Medicare Participation—Do Physicians Have Options?

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Physicians have three contractual options when it comes to the Medicare program: participating, non-participating and opting out. Providers should keep the old saying “look before you leap” at the forefront when considering opting in or out of the Medicare program. Since 2001, physician costs have been on the rise, with only mini­mal increases in reimbursements, which makes it important for providers to be fully informed of Medicare’s guidelines.

Participating Provider (Opting In)

When a physician agrees to participate in Medicare, he or she agrees to accept Medicare’s reimbursement rates as payment in full for claims furnished during each calendar year. To become a participating provider with Medicare, individual providers and organizations, such as medical groups, may enter into a participating physician or supplier agreement with the Contractor in their state. These participation agreements can be at the individual level, between the provider and Medicare, or at an organizational level, which is between a group practice and Medicare.

A new provider can become a Medicare participant by completing the participation agreement (CMS-460) and submitting it with their Medicare enrollment application. The participation agreement will become effective on the date of filing and remains in effect through Dec. 31 following the date the agreement becomes effective, and is required to be renewed automatically for each 12-month period thereafter.

All Medicare Administrative Contractors (MACs) have the Medicare participation agreement available on their websites, with detailed instructions for providers and organizations. Keep in mind, the MACs generally send letters to providers and/or organizations in mid-November informing them of the upcoming calendar year’s payment rates and offer the opportunity to change their participation status.

Non-Participating Provider

If a provider chooses not to participate in Medicare, he or she has the option to accept assignment on a claim-by-claim basis with their MAC. If the non-participating provider accepts assignment, Medicare will reimburse claims at only 95% of the participating amount, with 80% coming from the MAC and 20% from the patient. If the non-

participating provider makes the decision not to accept assignment, he or she must complete a beneficiary’s claim form and submit it directly to Medicare. Medicare will pay the patient directly, leaving the physician to bill and collect any remaining balance for services rendered from the patient. It is not permissible for practices to charge Medicare patients for filing their claims, but by not accepting assignment, non-participating physicians can balance bill patients up to the limiting charge.

Electing non-participating status is not without its drawbacks, such as challenges group practices may face when collecting from patients. As such, related cash flow and administrative implications should be factored in by practices electing non-participating status for their providers.

Opting Out

Providers also have the choice to opt out of the Medicare program. To do this, providers agree to not participate in the Medicare program for two years and privately contract with Medicare beneficiaries for services rendered. To meet the legal requirements for opting out, a physician must sign and file an affidavit agreeing not to bill or receive payment from the Medicare program; practices should then bill patients directly for their services at rates agreed upon between the patient and physician.

It is recommended the physician have a signed contract with the Medicare patient before rendering any service (except for emergency or urgent care services). The contract must clearly state the beneficiary 1) gives up all Medicare payments for services rendered by the contracting physician; 2) is liable for all charges without Medicare balance billing limitations or assistance from Medigap or other supplemental insurance; and 3) acknowledges that he or she has the right to receive services from other medical providers eligible for Medicare coverage.

Providers who opt out of Medicare should not use the Advance Beneficiary Notices (ABNs), because physicians who opt out use private contracts for any item or service that is, or may be, covered by Medicare (except for emergency or urgent care services).

Making a decision to opt out of the Medicare program should be done carefully and with full understanding of what it really means.

If you’ve decided to opt out of Medicare, you’ll need to take the following steps:

1. Notify your patients, colleagues and others. The first step in the opt-out process is to notify your Medicare patients and others of your intent. Send a letter to your patients explaining what opting out means, your reasons for doing so and their options for staying with the practice or finding a new physician. The letter should be sent in advance of opting out so patients have time to make alternative arrangements if needed.
2. File an affidavit with Medicare. The next step is to notify Medicare. You’ll need to file an affidavit with each Medicare carrier that has jurisdiction over claims that you have filed or that would have jurisdiction over your claims had you not chosen to opt out. The Medicare carrier must receive the affidavit at least 30 days before the first day of the calendar quarter (i.e., Jan. 1, April 1, July 1 and Oct. 1), following your opt-out date and within 10 days of entering into your first private contract.
3. Privately contract with the Medicare patients you continue to care for. Medicare patients who elect to receive care from you, other than on an urgent care or emergency basis, must sign a private contract before you can treat them. The only exception is for Medicare patients who need emergency or urgent care services. In this situation, append modifier-GJ—“‘Opt out’ physician or practitioner emergency or urgent service”—to any codes you are billing to indicate the service was provided by an opt-out physician providing emergency or urgent care.
4. Initiate appropriate office procedures. Once you’ve executed your affidavit(s) and private contracts, you need to establish office procedures to ensure that you comply with the opt-out rules. For example, you will need to implement procedures to identify Medicare patients and ensure that they are notified of the opt-out decision as well as remind them of payment arrangements when making appointments.
5. Mark your calendar to renew your opt-out status. Your final step is to mark your calendar to remind you to send in a new affidavit every two years to maintain your opt-out status. Failure to renew your opt-out affidavit will mean you are entering into private contracts with patients without Medicare’s consent. If, after two years of opting out, you choose to re-enroll in Medicare, you will need to complete a new Medicare physician enrollment form, just as you would if you were new to the program.

The one thing that faces most practices when making a decision to discontinue seeing Medicare patients is the financial implication. The practice must also consider the community and the reputation of the practice. It is important that physicians make sure they know all the facts in regard to the contractual options available with Medicare before making a final decision.

For additional information on practice management issues or guidelines, contact the ACR practice management department at [email protected].