Should I Opt-Out of Medicare?

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[WD – This is a guest post from Dr. Japa Volchok, DO of Vohra Wound Physicians. If you are tired of Medicare’s rules and fee schedules consider opting-out. I have a colleague who developed a chemical dependency and was convicted of fraud. While serving his sentence he received a letter stating he would no longer be able to treat Medicare or Medicaid patients. Those were his two lowest payers so he saw it as “a raise.” It may make sense for some of us to simply opt-out. Just understand first what that really means.]

Is Medicare Opt-Out a Sound Financial Decision for Physicians to Make?  As a physician, choosing whether or not to opt-out of Medicare is a difficult decision.

It is debated in the medical community. Some even believe opting out to be one of the worst choices a physician can make. But what does it really mean to opt-out of the Medicare program, and why is it an option?

Opting out or not participating in the program offers flexibility and freedom to use private plans. There are varying levels of participation, each of which has its own benefits. If you’re serious about wanting to opt-out of Medicare completely, it’s important to do your research. Evaluate whether the decision could be more harmful than helpful.

What is Medicare?

Medicare is a health insurance program offered by the federal government, which covers people aged 65 and up, as well as younger people living with certain disabilities. Among other disabilities, the program also covers those with End-Stage Renal Disease, which requires dialysis or transplant.

Medicare offers options for more than 800,000 physicians who accept payment through their wound care programs. As the largest network provider in the U.S., Medicare covers more than 44 million people.

Physicians Opting-Out of Medicare

Physicians who opt-out of the Medicare program are missing one of the largest groups of patients. Adults over 65 see doctors twice as much as those aged 18 to 44 years. For doctors who do not accept Medicare, this takes a chunk of money off the table.

Any physician or non-physician provider who has a National Provider Identifier (NPI) is eligible for enrollment in the Medicare program. Medical professionals are offered the opportunity for participation, non-participation, or opting out entirely.

When a physician is participating or non-participating, they can submit a claim for reimbursement. The amount will be determined by their status (participating or not). However, physicians who have opted-out of Medicare cannot bill Medicare whatsoever.

Parts of Medicare Covering Physician Services

There are two parts to Original Medicare: Parts A and B. These provide basic coverage for healthcare. In 1965, lawmakers signed the Social Security amendments which led to the formation of Medicare and Medicaid. Since then, Congress has made changes to allow wider eligibility for Medicare services. Additionally, Congress has significantly expanded the way the program can be managed.

In 2003, for instance, the Medicare Prescription Drug Improvement and Modernization Act (MMA) was signed into law. This approved private health insurance companies to offer health plans that combined Medicare Parts A and B. This became known as “Medicare Part C” or “Medicare Advantage Plans.”

Today, each part of Medicare may have a premium, deductible, copayment, and coinsurance from the beneficiary. Physicians who opt-in to accepting Medicare payments are also said to “accept assignments.” The amount paid for each service is then determined by Medicare and is called the “Medicare allowable charge.”

Medicare Part A
Medicare Part A, sometimes called the hospital benefit, covers a variety of services, including:

  • Inpatient hospital care
  • Skilled nursing facility treatment
  • Inpatient nursing home care for the short term, non-custodial care
  • Home health care
  • Hospice care

Part A is free to those aged 65 and over, and under certain other conditions (some of which are mentioned above). Those who do not qualify for the free plan may still be eligible to pay a monthly premium for Medicare Part A.

Medicare Part B

Medicare Part B primarily covers two types of services:

  • Services that are medically necessary, often to diagnose or treat a medical condition
  • Preventative services such as flu or pneumonia shots

Depending on the situation, the Medicare Part B plan may also cover services such as:

  • Ambulance services
  • Clinical research
  • Durable medical equipment
  • Limited outpatient prescriptions
  • Mental health services for inpatient, outpatient, and partial hospitalization

Everyone pays a monthly premium for Medicare Part B that depends upon their yearly income.

Medicare Advantage Plans (Medicare Part C)

Medicare Advantage Plans are structured like other private health insurance plans, including:

  • Health Maintenance Organization Plans (HMO)
  • Preferred Provider Organizations (PPO)
  • Private Fee-for-Service Plans (PFFS)
  • Special Needs Plans (SNPs)

 

The Medicare Advantage Plans, colloquially known as Medicare Part C, combine the benefits of both Part A and Part B. Under Part C laws the plans must offer all benefits in the original Medicare package. But they can also offer more specific needs like prescription drug coverage or lower copays.

The plans are sold and managed by private insurance companies. Still, they must first be approved by and follow Medicare rules. In turn, Medicare pays the plans a set amount each month. That covers the claims which are submitted to insurance companies rather than to Medicare Parts A or B.

These plans are offered by companies such as Aetna, Blue Cross, Humana, and United.

Assignment of Benefits

Medicare is governed and managed by the Social Security Administration. Physicians, non-physician health care specialists, and health care providers accepting Medicare assignments agree to accept payments from Medicare for any services.

The term “assignment of benefits” means that payment is sent directly to the physician from Medicare. If a physician is not participating, they may still submit a claim for services, but reimbursement is, on average, 5% less than the Medicare-allowable charge.

Participating physicians can agree to whatever compensation Medicare allows as their full payment for services provided. In some states, physicians are allowed to charge up to 15% more than the Medicare-allowed charge directly to the patient. The Part B excess charge also involves extra overhead on the practice in billing and collections.

What Opting Out of Medicare Really Means

As mentioned, there are three main options for physicians and providers in the Medicare system; participation, non-participation, and opting-out. For healthcare providers, or “concierge physicians” who offer specialized services, this may seem like an easy choice. These services are often classified as “non-covered services,” after all. For others, opting out could truly be the biggest financial mistake of your career.

Participation

Participating medical professionals are entering “an agreement with the Medicare program to accept assignment of the Medicare Part B payment for all services for which the participant is eligible to accept assignment under the Medicare law and regulations and which are furnished while this agreement is in effect.”

Non-participation

Non-participation, or a “non-par provider,” is defined in the above agreement by the Centers for Medicare & Medicaid Services (CMS) as, “a provider involved in the Medicare program who has enrolled to be a Medicare provider but chooses to receive payment in a different method and amount than Medicare providers classified as participating.”

Non-participating providers are then allowed to submit claims to Medicare without being bound by its prices. While this mid-tier Medicaid option does average lower reimbursement offerings than full participation, it’s still a safer bet to test the waters before opting out completely, which could have ongoing consequences.

Opting Out

The third option is to opt-out. This means that both the service provider and the patient must sign a contract stating they are not eligible to submit bills to or receive payment from Medicare for reimbursement.

Physicians choosing to opt-out must submit a signed affidavit to Medicare stating they are choosing to opt-out of the program. This can be automatically renewed every two years if the physician does not contact Medicare to opt-in.

Opting out of Medicare is a quick way to lose out on the growing market of aging people in the US. But depending upon your practice, it may or may not be a useful option for you.

How Does Opting Out Affect Physicians?

The difference between participating, non-participating, and opt-out providers lies in how Medicare services are billed, and how physicians are paid. If you choose to be a non-participating physician, the patient is responsible for the full bill. They must submit a claim to CMS for reimbursement.

If you are a participating provider, Medicare patients will pay co-payments at the office. You then bill CMS for the remaining amount. Generally, Medicare pays 80% and the patient pays the remaining 20% 

Physicians who choose to participate agree to accept Medicare’s allowable charge for each service. The rest gets applied as the patient’s copayment. The patient or a supplemental insurer – such as Medigap – is responsible for the rest. Medical professionals are not allowed, however, to bill patients for more than the Medicare allotted amount.

Opting Out and Staying Out

When a physician completely opts out of Medicare, they must have a written contract with their Medicare patients. It states that the patient is fully responsible for paying the physician’s charges. The contract must also be signed by the doctor and patient.

Doctors who want to stay out of the Medicare system must take care to maintain their opt-out status or it may be terminated involuntarily. For instance, if a physician or practice knowingly submits a claim to Medicare while they have opted out, they’ll receive a penalty and be opted back in. The only time this is acceptable is when they are providing emergency or urgent care. The opt-out may also be canceled if the physician fails to enter into a contract with their Medicare patients for private payment.

Why Opting-Out of Medicare Hurts Physicians

Physicians choose to opt-out for a number of reasons:

a. they offer services to patients who are not in the Medicare population
b. the services they provide do not line up with benefits covered by Medicare
c. they are part of a cash-only business model

No matter the reason, there are steep financial considerations to consider for anyone thinking about leaving the program.

By opting-out, medical professionals no longer have access to a large number of patients who seek regular treatment. If a practice does choose this option and fails to maintain opt-out status, they run the risk of not receiving payment for services rendered. Medicare will still require you to submit claims in many of these cases. After all that legwork, and knowing you would not get paid, how could you justify the time and lost money?

Can You opt Back In?

While it is possible to opt back into Medicare, there are strict guidelines. And the practice must wait until the initial two-year cancellation period is over. The only loophole is if you terminate within 90 days of the effective date of the provider’s first opt-out.

If you do choose to opt back in and miss the opt-in date at the end of the two years, you could also be out of luck for another two years. The opt-out automatically renews unless the physician notifies Medicare in advance of the renewal date.

In light of the regulations and subsequent consequences, many find it easier to simply accept Medicare services. Whether you make the choice to opt-out or stay in the game, keeping current with the changing norms is essential. 

[Dr. Japa Volchok is a vascular surgeon and is VP of Operations at Vohra Wound Physicians a national practice with 300 physicians servicing over 3000 facilities, Wealthy Doc has no affiliation or financial relationship with the author.]

 

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