Legal Summary

Breaking Free: How to Opt Out of Medicare (and Other Payors)

William h. maRuCa, esquiRe

Most physicians, unlike most other professionals, are beholden to two masters: their patients and their patients’ insurance carriers or other payors. Increasing interference with medical decision-making by third party payors has led some physicians to cut ties with Medicare and other insurers and deal directly with their patients. While such freedom may sound tempting, there are a number of steps that a physician must take in order to effectively declare your independence.

Medicare OptOut

The Balanced Budget Act of 1997 permits a physician to opt out of Medicare and enter into “private contracts” with their Medicare beneficiary patients, but only if the physician agrees to opt out of Medicare entirely for two years for all covered items and services furnished to Medicare beneficiaries. Under a private contract, the patient agrees to pay the physician without regard to any Medicare charge or payment limits and agrees not to submit those bills to Medicare. For many specialties, opting out of Medicare may not be practical, but for those whose patients have the resources to pay directly or who have relatively low Medicare numbers in their payor mix, this concept may be viable.

The first step is to complete and submit an opt-out affidavit. The affidavit remains in effect for two years and is automatically renewed every two years. (The original program required biennial renewals) The opt-out election may be cancelled at the end of any two-year period by giving 30 days’ written notice. Pennsylvania’s Medicare Administrative Contractor (MAC), Novitas Solutions, has posted a form for this affidavit at https://www. novitas-solutions.com/webcenter/ content/conn/UCM_Repository/uuid/ dDocName:00008290. You should send this affidavit by certified mail and retain proof of delivery. If you routinely send Medicare claims to multiple MACs, i.e., if you practice near a state border, you need to notify all such MACs.

By signing the affidavit, the physician agrees:

• To provide services to Medicare beneficiaries only through qualifying private contracts for services that, but for their provision under a private contract, would have been Medicarecovered services, except for certain emergency or urgent care services. • Not to submit a claim to Medicare for any service furnished to a

Medicare beneficiary during the opt-out period or to permit anyone else to submit such a claim, except for certain emergency or urgent care services.

• Not to receive direct or indirect

Medicare payment for services furnished to Medicare beneficiaries with whom the physician has privately contracted, whether as an individual, an employee of an organization, a partner in a partnership, under a reassignment of benefits, or as payment for a service furnished to a Medicare beneficiary under Medicare

Advantage.

• Not to require any patient to enter into a private contract as a condition of providing urgent care or emergency services.

A physician that has opted out of the Medicare program is not required to complete a separate application to order or refer items/services for beneficiaries to other Medicare providers such as prescriptions, diagnostic tests or specialist care.

Continued on Page 28

From Page 23 There is a box that can be checked on the Novitas affidavit which reads “Do you wish to order & refer?” In most situations you should check “Yes.”

Each Medicare beneficiary treated by a physician who has opted out must sign a private contract before the physician charges the patient for a Medicare-covered service. The contract must meet certain criteria set forth in the Balanced Budget Act, including:

• Print sufficiently large to ensure that the beneficiary is able to read the contract.

• Disclosure of whether the provider has been excluded from Medicare.

• Acknowledgement that Medicare limits do not apply to the private contract charges.

• Patient’s agreement not to submit a claim to Medicare or to ask the physician or practitioner to submit a claim to Medicare.

• Patient’s acknowledgement that

Medicare payment will not be made for any items or services furnished by the physician that would have otherwise been covered by Medicare if there was no private contract and a proper Medicare claim had been submitted. • Patient’s acknowledgement that they enter into this contract with the knowledge that he or she has the right to obtain Medicarecovered items and services from physicians and practitioners who have not opted-out of Medicare, and that the beneficiary is not compelled to enter into private contracts that apply to other

Medicare-covered services furnished by other physicians or practitioners who have not opted-out.

• Disclosure of the expected or known effective date and the expected or known expiration date of the current 2-year opt-out period.

• Patient’s acknowledgement that

Medigap plans do not, and that other supplemental plans may elect not to, make payments for items and services not paid for by

Medicare.

• Signature by the patient or legal representative and by the physician.

• May not be entered into by the patient during a time when the patient requires emergency care services or urgent care services.

Additionally, the physician must provide a copy to the patient before items or services are furnished to the patient under the terms of the contract; must keep a copy for the duration of the current 2-year opt-out period; and must make a copy available to CMS upon request.

CMS instructions still indicate that a new private contract must be entered into with each patient for each 2-year opt-out period, but this requirement is currently under challenge by the American Association of Physicians and Surgeons now that annual renewals are no longer required. Unless this rule is changed, you should calendar the two-year anniversary of each patient’s private contract and have it resigned every two years.

Note that both the private contracts and the physician’s opt-out are null and void for the remainder of the opt-out period if the physician fails to remain in compliance with the applicable conditions during the opt-out period. Therefore, you need to implement procedures to ensure that no claims are submitted to Medicare while under an opt-out affidavit and to make sure each patient signs the private contract and renews it in a timely manner.

Also note that the opt-out and private contracting rules only apply to services that would otherwise be covered by Medicare. You can charge patients whatever you see fit for services that are clearly noncovered services, such as cosmetic surgery. If the services are not covered for reasons such as medical necessity, you can charge the patient directly provided the patient has signed an Advanced Beneficiary Notice.

Private Insurance

Opting out of Medicare does not prevent you from continuing to accept private insurance, other than Medicare Advantage or Medigap plans. However, if you decide you no longer want to accept a particular private plan, or any plan for that matter, you need to review your participation agreement with each plan. Most plans include a provision for termination that requires 60 – 90 days’ advance written notice. You should also give your patients plenty of advance notice when you are withdrawing from participation and advise them in writing before a visit that you are no longer accepting their insurance and that they will be expected to pay your fees in full.

Unlike opting out of Medicare, when you terminate participation with a private insurance plan you do not need to compel your patients to promise not to submit your bills to that plan, but the patient may not be reimbursed to the same degree (or at all) if you are nonparticipating. Also, even if you are not paid directly by a particular plan, your claims may still be audited by that plan if the patient submits your bills and is reimbursed directly. You may have additional defenses to such audits if you do not have a direct contract with the plan.

Next Steps:

Freeing yourself from the shackles of third-party payor participation with all its red tape and second-guessing of your professional decisions may allow you to focus on patient care, but it is not a decision you should make without plenty of preparation. Take the time to sound out your patients, particularly Medicare-eligible patients if you’re planning to opt out of Medicare and be prepared to ramp up your billing and collection processes or to require payment at the time of service.

William H. Maruca, Esquire is a healthcare partner in the Pittsburgh office of the national law firm Fox Rothschild LLP and can be reached at 412.394.5575 or wmaruca@ foxrothschild.com

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