverage. 5

When non-participating providers balance bill, they bill the beneficiary directly, typically for the full charge of the service—including Medicare’s share, applicable coinsurance and deductible, and any balance billed amount.  Non-participating providers are then required to submit a claim to Medicare, so that Medicare can process the claim and reimburse the patient for Medicare’s share of the charge.  Two Medigap insurance policies, which beneficiaries may purchase to supplement their Medicare coverage, include coverage for balance billing. 6   Balance billing is prohibited for Medicare-covered services in the Medicare Advantage program, except in the case of private fee-for-service plans.

In traditional Medicare, the maximum that non-participating providers may charge for a Medicare-covered service is 115 percent of the discounted fee-schedule amount. (Medicare’s fee-schedule rates for non-participating physicians are reduced by five percent.)  Accordingly, non-participating providers may bill Medicare patients up to 9.25 percent more than participating providers (i.e., 1.15 x 0.95= 109.25).  If the non-participating physician or practitioner balance bills the maximum amount permitted (not including any unmet deductible), total beneficiary liability for Medicare-covered services is about 33 percent of Medicare’s regular fee schedule amount (Figure 2).

Balance billing limitations were implemented in conjunction with the institution of Medicare’s physician fee-schedule in the Omnibus Budget Reconciliation Act of 1989.  At the time, Medicare’s charge-based methodology for physician services gave rise to rapid spending growth and confusion among beneficiaries about what charges they would face for physician services. 7 Moreover, high cost-sharing liabilities weighed disproportionately on beneficiaries who were sickest and used the most physician services. Despite physician reports that they took patient incomes into account when determining whether to charge higher-than Medicare rates, PPRC research did not find a relationship between beneficiary income and the probability that claims would be assigned. 8

While the Congress constrained growth in provider fees through the implementation of the fee schedule, it also implemented maximum “limiting charges” to establish further certainty and predictability for patients on their expected costs for services. In trying to rein in Medicare fee-schedule payments, the Congress sought to protect beneficiaries from excess charges that providers could otherwise impose in response to restrictions on their fees. 9

The continued desire to protect beneficiary spending during the implementation of the new physician fee schedule gave rise to the question of whether Congress might consider imposing even greater restrictions on balance billing or even mandate assignment (prohibiting balance billing) for all claims. 10 Ultimately, the rationale in Congress for allowing limited balance billing was that it would provide for:  (1) a “safety valve” for physicians who believed that the fee schedule did not adequately reflect the quality of services that they provided; (2) a means to correct any underpricing of resource costs in the fee schedule; and (3) necessary financial protections for beneficiaries, particularly in areas of the country where choice of physicians was limited. 11

As limits on balance billing were implemented and incentives for physicians and practitioners to take assignment took hold, beneficiary liability for balance billing declined dramatically.  CMS data show that in 2011, total balance billing amounted to $40 million, down significantly from $2.5 billion in 1983, (which equals $5.6 billion in 2011 dollars) (Figure 4).  Concurrently, the rate of assigned claims to total covered charges climbed from 51% in 1983 to 99% in 2011.

Figure 4: Balance billing in Medicare has declined significantly; almost all physician services are now paid on assignment

Private Contracting Conditions for Providers who Opt Out of Medicare

A very small share of providers (less than 1 percent of physicians) have elected to “opt out” of Medicare and contract privately with all of their Medicare patients, individually. 12 Their fees are not bound by Medicare’s physician fee schedule in any way, which means that these providers have no limits on the amounts they may charge beneficiaries for their services.  Medicare does not reimburse either the provider or the patient for any services furnished by opt-out providers.  Therefore, Medicare patients are financially responsible for the full charge of services provided by providers who have formally opted out of Medicare. 13

Serving as beneficiary protections, several important conditions exist for providers who elect to contract privately with Medicare patients. One condition is that prior to providing any service to Medicare patients, physicians and practitioners must inform their Medicare patients that they have opted out of Medicare and provide their Medicare patients with a written document stating that Medicare will not reimburse either the provider or the patient for any services furnished by opt-out providers. Their Medicare patients must sign this document to signify their understanding of it and their right to seek care from a physician or other practitioner who has not opted-out of Medicare.

Providers opt-out by submitting a signed affidavit to Medicare agreeing to applicable terms and affirming that their contracts with patients include all the necessary information.  Physicians or practitioners who opt out of Medicare must privately contract with all of their Medicare patients, not just some.  Once a physician or practitioner opts out of Medicare, this status lasts for a two-year period and is automatically renewed unless the physician or practitioner actively cancels it. 14   Providers may not enter into a private contract with a beneficiary who also has Medicaid benefits or who is experiencing an urgent or emergent health care event. 15

These conditions, which provide protections for both beneficiaries and the Medicare program, were included in the Balanced Budget Act of 1997 as part of the legislation that first codified physicians’ ability to privately contract with Medicare beneficiaries.  Requiring opt-out providers to privately contract for all services they provide to Medicare patients (rather than being able to select by individual patients or services) was intended to prevent confusion among Medicare patients as to whether or not each visit would be covered under Medicare and how much they could expect to pay out-of-pocket.  Similarly, requiring providers to opt out for a minimum period of time—two years—was intended to ensure that beneficiaries had consistent information to make knowledgeable choices when selecting their physicians.  Both of these provisions also addressed Medicare’s duty to guard against fraudulent billing in an administratively feasibly manner.  If, for example, physicians contracted with only some of their patients and/or services, Medicare would have to examine each contract for each submitted claim to discern which claims were eligible for Medicare reimbursement and which were not.

Previous Kaiser Family Foundation analysis shows that psychiatrists are disproportionately represented among the 0.7 percent of physicians (4,863) who have opted out of Medicare—comprising 42 percent of all physicians who have opted out (Figure 5). 16   Another 1,775 clinical professionals with non-physician doctorate degrees (i.e. oral surgeon dentists, podiatrists, and optometrists) also have opted-out of the Medicare program. 17 Dentists who are oral surgeons comprise the majority of this group (95%).  Earlier research that examined opt-out providers through 2002 found similarly low numbers of providers opting out (2,839) as well as relatively higher opt-out rates among psychiatrists compared with other specialties. 18

Some physician organizations attribute physician decisions to opt out of Medicare to frustration with Medicare’s fees and regulations. 19 Others have noted a similar trend in physician refusal to work with any insurers—including commercial insurance plans—especially in prosperous communities. 20 In these cases, providers require patients to pay them directly out-of-pocket, leaving the patient to seek reimbursement, if any, from their insurer.  For providers with patients who have the resources to make the payments, this billing method significantly reduces providers’ paperwork.

Concierge Practice Models

Some physicians are turning to concierge practice models (also called retainer-based care), in which they charge their patients annual membership fees and typically have smaller patient caseloads.  Physicians in a concierge practice model do not necessarily need to opt-out of Medicare to see Medicare patients.  However, if they do not opt-out of Medicare, these physicians are subject to Medicare’s balance billing rules, and therefore, cannot charge beneficiaries additional fees for services that are already covered by Medicare. 21 For example, the annual fee for a concierge practice may not be used for the yearly wellness visit covered by Medicare, but it could be applied to items such as a newsletter and high-end waiting room furniture.  More controversy exists about concierge practices applying annual fees paid by Medicare beneficiaries to enhanced appointment access and extra time with patients. 22

While anecdotal reports suggest a significant migration of primary care physicians to concierge/retainer practices, particularly in areas around Washington D.C and other major east and west coast cities, reliable data on the number of these practices are lacking.  In 2010, a report for MedPAC found listings for 756 concierge physicians, compared with 146 found by Government Accountability Office in 2005. 23   Other news articles have reported larger numbers (4,400 in 2012) according to the American Association of Private Physicians. 24

Implications of Proposals to Modify Incentives and Relax Certain Financial Protections—Pros and Cons

Proposals introduced by Rep. Tom Price, House Speaker Paul Ryan and others have sought to relax private contracting conditions either throughout the Medicare program or as a demonstration project that could be implemented by the Administration.  For example, in 2015, two Bills introduced in the House with a companion Bill in the Senate 25 include provisions to allow physicians and practitioners to engage in private contracting on a beneficiary-by-beneficiary basis, instead of requiring providers to opt-out of Medicare entirely. These Bills would also allow beneficiaries to seek Medicare reimbursement for the portion of the privately contracted fee that equals Medicare’s fee schedule amount, but no out-of-pocket limits would apply to the remaining portion of the provider’s charge.  Similar changes are also proposed as a demonstration in the 2016 House Republican Plan, “A Better Way, our Vision for a Confident America.” 26   An earlier House Bill also included a demonstration to allow non-participating providers to collect Medicare’s portion of their charge directly from Medicare. 27

Pros: Support for Relaxing restrictions and increasing physician autonomy

Proponents of such proposals, including the American Medical Association, support relaxing restrictions on balance billing and private contracting for a number of reasons—perhaps the foremost is that they would allow physicians to charge Medicare beneficiaries higher rates and thereby get relief from fees that they say have failed to keep pace with the rising costs of running their practices. 28   Proponents also assert that this ability could increase the overall number of providers willing to accept Medicare patients. This concern may be an issue in some geographic areas, though surveys and other data sources show that nationally, access to physicians among Medicare seniors is generally comparable to access among people age 55 to 64 with private insurance. 29

Physician groups also state that proposals to relax constraints on balance billing and private contracting would give providers a sense of greater autonomy in how they relate to both their patients and the Medicare program and would allow physicians to charge higher fees to some patients based on their assessment of their patients’ ability to pay. 30   Additionally, beneficiaries would be able to seek at least partial Medicare reimbursement for services they received under private contracts.  Proposals that would allow non-participating providers to collect Medicare’s portion of their charge directly from Medicare would obviate the need to charge patients the full fee upfront. This circumstance could be helpful to those patients who do not want to wait for Medicare’s reimbursement, even if on net, they would incur higher out-of-pocket liability due to balance billing.  Non-participating providers could also experience a more reliable payment from Medicare, compared with the challenges, in some cases, of collecting fees from Medicare patients for unassigned claims.

Cons: Concerns about Eroding Financial Protections

Other analysts have raised concerns about the effects of relaxing private contracting rules and balance billing restrictions. 31   To the extent that such changes lead to increases in the number of non-participating and/or opt-out providers, they could exacerbate problems that lower-income beneficiaries face when seeking care.  Beneficiaries without the ability to pay higher rates (who are also likely to be disproportionately sicker) could find a reduced pool of physicians willing to accept them. Also, for rarer physician specialties and in some geographic areas, such as rural parts of the country, patients may have little choice among physicians.  If the limits on balance billing and private contracting were relaxed, beneficiaries in these situations could face the types of problems that existed prior to the imposition of limits on balance billing—high out-of-pocket costs and greater confusion and uncertainty about possible charges.  Additionally, concerns have been raised about the accuracy and appropriateness of providers determining which Medicare patients in their caseload can afford higher fees, and by how much.

While proposals that allow beneficiaries and non-participating physicians to seek reimbursement from Medicare may, in the short term, reduce out-of-pocket liability for beneficiaries, they could also decrease the incentives for physicians and practitioners to become participating providers.  In the long run, if significantly more providers balance billed their Medicare patients or opted-out of Medicare, this shift could alternatively increase beneficiary out-of-pocket spending.

From the perspective of the Medicare’s program integrity, Medicare would have significant difficulty tracking fraud and abuse if physicians were able to contract selectively for services with some but not all beneficiaries.  Medicare would have to examine every physician-patient contract, on a claim-by-claim basis, to determine which claims could be reimbursed directly to the physician and which would be the full responsibility of the patient.  Additionally, Medicare would need to examine these physicians’ billing practices to ensure that beneficiaries were not being charged inappropriately.

Conclusions

Balance billing limits, with incentives for physicians to accept assignment, have proven effective in limiting beneficiaries’ out-of-pocket liability for physician services. Today, a small share of Medicare beneficiaries experience balance billing just as only small share of provider claims in Medicare are paid unassigned—very different from the years before balance billing limits were instituted.  Moreover, only about 1 percent of physicians provide services to beneficiaries on a private contracting basis.  As the Congress has been considering changes to the way in which Medicare pays for physician service in the context of SGR repeal, some proposals have briefly surfaced to relax constraints on balance billing and private contracting.

On the one hand, these proposals could increase physician autonomy and provider willingness to treat Medicare patients, particularly among those providers who charge higher fees. On the other hand, such proposals could result in higher out-of-pocket liability, particularly in the longer term, which could affect beneficiary access to care.  Additionally, relaxing these protections could foster less predictability in the fees beneficiaries encounter when seeing physicians and practitioners.  Patients most at risk for experiencing a greater financial burden would be those with modest incomes and greater health care needs.  Beneficiaries in geographic areas with limited choices of physicians might also be at higher risk if a growing number of providers choose to balance bill or require private contracts with their Medicare patients.  The key is to strike a balance between assuring that providers receive fair payments from Medicare while also preserving financial protections that help beneficiaries face more predictable and affordable costs when they seek care.

Technical support in preparation of this brief was provided by Health Policy Alternatives, Inc.

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Everything PTs Need to Know About Accepting Medicare Assignment

There's no one-size-fits-all answer as to whether or not a PT should accept Medicare assignment, but you can better understand your options.

There's no one-size-fits-all all answer as to whether or not a PT should accept Medicare assignment, but you can better understand your options.

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Discuss any topic within rehab therapy, and chances are that Medicare will come up at some point. Whether it’s talking about Medicare and direct access or Medicare supervision requirements , it’s hard to avoid discussing the ins and outs of the program, given its prominence in healthcare at large. However, there’s one question that probably doesn't get asked enough: do providers have to participate in Medicare? We’re going to dive into the specifics of what rehab therapists can and can’t do when it comes to accepting Medicare assignment, and the pros and cons of each.  

What it means to “accept Medicare assignment”

In short, accepting Medicare assignment means signing a contract to accept whatever Medicare pays for a covered service as full payment. Participating and non-participating status only applies to Medicare Part B; Medicare Advantage plans operate with contracts similar to commercial insurance with in-network and out-of-network providers. 

Participating Providers

If you’re accepting Medicare assignment for all covered services, you are considered to be a participating provider under Medicare and may not charge patients above and beyond what Medicare agrees to pay. In this case, you can charge 100% of the Medicare Physician Fee Schedule (MPFS) and are paid at 80% of that rate, minus the Multiple Procedure Payment Reduction (MPPR) and the 2% sequestration adjustment.   

You may, however, collect patient deductibles and coinsurances—although, as explained in the Medicare payer guide , these providers typically ask Medicare to pay its share before collecting anything from the patient. Per the same resource, these providers are required to submit claims directly to Medicare for reimbursement and cannot charge patients for the claim submission. As Dr. Jarod Carter, PT, DPT, MTC, writes in Medicare and Cash-Pay PT Services , “This is the most common and best-understood relationship that physical therapists have with Medicare.”

Because Medicare beneficiaries often pay less out-of-pocket costs when receiving care from a provider who accepts assignment, patients may be more willing to work with these providers. Thus, if you accept assignment, you may have access to not only more Medicare patients but also more potential referral partners who only work with assignment-accepting providers. 

You must accept whatever Medicare deems appropriate compensation, and as we know, that’s below market value more often than not. Given the recently announced cuts to assistant-provided services and the 8% cut to all physical therapy services , accepting assignment may be increasingly less appealing to physical therapists. That said, if you serve a large Medicare population, the volume of patients you see may make it financially beneficial for you to continue playing by Medicare’s rules.

If you don’t want to accept Medicare assignment, what are your other options?

Non-participating providers.

As Meredith Castin explains in 4 Things to Know About Billing for Cash-Pay PT , Medicare also allows physical therapists to be non-participating providers (a.k.a. non-enrolled providers), which simply means that, while they are still in a contractual relationship with Medicare (and thus, are eligible to provide covered services to Medicare beneficiaries), they have not agreed to accept assignment across the board. 

If a non-participating provider opts to accept assignment for a case, they can charge 95%. 

If they do not accept assignment but still treat the patient, these providers may charge up to what Medicare calls “the limiting charge” for a service—which is 15% above the Medicare allowed amount.  Non-participating providers may choose to accept assignment for some services, but not others —or no services at all. For services that are not under assignment, the provider may collect payment directly from the patient; however, he or she must still bill Medicare, so that Medicare may reimburse the patient.

Non-participating providers are still eligible to serve Medicare beneficiaries, but they maintain some degree of freedom when it comes to pricing their services. In other words, if you are a non-participating provider, you are less beholden to what Medicare deems as appropriate payment than you are as a participating provider.

That said, you do still have to charge within Medicare’s limit, which means your freedom is far from total. Additionally, because patients may have to pay more out of pocket for your services and/or pay and wait for reimbursement from Medicare, you may have to work harder to convince them that you’re worth the financial investment. With the right data and marketing , it’s definitely doable; it may just require more effort.

No Relationship with Medicare

Physicians are eligible to “opt-out” of Medicare, which means that even if they are neither participating nor non-participating providers, they can still see Medicare beneficiaries on a cash-pay basis. Physical therapists do not enjoy the same privilege. So, if you decide not to be a Medicare participating provider or non-participating provider, then you effectively have no relationship with Medicare. Thus, you are not able to provide Medicare-covered services to Medicare beneficiaries. 

That said, all physical therapists, regardless of their relationship with Medicare, may provide never-covered services to Medicare beneficiaries, including wellness services. According to Castin, though, providers who go down that route, “need to be very clear about Medicare’s definition of ‘wellness services’ versus ‘physical therapy services.’” According to cash-pay PT Jarod Carter , it’s imperative for your documentation to clearly support that the services were indeed wellness as opposed to therapy. 

As a provider with no relationship with Medicare, you’re not required to play by Medicare’s rules when it comes to reporting requirements or (lowball) payments. You’re also not at all affected by Medicare’s most recent cuts, which, quite frankly, is a big bonus.

However, as of 2007 , 15% of the US population was enrolled in Medicare; that’s 44 million people—most of whom could benefit from seeing a physical therapist to improve function and mobility and decrease pain. And that number is projected to grow to 79 million people by 2030. As such, choosing not to play ball with Medicare means you’re walking away from a very large market of patients who need your services. 

It’s your decision.

Deciding on accepting Medicare assignment—and what type of relationship you’d like to have with Medicare—is not an easy decision to make, and there are a lot of factors to take into consideration before getting involved or breaking it off with this substantial federal payer. That said, it is important to know that you have options. Have more questions about what it means to accept assignment as a PT? Ask them below, and we’ll do our best to find you an answer.

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Leasehold assignment: who is liable for the service charge debt?

Leasehold properties regularly change hands without the knowledge of the managing agent and without the service charge arrears being settled., it can then be a challenge to know who – and how – to chase for these arrears: is it the old leaseholder or the new one and what debt recovery procedure should they follow, brady solicitors explain the legal position and gives some practical advice to both managing agents and leaseholders..

When one of your leaseholders sells their flat they should – in an ideal world – settle any outstanding service charge and ground rent arrears and, importantly, tell you, the managing agent, about the sale. In fact, this latter point is nearly always stipulated in the lease.

If there are outstanding arrears, these can be paid by the seller before completion or paid as part of the completion by the purchaser, and the purchase price adjusted accordingly. This allows the new leaseholder to start with a clean slate, without the worry of any pre-existing service charge debts.

The leasehold conveyancing position

Back to the real world and, unfortunately, leasehold purchasers often opt for the cheapest conveyancing quote and end up owning their new flat without getting proper advice on the associated liabilities.

There is no obligation on the seller’s solicitors to disclose information about any outstanding service charge arrears.

So, if there is an existing service charge debt, the buyer won’t know about it if their solicitor doesn’t make the appropriate enquiries.

Buyers can be reassured that, under The Landlord and Tenant (Covenants) Act 1995, the arrears remain the liability of the previous leaseholder and do not pass on to the new owner. However, if there is evidence of a breach of lease by the seller, forfeiture proceedings can be brought against the new owner of the flat – a rather unwelcome housewarming gift, most would agree! And, as we set out at the start of this article, selling a leasehold property without informing the managing agent can be a breach of lease in many situations .

How to recover service charge debts when a flat is sold

The first step is to pursue the seller for the arrears. If there has been no provision to transfer the arrears to the new owner, then the correct process is to issue proceedings (in either the county court or at the FTT) against the seller in order to obtain a judgment for their repayment.

We always recommend that you send a copy of these proceedings to the buyer.

Whilst the new owner is unlikely to be keen to pay the previous leaseholder’s bill, when they recognise there is a risk of forfeiture proceedings they may decide to settle up in order to avoid the ongoing hassle and costs.

Assuming you have secured the judgment at the first stage, you then need to decide whether to pursue the seller or the buyer for the arrears. Some former leaseholders will pay up immediately, not wanting to have a judgment against their name. Others will simply ignore it. We generally recommend that you seek to enforce the judgment against the current leaseholder – the buyer.

So the next step is to issue forfeiture proceedings against the buyer. Because the lease has been breached through non-payment of service charge arrears, albeit by the seller, you can issue proceedings against the buyer to forfeit. And, as the new owner of the property, they are likely to settle quickly. Additionally of course, by pursuing the buyer, you can rely on any cost clauses in the lease to ensure you can recover your legal costs.

If you are a leaseholder and find yourself in the unwelcome position of inheriting unknown service charge arrears or enforcement actions, you may have grounds for action against your conveyancing solicitor for potential negligence.

In the very unlikely situation that forfeiture proceedings fail, you can resort to personal enforcement proceedings against the seller. But be aware that this may involve bankruptcy proceedings and there is no guarantee you will be able to recover your legal costs.

So, in summary, where service charges remain unpaid, you should bring proceedings against the seller. However, by advising the purchaser that their property may be subject to forfeiture if the service charge arrears remain unpaid, you may be able to persuade them to settle the service charge to avoid this risk.

Take care to avoid waiving the right to forfeit

If you issue service charge demands – and collect monies – for periods after the leasehold assignment has taken place, you run a high risk of waiving the right to forfeit. It is very common for managing agents (and landlords) to end up in a situation where they have accidentally waived the right to forfeit the lease, simply because they have ‘carried on as normal’.

Without the right to forfeit you lose the ability to recover the service charge arrears from the buyer. And, whilst the buyer won’t want to pay the old owner’s debt, they arguably have more interest in settling it.

Brady Solicitors recommend that you put processes in place to make sure that service charge demands for the post-sale period are not issued to the new leaseholder.

What about balancing charges?

The situation becomes more complicated where the lease states that a separate balancing charge should be issued at the end of a service charge year to resolve any shortfall in the service charge amount.

Essentially, the balancing charge will be payable by whoever holds the lease at the time when the payment falls due. So, if the seller is up-to-date with their service charge payment but sells the flat before the balancing charge is due, then it is the purchaser who will be responsible for paying this charge.

Ensure you understand exactly when the balancing charge is due and when the lease assignment took place. 

You can also save unwelcome surprises by making regular enquiries at your estates to check whether any flats have been put on the market.

Dealing with service charge debts when a lease is assigned can be tricky. but, there are clear routes open to you as the managing agent if you end up with a new leaseholder and old service charge arrears., contact the service charge specialists at brady solicitors..

Leasehold survey: poor communication threatens sector

The importance of good housekeeping in service charge demands

What happens to service charge arrears when a property is sold?

Tips on issuing a service charge demand

MANAGING AGENT GUIDE TO SERVICE CHARGES

For more practical advice on how to make sure your service charge processes are working smoothly, download our free Managing Agent Guide to Service Charges. Click on the image to get your copy.

Get in touch with our experts

With hundreds of years’ worth of combined experience, our experts have dealt with nearly every leasehold property matter you can imagine. If you’re currently in need of legal support or advice, please get in touch.

Concierge care

Medicare doesn't cover membership fees for concierge care (also called concierge medicine, retainer-based medicine, boutique medicine, platinum practice, or direct care).

Your costs in Original Medicare

You pay 100% of the membership fee for concierge care.

Your membership fee depends on the contract or agreement you sign with the doctor or doctor group. Additional state laws and consumer protections may apply. For more information, contact your state’s insurance department or consumer protection bureau.

Concierge care is when a doctor or group of doctors charges you a membership fee before they’ll see you or accept you into their practice. After you pay the membership fee, you may get some services or amenities that Medicare doesn’t cover.

Things to know

Doctors who offer concierge care must still follow all Medicare rules, including the following:

• Doctors who accept assignment  can’t charge you extra for Medicare-covered services. This means your membership fee can’t include additional charges for items or services that Medicare usually covers, unless Medicare won’t pay for the item or service. In this situation, your doctor must give you a written notice called an  "Advance Beneficiary Notice of Noncoverage” (ABN)  listing the services and reasons why Medicare may not pay.
• Doctors who don’t accept assignment can charge you more than the  Medicare-Approved Amount  for Medicare-covered services, but there’s a 15% limit called the " limiting charge ."
• All Medicare doctors (whether or not they accept assignment) can charge you for items and services that Medicare doesn’t cover.

Is my test, item, or service covered?

Assignments: why you need to serve a notice of assignment

Catherine phillips.

PSL Principal Associate

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork - not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice of assignment.

What issues are there with serving notice of assignment?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment.

The case concerned the assignment of a trade mark licence to GNIC . The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist.

At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC , as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

• If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
• If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
• Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Best practice for serving notice of assignment

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

For further advice on serving notice of assignment please contact Kirsty Barnes or Catherine Phillips  from our Banking & Finance team.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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Assignments: why you need to serve a notice of assignment

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork – not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice.

What's the issue?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment. The case concerned the assignment of a trade mark licence to GNIC. The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist. At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC, as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

• If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
• If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
• Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

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What is a notice of assignment?

An assignment takes place when one party is holding a right to property, claims, bills, lease, etc., of another party and wishes to pass it along (or sell it) to a third party. As complicated as that sounds, it really isn’t. Strangely enough, many assignments can be made under the law without immediately informing, or obtaining the permission, of the personal obligated to perform under the contract. An example of this is when your mortgage is sold to another mortgage company. The original mortgage company may not inform you for several weeks, and they certainly aren’t going to ask your permission to make the sale.

If a person obligated to perform has received notice of the assignment and still insists on paying the initial assignor, the person will still be obligated to pay the new assignee according to the agreement. If the obligated party has not yet been informed of the assignment and pays the original note holder (assignor), the assignor is obligated to turn those funds over to the new assignee. But, what are the remedies if this doesn’t take place? Actually, the new assignee may find themselves in a difficult position if the assignor simply takes off with their funds or payment. They are limited to taking action against the person they bought the note from (assignor) and cannot hold the obligator liable. Therefore, it is important to remember that if any note or obligation is assigned to another party, each party should be well aware of their responsibilities in the transaction and uphold them according to the laws of their state. Assignment forms should be well thought out and written in a manner which prevents the failure of one party against another.

Related posts:

• Does your Agreement Require an Assignment Legal Form?
• Why Every Landlord and Tenant Needs a Lease Agreement
• Why you need a Power of Attorney and How to Assign One

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Former teacher charged with historical child sex offences at Brisbane school

Police allege a former Brisbane teacher committed 49 offences against 19 children while working at a primary school between 1988 and 1990.

The 68-year-old has been charged with 27 counts of indecent treatment of children under 16, 17 counts of taking a child for immoral purposes and five counts of common assault.

What's next?

He was granted bail with strict conditions on Monday and the magistrate adjourned his case to a mention next month.

A former Brisbane teacher has been granted bail after being charged with nearly 50 historical child sex abuse offences against more than a dozen children.

Police allege 68-year-old Stephen Patrick Andrew Kayser committed 49 offences against 19 boys and girls — who were aged between nine and 10 years old — while working as a teacher between 1988 and 1990.

The alleged offences occurred at Belmont State School in Carindale and at the Sleeman Sports Complex in Chandler, according to court documents.

Detective Acting Inspector Deanna Geck said detectives from the Morningside Child Protection and Investigation Unit launched Operation Whiskey Mott after a formal report was lodged on June 10 this year.

"Extensive investigations led the detectives to execute a search warrant at a South Brisbane home where the 68-year-old man was taken into custody," she said. 

"Offences against children, our most vulnerable, are reprehensible and the Queensland Police Service is committed to following every avenue of inquiry to seek justice."

Detective Inspector Geck said police will allege the offences occurred on school grounds.

He was charged with 27 counts of indecent treatment of children under 16, 17 counts of taking a child for immoral purposes and five counts of common assault.

Mr Kayser appeared in the Brisbane Magistrates Court this morning where he was released on bail with strict conditions, including that he must report to police three days a week and can't apply for a passport.

The court heard he was a school teacher for 43 years before he retired in 2020.

Speaking outside court, Mr Kayser said he would be fighting the charges against him.

"I don't believe I have done anything wrong," he said.

Mr Kayser said he was "shocked" when he was taken into custody.

Charges 'very serious'

Magistrate Belinda Merrin said the charges were "very serious".

"The nature of them and the sheer number of them would mean, if convicted of the offences, a lengthy term of imprisonment would be inevitable," she said.

When granting Mr Kayser bail, the magistrate told the court she had considered the timing of the alleged offences.

"I am not satisfied that the applicant is at an unacceptable risk of committing further offences, given the length of time since these offences are alleged to have occurred."

She adjourned the case to a committal mention on September 2.

Investigations are continuing.

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Visit the vet without leaving your home, thanks to chewy.

Have you ever found yourself at three in the morning, Googling “How much grass can my dog eat ?” Or maybe you’ve wondered if your cat’s new obsession with staring at the wall means they’re plotting world domination? (Spoiler: they are). Worry no more, because Chewy can swoop in to save your most perplexing pet moments with their Connect with a Vet service.

Connect with a Vet, a Chewy Service

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How does it work?

“There are two easy ways to connect with our licensed veterinarians and veterinary technicians,” advised Dr. Bledsoe.

“Live Chat consults will connect you instantly, so you can get advice right when you need it. Use the text-based live chat to exchange messages, pictures, and videos with the veterinarian or veterinary technician. Video Consults are scheduled in advance, so you can select a date and time that works best for you. There are usually same-day appointments available, or you can schedule a video call up to 2 weeks in advance. All video consults are 20 minutes long. You’ll be able to see and talk with the online veterinarian, as well as show your pet on camera.”

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• Sign up: If you’re already a Chewy customer, you’re halfway there. Just log in to your account. If not, sign up — it’s quick and painless, unlike trying to get your cat into a carrier.
• Book a session: Schedule a video call or start a text chat. You can do it at a time that works for you — no more waiting weeks for an appointment.
• Chat away: Discuss your pet’s quirks and issues with a real, live veterinarian. The vets are here to help with advice, diagnoses, and even prescription refills.

What does it cost?

“Connect with a Vet live chat is free for Chewy customers,” said Dr. Bledsoe. “The price for a single video appointment (20 minutes) is $19.99,” and you get an “unlimited number of sessions. Connect with a Vet is currently available to customers nationwide except customers residing in Alaska and Hawaii,” unfortunately.

Why you’ll love it

• Convenience: No more wrestling your dog into the car or dealing with a hissing cat at the vet’s office if not totally necessary. Connect from anywhere — your living room, your backyard, or even your pet’s favorite napping spot.
• Expert advice: Get professional advice from licensed vets who genuinely care about your furry friend. They’re like the wise owl of the pet world, minus the hooting. “Our licensed veterinarians and veterinary technicians talk through your pet’s symptoms and provide information about illnesses, allergies, injuries, and more,” commented Dr. Bledsoe.
• Peace of mind: Whether it’s a minor question or a bigger concern, you’ll get answers quickly. Think of it as a security blanket for pet parents — soft, comforting, and always there when you need it. It’s also an ideal way to “learn how to support your pet’s well-being at every age, from supplements to dental care,” advised Dr. Bledsoe. “We’ll help take the guesswork out of food and treats for your cat or dog.”
• Affordable: It’s a budget-friendly way to keep your pet’s health in check. You might even save enough to buy that fancy cat tree or those gourmet dog treats you’ve been eyeing.

The verdict

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Remember, in the world of pet parenting, there are no silly questions, only happy, healthy pets. So go ahead, Connect with a Vet, and give your furry friend the best care possible — because they deserve it, and you deserve peace of mind.

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• Life & Culture

Service charges or kitchen fees on your restaurant bill? Here’s what they mean

• Gabrielle Lazor Times staff

Around 8 p.m. on a recent Friday, the hostess at Kobé Japanese Steakhouse in St. Petersburg brought 10 guests to their hibachi table — a rare occasion where complete strangers share the intimacy of a meal together, and risk getting their eyebrows singed off.

Before leaving the table, she told them an 18% service charge would automatically be added to their bill.

“How much?” shouted Ed Karlau, 61.

At tables across the country, this is increasingly common, as restaurant owners facing inflation and rising labor costs try to find the balance between competitive employee pay and competitive menu prices. More and more, they are turning to seemingly arbitrary service charges.

Receiving the check these days can feel like a round of roulette crossed with an etiquette pop quiz. Will there be a standard service charge? A line to show kitchen appreciation? “Menu stabilization” fees? Will it be 2% or 20%? Does party size matter? Should I tip more on top of these charges?

Restaurants around Tampa Bay are no exception.

The Black Pearl, The Living Room and Sonder Social Club, all operated under The Feinstein Group in Dunedin, use a commission model with a 20% service charge. Kobé Japanese Steakhouse, a hibachi franchise with 13 locations from Orlando to Tampa Bay, charges 18%. Crabby Bill’s in St. Pete Beach and Indian Rocks Beach has a 10% menu stabilization fee. Baba in downtown St. Petersburg has a 2% “kitchen appreciation” fee that’s optional but is automatically added to checks.

“Some businesses institute these because they think that it’s better than raising prices,” said Bankrate Senior Industry Analyst Ted Rossman. “I tend to think surcharges often backfire ... the perception can be negative and can lead people to take business elsewhere.”

Kobé lists its service charge on the menu, but Karlau needed glasses to read the print at dinner, so his daughter recited the options.

In the center of the table, Chef Masato expertly wielded stainless steel tools in a hypnotic pas-de-deux before juggling an egg and cracking it on his cleaver’s edge. The runny whites, doubling as edible ink, dripped until a heart with an arrow sizzled on the grill. He ignited a volcano of onion slices before sending the veggies “choo-chooing” down the grill like a train. Their server, Kim Lugo, floated around guests refilling waters and clearing dishes.

When everyone’s meal ended and their plates overflowed with fried rice and noodles, shrimp and filet mignon, one guest passed Masato cash. Vinnie Piscitello, Karlau’s brother-in-law, forked over a $10 bill. Karlau followed with a 20. The hibachi cook tucked the extra bucks into his tall white hat.

Compliments to the chef took cash form this evening — just in case.

“Well, I saw the gentleman to my right, he gave (Masato), I guess a five or whatever,” said Piscitello, 61, a few days later. “I was like, ‘yeah, that’s a good idea.’ I didn’t know ... if he got any of that (18% service charge) or not.”

Lugo handed over the table’s bills. Piscitello picked up the tab for his party of seven, which totaled $400.67 with the service charge.

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“Tip’s already included right?” he asked.

He ignored the options to add an extra 15%, 18% or 20%.

Lugo estimated she receives a tip on top of the service charge about 80% of the time, which she splits evenly with the chef.

Piscitello said he remembers thinking that was redundant.

“Well I’m not tipping twice, you already got 18%.”

Although tip-like in appearance, service charges aren’t tips. Mandatory charges like these go directly to restaurant owners, who then can allocate them as they please, often to counter increased labor costs.

The practice is legal in the Sunshine State as long as restaurants disclose “on the food menu and on the face of the bill provided to the customer notice that an automatic gratuity is included.”

In 2022, the issue went to court after employees at Nusr-Et Steakhouse in Miami filed a lawsuit against their employer Nusret Gökçe, otherwise known as the Internet personality “Salt Bae,” for using the restaurant’s mandatory service charge to offset employee wages.

The U.S. Court of Appeals for the 11th Circuit ruled in favor of the steakhouse, saying “because the service charge was not a tip, it was properly considered part of the Employees’ ‘regular rate of pay’ so Nusret could lawfully use it to pay employee wages.”

Rossman said inflation has squeezed businesses and consumers.

“One of the root causes of this whole debate is that at the end of the day, everybody is sort of trying to push the burden elsewhere, whether that’s tipping or whether that’s taxes or whether that’s processing fees,” he said. “There’s sort of this whole game of hot potato going on with ‘who gets stuck with the bill?’”

The rules in the restaurant game are changing. The once delicate symbiosis between owner, waiter and diner — where servers earned significantly less than minimum wage, and guests were expected to make up the difference with tips — has toppled.

“Post-COVID, the restaurant industry has had two major pressures on it that’s just wiping out their margins,” said George Sayegh, co-owner of Baba. “And one of them is the cost of goods. Everything that comes through the door has gone up. ... The other cost ... is your labor cost.”

After talking with a handful of local restaurants, the standard restaurant model seems to allocate 30% of its menu prices to food costs and 30% to labor. Meaning, for a hypothetical $18 plate of tacos, nearly $11 goes to ingredients and employees.

On Nov. 3, 2020, Florida voters approved Amendment 2 , which will gradually increase the state’s minimum wage by $1 every year until it reaches $15 an hour on Sept. 30, 2026. The latest increase went into effect on Sept. 30, 2023, with Florida’s amended minimum wage being $12 and $8.98 for hourly employees and tipped hourly employees, respectively.

“And so these $18 tacos, if you do the math, from the time the wage increase started to (when it ends), it would be roughly a 217% increase to keep these margins the same. So that means these tacos now would be, what, $36?” said CEO and co-founder of The Feinstein Group, Zach Feinstein.

The hypothetical scenario points to price elasticity, which looks at how consumers change their spending habits when prices change. To many restaurant owners, increasing menu prices is a highly elastic choice that would drive customers away.

Next month will bring another $1 increase to minimum wages across Florida.

“We now have this inflation related to labor that’s pushing up the cost faster ... It’s created some pressures in there that restaurants don’t know how to adapt to this quickly enough,” said Matt Loder Jr. at Crabby Bill’s.

The family-owned seafood joint added a 10% “labor surcharge” to guests’ bills in February. They printed the new fee on their menus, updated their website and added stickers to each table with a QR code for more information. Since then, the charge has been renamed to a “menu stabilization” fee, “to stabilize our menu pricing, increase the wages of our team and combat rising costs due to the inflationary environment.”

It’s not a replacement for gratuity. The Loders feared de-incentivizing their tipped employees.

“If somebody walks in and, you know, no matter what you do, you’re going to get 17% of the bill ... and there’s no discretion to that money that you’re going to get based on the quality of service you provide, we believe that it was going to negatively affect the service,” said Loder.

Servers’ reported credit card tips have remained in the 18%-20% range, according to Loder.

But the bump did not go unnoticed by OpenTable reviewers.

“The 10% stabilization fee on the menu is wild to me. That just sounds like an inability to plan for market swings in seafood costs,” noted one diner on the website.

The restaurant industry is unique in that a customer can help determine an employee’s livelihood. To Feinstein, that doesn’t seem fair.

“If you have a plumber come to your house to fix a leaky sink, and for whatever reason, it wasn’t a great experience, you’re not going to call the plumbing company and cut the plumber’s pay, right? But in our industry, that’s the standard,” he said.

The 20% service charge in his restaurants’ commission model functions as a tip, except it’s not left to the customer’s whim. It also addresses wage disparities between the front and back of house.

“Again, I can only speak for my business, but ... ours is 100% distributed back to the (front of house) staff,” said Feinstein.

At Kobé, staff access a mobile app to see how the service charge is distributed, said Lugo.

In tourist hotspots, the charge can also safeguard against guests from other countries where tipping isn’t customary. Or anyone who isn’t keen on leaving gratuity.

Alex Melendez, 25, is a server at Feinstein’s The Living Room on Main in Dunedin. Before that, he worked at Ruth’s Chris Steak House. There were plenty of times when guests would leave $0 tips on $500 tabs.

“Here, it’s like I do have a safety net, but at the end of the day, that safety net doesn’t give me excuse to slack on the job. I still fulfill that 20% or more than that,” said Melendez.

He lets his tables know there’s a service charge included, but anything extra is appreciated. Melendez estimates 70% of his tables tip extra.

Similarly, Baba’s 2% “kitchen appreciation” fee strives to create more equitable wages between the front and back of house. The charge, introduced at the end of last year, is automatically added to guests’ checks, but they have the option to opt out.

“We try to make it transparent and evident,” said Sayegh. “‘Kitchen appreciation’ kind of lets them know that it’s not being used in any other way except for the (hourly) kitchen employees.”

Instead of raising menu prices by another 2% and recalculating hourly pay, kitchen staff get to benefit from busier days just like servers.

Christina Armenti visited the Greek-Lebanese spot a couple months ago, feasting on octopus and chicken, bread pudding and baklava. She couldn’t remember noticing the kitchen appreciation fee. And if she did, it wasn’t questioned.

“I think they deserve it. I’m sorry. Like, the food and beverage industry is a very low paid industry,” said Armenti, who has worked in the industry herself.

She didn’t leave any less of a tip because of the extra 2%.

Gabrielle Lazor is a life and culture reporter. She can be reached at [email protected].

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Leader of International Malvertising and Ransomware Schemes Extradited from Poland to Face Cybercrime Charges

Justice Department Unseals Charges Against Two Additional International Cybercriminals

WASHINGTON – A Belarussian and Ukrainian dual-national charged in both the District of New Jersey and Eastern District of Virginia with leading international computer hacking and wire fraud schemes made his initial appearance in Newark, New Jersey, today after being extradited from Poland.

As alleged in court documents unsealed today, Maksim Silnikau, also known as Maksym Silnikov, 38, led two multiyear cybercrime schemes. At different points, Silnikau has been associated with the online monikers “J.P. Morgan,” “xxx,” and “lansky,” among others.

In the District of New Jersey, Silnikau, along with alleged co-conspirators Volodymyr Kadariya, a Belarussian and Ukrainian national, 38, and Andrei Tarasov, a Russian national, 33, are charged with cybercrime offenses associated with a scheme to transmit the Angler Exploit Kit, other malware, and online scams to the computers of millions of unsuspecting victim internet users through online advertisements — so-called “malvertising” — and other means from October 2013 through March 2022. In the Eastern District of Virginia, Silnikau is charged for his role as the creator and administrator of the Ransom Cartel ransomware strain and associated ransomware operations beginning in May 2021.

“Today, the Justice Department takes another step forward in disrupting ransomware actors and malicious cybercriminals who prey on victims in the U.S. and around the world,” said Deputy Attorney General Lisa Monaco. “As alleged, for over a decade, the defendant used a host of online disguises and a network of fraudulent ad campaigns to spread ransomware and scam U.S. businesses and consumers. Now, thanks to the hard work of federal agents and prosecutors, along with Polish law enforcement colleagues, Maksim Silnikau must answer these grave charges in an American courtroom.” 

“This arrest underscores a long-term investigation by the U.S. Secret Service, in coordination with foreign, domestic and private partners, of cybercrime organizations that allegedly distributed the notorious Angler Exploit Kit, conducted malvertising, and operated the Ransom Cartel ransomware organization,” said Assistant Director of Investigations Brian Lambert of the U.S. Secret Service. “Cybercriminals should know that even if they attempt to hide their criminal conduct behind the anonymity of the internet that eventually, through the dedication of international law enforcement professionals, they will be apprehended and held accountable for their actions.”

“Silnikau and his co-conspirators allegedly used malware and various online scams to target millions of unsuspecting internet users in the United States and around the world,” said FBI Deputy Director Paul Abbate. “They hid behind online aliases and engaged in complex, far-reaching cyber fraud schemes to compromise victim devices and steal sensitive personal information. The FBI will continue to work with partners to aggressively impose costs on cybercriminals and hold them accountable for their actions.”

“As alleged in the indictment, Silnikau and his co-conspirators distributed online advertisements to millions of internet users for the purpose of delivering malicious content,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “These ads appeared legitimate but were actually designed to deliver malware that would compromise users’ devices or to deliver ‘scareware’ designed to trick users into providing their sensitive personal information. Silnikau’s arrest and extradition demonstrate that, working with its domestic and international partners, the Criminal Division is committed to bringing cybercriminals who target U.S. victims to justice, no matter where they are located.”

“These conspirators are alleged to have operated a multiyear scheme to distribute malware onto the computers of millions of unsuspecting internet users around the globe,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “To carry out the scheme, they used malicious advertising, or ‘malvertising’, to trick victims into clicking on legitimate-seeming internet ads. Instead, the victims would be redirected to malicious internet sites that delivered malware to their devices, giving the conspirators access to the victims’ personal information. The conspirators then sold that access and information to other cybercriminals on the dark net. Throughout the scheme, the conspirators attempted to hide their identities from law enforcement, including by using fraudulent aliases and online personas.”

“This case reemphasizes the importance of both cybersecurity and our crucial law enforcement partnerships worldwide,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “Online threats emerge within the digital ecosystem among those who exploit the very tools that help us connect and collaborate. In turn, we must maximize our investigative collaborations globally to address those threats. This investigation demonstrates the positive results of leveraging international partnerships to combat international crimes.”

“The FBI will continue to work alongside our partners both overseas and in the states to identify and dismantle cyber threats, and to pursue those criminals who attempt to target and defraud victims in the United States,” said Special Agent in Charge Stephen Cyrus of the FBI Kansas City Field Office.

District of New Jersey Indictment

According to the indictment unsealed in the District of New Jersey, from October 2013 through March 2022, Silnikau, Kadariya, Tarasov, and others in Ukraine and elsewhere used malvertising and other means to deliver malware, scareware, and online scams to millions of unsuspecting Internet users in the United States and elsewhere. The malvertising campaigns were designed to appear legitimate, but often redirected victim Internet users who viewed or accessed the advertisements to malicious sites and servers that sought to defraud the users or delivered malware to the users’ devices. The conspirators’ scheme caused unsuspecting Internet users to be forcibly redirected to malicious content on millions of occasions, and defrauded and attempted to defraud various U.S.-based companies involved in the sale and distribution of legitimate online advertisements.

One strain of malware that Silnikau and others allegedly took a leading role in disseminating was the Angler Exploit Kit, which targeted web-based vulnerabilities in Internet browsers and associated plug-ins. At times during the scheme, the Angler Exploit Kit was a leading vehicle through which cybercriminals delivered malware onto compromised electronic devices. The conspirators also allegedly enabled the delivery of “scareware” ads that displayed false messages claiming to have identified a virus or other issue with a victim Internet user’s device. The messages then attempted to deceive the victim into buying or downloading dangerous software, providing remote access to the device, or disclosing personal identifying or financial information.

For years, the conspirators tricked advertising companies into delivering their malvertising campaigns by using dozens of online personas and fictitious entities to pose as legitimate advertising companies. They also developed and used sophisticated technologies and computer code to refine their malvertisements, malware, and computer infrastructure so as to conceal the malicious nature of their advertising.  

As alleged, Silnikau, Kadariya, Tarasov, and conspirators used multiple strategies to profit from their widespread hacking and wire fraud scheme, including by using accounts on predominantly Russian cybercrime forums to sell to cybercriminals access to the compromised devices of victim Internet users (so-called “loads” or “bots”), as well as information stolen from victims and recorded in “logs,” such as banking information and login credentials, to enable further efforts to defraud the victim Internet users or deliver additional malware to their devices.

Eastern District of Virginia Indictment

According to the indictment unsealed in the Eastern District of Virginia, Silnikau was the creator and administrator of the Ransom Cartel ransomware strain, created in 2021. Silnikau allegedly had been a member of Russian-speaking cybercrime forums since at least 2005 and was a member of the notorious cybercrime website Direct Connection from 2011 to 2016, when the site was shuttered after the arrest of its administrator.

Beginning in May 2021, Silnikau allegedly developed a ransomware operation and began recruiting participants from cybercrime forums. On various occasions, Silnikau allegedly distributed information and tools to Ransom Cartel participants, including information about compromised computers, such as stolen credentials, and tools such as those designed to encrypt or “lock” compromised computers. Silnikau also allegedly established and maintained a hidden website where he and his co-conspirators could monitor and control ransomware attacks; communicate with each other; communicate with victims, including sending and negotiating payment demands; and manage distribution of funds between co-conspirators.

On Nov. 16, 2021, Silnikau allegedly executed a ransomware attack on a company based in New York, and on March 5, 2022, Ransom Cartel ransomware was deployed against a company based in California. The hackers removed confidential data without authorization and demanded a monetary payment to refrain from releasing the victim’s data.

In the District of New Jersey, Silnikau, Kadariya, and Tarasov are charged with conspiracy to commit wire fraud, conspiracy to commit computer fraud, and two counts of substantive wire fraud. If convicted, Silnikau, Kadariya, and Tarasov face maximum penalties of 27 years in prison for wire fraud conspiracy, 10 years in prison for computer fraud conspiracy, counts, and 20 years in prison on each wire fraud count.

In the Eastern District of Virginia, Silnikau is charged with conspiracy to commit computer fraud and abuse, conspiracy to commit wire fraud, conspiracy to commit access device fraud, and two counts each of wire fraud and aggravated identity theft. He faces a mandatory minimum of two years in prison and a maximum penalty of 20 years in prison.

The U.S. Secret Service and FBI Kansas City Field Office are investigating the case in the District of New Jersey, and the U.S. Secret Service is investigating the case in the Eastern District of Virginia. The Department also appreciates the extensive cooperation and coordination by the United Kingdom’s National Crime Agency and Crown Prosecution Service over the course of several years, as well as significant support provided by the Security Service of Ukraine Cyber Department and Prosecutor General’s Office; Guardia Civil of Spain, Spanish Ministry of Justice, and the Public Prosecutor’s Office at the Audiencia Nacional; Policia Judiciaria of Portugal; Germany—Bundeskriminalamt (BKA) and Landeskriminalamt (LKA) Berlin; and Polish authorities, in particular assistance provided by Poland’s Central Cybercrime Bureau, Border Guard, Ministry of Justice, and National Prosecutors Office.

Senior Counsel Aarash A. Haghighat, Cyber Operations International Liaison Louisa K. Becker, and Trial Attorney Christen Gallagher of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Samantha Fasanello, Chief of the Narcotics/OCDETF Unit, for the District of New Jersey are prosecuting Silnikau and his co-defendants in the District of New Jersey. Assistant U.S. Attorneys Andrew M. Trombly, Chief of the General Crimes Unit, for New Jersey, and Christopher Oakley for the District of Kansas also provided substantial assistance to the New Jersey case. Assistant U.S. Attorneys Jonathan Keim and Zoe Bedell are prosecuting the case in the Eastern District of Virginia.

The Justice Department’s Office of International Affairs also provided substantial assistance in the extradition of Silnikau and collection of evidence.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

View the District of New Jersey indictment here.

View the Eastern District of Virginia indictment here.

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Vance accused Walz of 'stolen valor.' What to know about Walz’s military record

Quil Lawrence

Left: Democratic vice presidential candidate Minnesota Gov. Tim Walz speaks during a campaign rally on August 6 in Philadelphia. Right: Republican Vice Presidential Candidate Sen. JD Vance, R-Ohio, delivers remarks during a campaign rally on August 6 in Philadelphia. Andrew Harnik/Getty Images; Drew Hallowell/Getty Images hide caption

For more on the 2024 race, head to the NPR Network's elections updates page.

Late Tuesday afternoon, the Harris campaign released a video of Tim Walz talking about gun control. Walz, whom Kamala Harris recently announced as her running mate, talks about banning assault rifles as part of what he calls “common sense” proposals.

“We can make sure that those weapons of war, that I carried in war, is the only place where those weapons are at,” Walz said in the video.

That was all Republican vice presidential nominee JD Vance needed.

“Well, I wonder, Tim Walz, when were you ever in war? When was this?” Vance said.

The vice presidential candidate is supposed to be an attack dog, sometimes landing the lower blows that might seem unpresidential. But Vance and Walz are also both veterans, with another thing in common: neither one of them saw combat. Their service shored up each ticket, adding a military credential beside two presidential candidates that never served. It didn’t seem like an issue. But in this compressed campaign season, Walz’s phrasing opened up a line of attack — and the Trump campaign took it, accusing the Minnesota governor of one of the most grievous charges possible in military circles.

War, combat and service – and a charge of “stolen valor”

Walz joined the National Guard at age 17 and served 24 years, first in Nebraska then Minnesota. During that time he got called up to national disasters and a deployment to the Arctic Circle in Norway. He completed his 20 years required for retirement in 2001, but then reenlisted after the attacks on Sept. 11. His only wartime deployment was to Italy in 2003, backfilling troops that were deploying to Afghanistan. So Vance, and many veterans on social media, took issue with Walz saying he’d carried weapons “in war.”

The Harris campaign said in a statement: “In his 24 years of service, the Governor carried, fired and trained others to use weapons of war innumerable times. Governor Walz would never insult or undermine any American's service to this country -- in fact, he thanks Senator Vance for putting his life on the line for our country. It's the American way."

But Vance went a lot further, with an attack that the Trump campaign probably had prepared.

“What was this weapon that you carried into war, given that you abandoned your unit right before they went to Iraq, and he has not spent a day in a combat zone? What bothers me about Tim Walz is the stolen valor garbage," Vance said.

Since Walz first ran for Congress and then governor, he’s faced attacks around the timing of his retirement. Vance’s accusation echoes one made by two fellow high-ranking sergeants from the Minnesota Guard who publicly attacked Walz in 2018, in a paid endorsement letter to the editor of the West Central Tribune . They slammed Walz for “conveniently retiring a year before his battalion was deployed to Iraq.”

According to the Minnesota National Guard, Walz retired in May 2005, two months before his unit, the 1st Battalion, 125th Field Artillery received an alert order for mobilization to Iraq in July 2005. It’s likely that Walz put in for retirement months before that May. It’s also clear that guardsmen anticipated deployment to Iraq months before July.

According to several of his contemporaries in the guard Walz talked about it as a hard decision: that if he deployed he’d miss his best chance to run for Congress.

“He weighed that decision to run for Congress very, very heavy,” Allan Bonnifield, who served with Walz, told Minnesota Public Radio in 2018. “He loved the military, he loved the Guard, he loved the soldiers that he worked with, and making that decision was very tough for him. Especially knowing that we were going on another deployment to Iraq. He didn’t take that decision lightly at all.”

The unit didn’t go to Iraq until March 2006, 10 months after Walz retired, where it stayed for a grueling 22-month extended deployment. The charge has dogged Walz, and in his last run for governor in 2022, it was even leveled by a political opponent who never served at all.

Walz’s rank

The latest round of attacks on Walz stirred up another confusing point about his rank. Walz served as a command sergeant major, the highest enlisted rank. But his retirement papers put him one step lower – a master sergeant. The Minnesota National Guard told NPR that Walz retired before completing academic requirements to keep the higher rank.

“He held multiple positions within field artillery such as firing battery chief, operations sergeant, first sergeant and culminated his career serving as the command sergeant major for the battalion. He retired as a master sergeant in 2005 for benefit purposes because he did not complete additional coursework at the U.S. Army Sergeants Major Academy,” said Army Lt. Col. Kristen Augé, the Minnesota National Guard’s state public affairs officer.

So while Walz can say he served as a command sergeant major, which also made him the highest enlisted member serving in Congress, and he can even get away with saying he retired as a command sergeant major, he cannot say he is a “retired command sergeant major.” On Thursday the Harris campaign changed Walz’s official bio on their website to reflect that.

John Kerry Reflects On Smear Campaigns And Not Taking Anything For Granted

Charges of “swiftboating”.

Attacking an opponent’s military service has a short history in presidential campaigns – the verb “swiftboat” dates back only 20 years, when George W. Bush’s campaign attacked combat-decorated John Kerry’s military service in Vietnam, which might have seemed risky since Bush avoided serving there. Donald Trump, who also avoided going to Vietnam, took the tactic to another level, attacking his GOP critic John McCain’s storied status as a POW. Now, Harris supporters are claiming that Vance is trying to “swiftboat” Walz, and even pointing to a member of the Bush-era campaign who is now working for Trump .

Veterans groups are generally keeping out of the fray; many veterans service organizations are on record praising the choice of two enlisted military veterans as vice-presidential nominees.

“This means that regardless of the outcome in November, the next vice president of the United States will be a former enlisted service member. I am pleased to see both major parties recognize that military service is once again a valued experience in choosing the candidate for the second highest position in the country,” Veterans of Foreign Wars National Commander Al Lipphardt said in a statement.

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Will the attacks on Walz’s military service stick like they did to Kerry 20 years ago?

This combination photo shows John Kerry during an interview, Feb. 6, 2024, in Washington, left, and Democratic vice presidential nominee Minnesota Gov. Tim Walz at a campaign rally, Aug. 10, 2024, in Las Vegas. (AP Photo)

FILE - Democratic presidential nominee Vice President Kamala Harris accompanied, left, by her running mate Minnesota Gov. Tim Walz, appear at a campaign event in Philadelphia, Aug. 6, 2024. (AP Photo/Matt Rourke, File)

FILE - Democratic Presidential candidate Sen. John Kerry, D-Mass., speaks at a rally in Detroit, Mich. Monday, Nov. 1, 2004. (AP Photo/Gerald Herbert, File)

FILE - Democratic vice presidential nominee Minnesota Gov. Tim Walz speaks at a campaign rally, Saturday, Aug. 10, 2024, in Las Vegas. (AP Photo/Julia Nikhinson, File)

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WASHINGTON (AP) — In some corners of the Democratic Party, last week felt like déjà vu.

The party’s vice-presidential nominee’s military record was under assault from Republicans — attacks reminiscent of those leveled two decades earlier on Sen. John Kerry during his run for the White House.

Democratic strategists who lived through the Kerry onslaught, however, say the political landscape has changed so much since 2004 that they do not believe the attacks will land with the same resonance.

“It is a very different world,” said Tad Devine, a senior adviser to Kerry’s 2004 campaign.

Former President Donald Trump’s campaign responded to the selection earlier this month of Minnesota Gov. Tim Walz as the Democratic vice presidential nominee by attempting to pick apart his military record. Walz served for 24 years in the Minnesota National Guard, but Trump’s campaign has criticized him for using imprecise language to describe how he carried a weapon in war and when he retired from service.

Kamala Harris’ campaign has pushed back against the attacks, but some Democrats worry Republicans might succeed in turning Walz’s military service into a liability. Others accused Republicans of attempting to “swift boat” Walz, a reference to the 2004 campaign and a sign of the campaign’s continued relevance.

The origin of “swift boating”

Kerry’s campaign was caught flatfooted in the summer of 2004 by attacks that questioned whether the presidential candidate had earned his many commendations as a commander of a swift boat during the Vietnam War. Kerry received three Purple Hearts, a Silver Star and a Bronze Star.

By 2004, America was involved in two wars — in Iraq and Afghanistan — following the Sept. 11, 2001, terror attacks. Kerry, a senator from Massachusetts, had made his military service a centerpiece of the hard-fought presidential primary campaign, to the point of starting his nomination speech by saying he was “reporting for duty.”

Republicans sought to undermine that selling point by raising questions about his Vietnam War service. An outside political group, the Swift Boat Veterans for Truth, led the anti-Kerry campaign, spending millions of dollars on hard-hitting television ads. One spot featured men who served in Vietnam questioning Kerry’s leadership and heroism, as well as his fitness to lead the country; another blasted Kerry’s participation in later anti-war protests.

The ads were effective.

“I remember being in Ohio and listening to that ad. And I called my campaign headquarters and said, guys, I just heard an ad. And if I heard that ad, I wouldn’t vote for me,” Kerry told NPR in 2018 .

Some in Kerry’s campaign wanted to respond more forcefully, while others wanted to take a more cautious approach, concerned that focusing on the attacks would elevate them.

The campaign pushed back in the press but spent little money on costly television ads to address the controversy.

That trepidation, one-time Kerry advisers said, ensured that the public began to question the candidate’s ability to handle national security matters.

Chris LaCivita — a top Trump campaign adviser — was one of the top Republican operatives behind the “swift boat” campaign. When Democrats compared the attacks on Walz to those on Kerry, LaCivita posted on X that the 2004 allegations “were never disproven.”

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“Two things you don’t do is lie about the medals you received and whether or not you saw combat. Those are the two big sins. And he’s guilty of at least one of them,” LaCivita told The Associated Press last week.

Multiple veterans who served with Kerry refuted the accusations in 2004. Matthew Dowd, the chief strategist for the Bush campaign in 2004, said last week that the “swift boat” allegations were “ nearly all lies .”

Walz pushes back

The Trump campaign has sought to take a similar approach in criticizing Walz’s service. Trump’s running mate, Sen. JD Vance, has led the charge, accusing Walz of lying about his record. Vance, a Marine veteran, also accused Walz of abandoning his unit before it deployed to Iraq.

The Harris-Walz campaign has pushed back against the criticism. A campaign spokesperson told the AP that Walz “misspoke” in 2018 when he attempted to make a point on gun control by saying he carried weapons in a war. Walz did not see combat during his tenure in the Minnesota National Guard.

Walz’s first congressional campaign in March 2005 issued a statement saying he planned to run despite a possible mobilization that might send his soldiers to Iraq. According to the Guard, Walz retired from service in May 2005. Three months later, the Army issued a mobilization order for Walz’s unit. It was sent to Iraq in March 2006. The Harris-Walz campaign has pushed back against the Republican characterizations that Walz retired to avoid deploying to a war zone.

Walz achieved the rank of command sergeant major. But because he did not finish certain coursework before his retirement after 24 years in the National Guard, he retired as a master sergeant, a lower rank, for benefits purposes.

It is unclear how effective these GOP attacks will be. Democrats who worked on the Kerry campaign said they are likely not going to be as potent because so much has changed since 2004.

Flush with cash

The main reason: Campaigns are now flush with cash, making it easier to fight back.

In 2004, Kerry and President George W. Bush, the Republican nominee, took public funding, receiving $74.6 million each from the government, barring them from private donations. The decision, said Devine and others, handcuffed a campaign that wanted to focus on its preferred message.

“We were living in a world of limited resources where we had to make decisions about should we go on the air now, should we go on later,” said Steve Elmendorf, Kerry’s deputy campaign manager. The Harris-Walz campaign “doesn’t have those constraints.”

Public funding is a thing of the past, and Harris’ operation raised a staggering $310 million in July. The Democratic campaign, aided by what President Joe Biden collected before he stepped aside, is expected to raise well over $1 billion.

“If we were going to respond to those attacks in the paid media, we were going to need to spend money that we were going to need in October,” said Devine.

Walz is not the presidential nominee

The strategists pointed to other differences in today’s environment.

Whereas the “swift boat” attacks were generated by an outside group relying on advertising, Republicans have largely hit Walz on social media and in interviews. Such broadsides may reach the GOP base but not the independent voters who will decide the election.

Walz is also not the presidential nominee — as Kerry was. Voters tend to focus on the candidates at the top of a ticket, something Trump himself has noted.

And then there is the issue of Trump. Could attacks on Walz’s 24 years of military service boomerang on the Republican standard-bearer? The former president has been criticized for avoiding military service over claims he suffered from bone spurs .

Despite the differences in the two campaigns, veterans of Kerry’s run said Democrats should take to heart a lesson they learned the hard way: They waited too long to counterattack. Mark Mellman, Kerry’s pollster, said Democrats should be particularly concerned about attacks on Walz’s integrity, a key selling point of his candidacy. “To the extent that image is damaged,” Mellman said, “it can be quite problematic.”

Associated Press writers Meg Kinnard in Cincinnati and Michelle L. Price in New York contributed to this report

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