Opting Out of Medicare in Three Steps

Last week, I discussed the six reasons physicians are opting-out of the Medicare program. This week, let’s talk about how it is done. First, the disclaimer: Before you make this decision, talk to your SPORE (Spouse, Priest or Rabbi, and Everyone else.) Second, you need a health lawyer of your own. Reading how to do something in a magazine, doesn’t count. However, if you wish to read more on the subject (who wouldn’t) one of the most ardent supporters of opting out is Timothy C. Kriss, M.D who published, “Opting Out Of Medicare: Practical Tips for Opting Out,” for the American Association of Physicians and Surgeons.

Part of the problem for physicians participating in the Medicare Part B program, is the convoluted prohibition on billing a beneficiary for services. A very good 17-page paper on the details and history of opting out was written by William Buczko Ph.D., and may be found on the CMS website. According to Buczko while it is possible to balance bill patients, most providers opt-in and receive payments directly from the government. The trade-off is that physicians who do not follow the protocol for opting-out, cannot contract directly with the Medicare beneficiary - even those willing to pay out of pocket for top-line care. Congress changed this with the Balanced Budget Amendment of 1997 for most providers, and added more with the Medicare Prescription Drug Improvement Act of 2003, which is covered in great detail in Buczko’s paper.

Mechanically, opting out involves three things: (1) informing Medicare that you are "opting- out" at the appropriate deadline (and by following opt-out procedure); (2) contracting with a beneficiary; and (3) following the rules in order that you do not lose your opt-out status.

First Step: Opting Out
Inform Medicare that you will be opting out. Here's a guide from the AAPS to help.

You should notify your patients that you are opting out of Medicare, and file a copy of an affidavit with each carrier that has jurisdiction over the claims that the physician or practitioner would otherwise file with Medicare, no later than 10 days after entering into first private contract.

In the words of CMS, "Participating physicians and practitioners may opt out if they file an affidavit that meets the criteria and which is received by the carrier at least 30 days before the first day of the next calendar quarter showing an effective date of the first day in that quarter (i.e., January 1, April 1, July 1, October 1)." [From CMS Benefit Policy Manual (Rev. 147, 08-26-11) Sec. 40.17] Note that a participating physician must give his or her carrier 30-days' prior notice by sending in the opt-out affidavit with an effective date of the beginning of the next quarter.

Second Step: Private Contracts
You will need a patient contract specifically tailored to Medicare Part B beneficiaries. Again, the above link contains a sample contract, which should clearly state that the patient agrees to be responsible, whether through insurance or otherwise, to make payment in full for the services, and acknowledges that physician will not submit a Medicare claim for the services and that no Medicare reimbursement will be provided.

Third Step: After You Opt-Out
Install procedures to ensure that your office never files a Medicare claim, and never provides information to a patient that enables him to file a Medicare claim. Mark your calendar to send in a new "opt out" affidavit every two years to maintain your status.

Finally, a process getting out from under Medicare’s immensely convoluted bureaucracy could never be complete without a complex set of rules published in a CMS manual defining what it means to “Fail to Maintain” opt-out status:

     Failure to Maintain Opt-Out Occurs if during the opt-out period:
     ? The physician/practitioner has filed an affidavit in accordance with §40.9 and has signed private contracts in accordance with §40.8 but, the physician/practitioner knowingly and willfully submits a claim for Medicare payment (except as provided in §40.28) or the physician/practitioner receives Medicare payment directly or indirectly for Medicare-covered services furnished to a Medicare beneficiary (except as provided in §40.28); (For specific information about Chapter 15, sections 8 and 28, refer to http://www.cms.hhs.gov/Manuals/downloads/bp102c15.pdf on the CMS website. The sections of Chapter 15 that are revised by CR6081 are attached to CR6081.)
     ? The physician/practitioner fails to enter into private contracts with Medicare beneficiaries for the purpose of furnishing items and services that would otherwise be covered by Medicare, or enters into private contracts that fail to meet the specifications of §40.8; or
     ? The physician/practitioner fails to comply with the provisions of §40.28 regarding billing for emergency care services or urgent care services; or
     ? The physician/practitioner fails to retain a copy of each private contract that the physician/practitioner has entered into for the duration of the opt-out period for which the contracts are applicable or fails to permit CMS to inspect them upon request.

To see the official instruction (CR6081) issued to your carrier or A/B MAC visit the CMS website.

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