Regulations to Consider Before Opting Out of Medicare

It seems that many of my blogs this year have addressed in some respect the ever-changing and evolving healthcare system. In the midst of these changes, many physicians find themselves evaluating their practice operations, as well as the patients they treat. This assessment, coupled with changes in Medicare reimbursement, has led many physicians to consider changing their status as enrolled and participating Medicare providers.

Before you determine that an investment as a Medicare provider no longer is worth it, you must be aware of your options and legal requirements.

There are three basic Medicare enrollment options for physicians:
1. Participating providers. A participating provider is enrolled in the Medicare program and accepts assignment on all Medicare claims. Accepting “assignment” means that the physician bills Medicare directly and accepts as full payment for a rendered service 80 percent of the Medicare fee schedule amount; plus 20 percent of the Medicare fee schedule amount from the patient (or the patient’s secondary insurance). A participating physician must accept assignment for all Medicare covered services; however, the physician can limit the number of Medicare patients he or she treats.

2. Non-participating providers. In many ways, non-participating providers are similar to participating providers. Both are enrolled in Medicare, both bill Medicare directly for services, and Medicare pays both 80 percent of the approved charge for a rendered service. There are, however, some important differences between these providers.
For non-participating physicians, Medicare sets the approved amount for a service at 95 percent of what is approved for participating physicians. Accordingly, if Medicare makes payment based on an approved charge of $100 for a participating physician, Medicare will base payment for a non-participating physician on a charge of $95 for the same service. Non-participating physicians, however, are not limited to accepting only $95. They can charge up to 115 percent of Medicare’s allowed charge. For example, for a service with a Medicare-approved charge of $95, a non-participating provider can charge a total of $109.25. The provider would bill Medicare for $109.25 and Medicare would pay $76 (80 percent of the $95 Medicare-approved fee). Even though the physician would bill Medicare for this service, the payment would be made to the patient, and the physician would need to collect the amount directly from the patient. The patient or secondary-payer would be responsible for $19 (20 percent of the $95 Medicare approved fee). The remaining amount ($14.25) would be billed to the patient.

3. Opt-out providers. Physicians opting out of Medicare bill patients directly for services otherwise covered by Medicare. Unlike both a participating and non-participating provider, physicians who have opted-out of Medicare may not bill Medicare for services (with the limited exception of some emergency services), and Medicare beneficiaries receiving services from an opted-out provider may not seek reimbursement from Medicare. To privately contract with a Medicare beneficiary, a physician must enter into a written, private agreement with the patient that meets specific requirements, as set forth by Medicare regulations.  In addition to the private agreement, the physician must file an affidavit with Medicare that also meets certain Medicare regulatory requirements. The affidavit must be filed no later than 30 days before the first day of a calendar quarter. A physician has 90 days after the start of the opt-out period to revoke his or her decision and remain enrolled in Medicare. After that time, the opt out is effective for two-years.

Whether you decide to continue as a fully-enrolled participating Medicare provider or decide to choose a less traditional (although becoming more popular) enrollment option, you must make certain your choice is properly documented in accordance with Medicare regulations.

Failure to limit your charges as a non-participating provider or to opt out of Medicare correctly can place your practice in financial jeopardy and limit your enrollment choices with Medicare in the future. As always, it is best to consult counsel knowledgeable about Medicare enrollment procedures and regulations to make certain that the choices you make today will not impact your ability to make choices tomorrow.