Medicare Opt Out: What You Need to Know in a Nutshell
• Physicians are not required to participate in Medicare but many rules and timelines apply.
• Participation, non-participation or going the private contract route all have financial consequences; so…
• An analysis of whether and to what extent a physician wants to participate in Medicare should include consideration of a number of factors, including patient needs, the implications of the decision on hospital privileges and the financial implications of the decision.
Physicians have three Medicare participation options. There are repercussions for each option and the OMA does not advise or recommend that physicians select any particular option.
1. Participating physician: The physician accepts Medicare patients and bills Medicare as payment in full for these patients.
2. Non-participating physician: The physician may make assignment decisions on a case-by-case basis. A non-participating provider is permitted to bill patients for more than the Medicare allowance for unassigned claims, as discussed below.
3. Private Contractor: The physician fully opts out from Medicare and bills pursuant to a private contract. This physician relinquishes the right to any payments from Medicare to patients or to themselves.
Can I be a participating provider and close my practice to new Medicare patients?
Yes, the law permits you to close your practice to new Medicare patients and retain your participating provider status. Before you take this step, however, we advise you to consider the medical needs of your patients and the availability/access to care in the community, as well as other factors.
Changing Medicare Status:
• Changing from Participating to Non-participating:
- Annually through written notification to their carrier.
- Once made, the decision generally is binding until the next annual contracting cycle except where the physician's practice situation has changed significantly, such as relocation to a different geographic area or a different group practice.
• Participating or Non-participating to Private Contractor:
- 30 days notice through an affidavit to the carrier before the first day of the quarter the contract takes effect. See more information in the Private Contractor/Opt Out How To section below.
Non-Participating Physician Charges to Patient:
If a physician chooses to be a non-participating physician, the Medicare-approved amounts for services provided by non-participating physicians (including the 80 percent from Medicare plus the 20 percent patient co-payment) are set at 95 percent of Medicare- approved amounts for participating physicians. This section applies to those physicians participating in the fee for service system as opposed to the managed care system.
Non-participating physicians, however, are allowed to charge up to 115% of the Medicare-approved non-participation amount. This means the actual limiting charge is effectively 9.25% above the participating physician approved amounts for the services. The AMA estimates that non-participating physicians would need to collect the full 109.25% charge amount roughly 35 percent of the time they provide a given service for the revenues from that service to equal those of participating physicians.
Private Contractor/Opt Out How To:
A physician who wishes to fully opt out of Medicare must:
• File an affidavit with all applicable carriers. The affidavit must meet CMS criteria. For a sample AMA affidavit, please see this document.
• File the affidavit at least 30 days before the first day of the next calendar quarter for which the provider will not accept Medicare patients. The affidavit must show an effective date of the first day in that quarter (i.e., 1/1, 4/1, 7/1, 10/1).
• Provide care to Medicare patients only through a private contract, except for urgent or emergency services.
• File the affidavit no later than 10 days after the physician enters in a private contract.
• Only provide care pursuant to a private contract after the effective date of the affidavit opting out of Medicare.
Opt Out Consequences
If a physician has opted out of Medicare, he or she is not permitted to submit claims to Medicare for any patient for a two (2) year period; no picking and choosing among patients. After those two years are over, a physician may elect to return to Medicare or to opt out again. A physician who never participated in Medicare may elect not to see Medicare patients without filing an affidavit indicating that election. If the physician is providing services that Medicare categorically excludes from coverage, Medicare rules, including the rules for opt out, do not apply and a physician may continue to provide these services to the patient.
1. It is important to remember that that when a physician opts out of participating in Medicare, that opt out applies to all items or services the physician furnishes to Medicare beneficiaries, regardless of the location where such items or services are furnished. This means that a physician who opts out of participation in Medicare may not see Medicare patients in the hospital or other care setting in addition to the physician’s own office. Before opting out, make sure the hospital at which you have admitting privileges does not require that you see Medicare patients.
2. As discussed above, participating physicians who opt out may not provide private contracting services until the first date of the next quarter that is at least 30 days after receipt of the notice by the carrier. To maintain “opt out” status, physicians should mark their calendars to send in a new "opt out" affidavit every two years. A physician who has never participated in Medicare may enter into private contracts immediately.
Contents of a Private Contract and Signing Requirements:
In a private contract, the Medicare beneficiary agrees to give up Medicare payment for services furnished by the physician and to pay the physician as provided in the contract and without regard to any limits that would otherwise apply to what the physician could charge.
The private contract must be signed by both parties before the physician may provide services under its terms and must state plainly and unambiguously that by signing the private contract the beneficiary or the beneficiary’s legal representative must:
1) Give up all Medicare coverage of, and payment for, services furnished by the opted out physician; Agree not to bill Medicare or ask the physician or practitioner to bill Medicare for items or services furnished by the opted out physician or practitioner;
2) Be liable for all charges of the physician , without any limits that would otherwise be imposed by Medicare;
3) Acknowledge that Medigap will not pay towards the services and that other supplemental insurers may not pay either; and
4) Acknowledge that he or she has the right to receive items or services from physicians and practitioners for whom Medicare coverage and payment would be available.
The contract must also indicate if the physician has been excluded from Medicare and state that the contract is not valid if it is entered into by a beneficiary or by the beneficiary’s legal representative when the Medicare beneficiary is facing an emergency or urgent health situation. For a sample AMA private contract, click here.
Private Contracting Rules – Medicare as Secondary Payer:
When Medicare is the secondary payer, and the physician has opted out of Medicare, the physician has agreed to treat Medicare beneficiaries only through private contract. Under this circumstance, no Medicare secondary payments will be made for items and services furnished by the physician or practitioner under the private contract.
Urgent or Emergency Treatment Rules:
• A physician who provides services to a patient pursuant to a private contract may provide urgent or emergency services to the patient under the contract provided the contract was entered into prior to onset of the urgent or emergency condition.
• The law prohibits a private contract (opt out) physician from asking a beneficiary to enter into a private contract at the time the beneficiary is facing an urgent or emergency health care situation.
• When a private contract physician treats a Medicare beneficiary without a private contract in an urgent or emergency situation, the physician may not charge the beneficiary more than the Medicare limiting charge for the service and must submit the claim to Medicare on behalf of the beneficiary. Medicare payment may be made to the beneficiary for the Medicare covered services furnished to the beneficiary.