Opting out of Medicare: Serious Compliance Issues Face Providers

The whole world of opt-out physicians and practitioners creates compliance issues, particularly for coding, billing, and reimbursement

Physicians and certain practitioners can elect to opt out of the Medicare program. An affidavit must be filed with a Medicare Administrative Contractor (MAC) first. There is then a two-year process, with the affidavit automatically renewing after two years unless the physician or practitioner intervenes.

Opting out of the Medicare program means that the given physician or practitioner does not bill or file claims to Medicare. Medicare beneficiaries can be seen under private contract. This means that the Medicare beneficiary pays the physician or practitioner under the terms of the contract. The Medicare beneficiary further agrees not to file a claim with Medicare themselves.

Opting out of Medicare is an all-or-nothing proposition. Either the physician enrolls (e.g., CMS-855-I, CMS-885-R, etc.) or the physician has nothing to do with the Medicare program. For instance, a physician may decide not to address Medicare beneficiaries under the traditional fee-for-service program, but instead see Medicare beneficiaries under a Medicare Advantage program. While these beneficiaries would appear to be insulated relative to the traditional Medicare program, the physician is still required to enroll in Medicare if there is any billing to the Medicare Advantage program.

Note that some physicians and/or practitioners have arranged their practices so that they have opted out of dealings with all third-party payers. Thus, the given physician/practitioners does not contract with any third-party payer and does not submit claims. Patients present, receive services, and pay for the services, and then the physician gives the patient any necessary information to file a claim, if so desired. The physician is not part of the billing and claims-filing process with the third-party payer. The physician is directly paid by the patient.

While the concept of opting out is fairly straightforward, there are some complicating facts that can quickly evolve into compliance concerns. When Congress introduced the whole concept of being an opt-out physician, an exception was established, namely that either urgent or emergent care could be provided by an opt-out physician and a claim filed with Medicare. Of course, this presumes that there is no private contract between the Medicare beneficiary and the physician. If there is a contract, then the urgent or emergent care falls under the contract.

What is needed is a formal billing definition of emergent and urgent care. While the true definitions of these terms are clinical in nature, they require a determination of a clinician. The concept of emergent care is addressed in the Emergency Medical Treatment and Labor Act (EMTALA) and is defined as a condition that requires immediate medical attention, or serious consequences may ensue. Urgent care uses a 12-hour rule; that is, unless medical attention is provided within 12 hours, the condition likely will become an emergent medical condition.

For instance, if an opt-out physician were to see a Medicare beneficiary in a hospital’s ER with whom the physician had no contract, then the physician would be able to file a claim with Medicare. If the encounter were for a laceration, then concern would be focused on the medical condition (that is, is it emergent or urgent?) This requires clinical judgement.

A laceration is likely not an emergent presentation, but rather an urgent presentation. Of course, if the laceration is relatively minor, then an auditor might claim that it is a clinical visit, neither emergent nor urgent, and thus outside the range of the opt-out physician to bill Medicare. Of course, to even consider billing, the physician would have to enroll in the Medicare program in some way.

Let us consider another case. In this case the Medicare beneficiary is under contract with the opt-out physician. The physician has directed the patient to meet the physician at the hospital’s ER. Services are provided, and the physician bills the Medicare beneficiary with whom the opt-out physician has a contractual agreement. What about the hospital? Are there going to be any billing problems on the facility side? Note that we are assuming that the EMTALA-mandated MSE (Medical Screening Examination) is being performed and documented, either by the opt-out physician or an ER physician. But what if this is not an emergent or urgent condition? Will the hospital be able to bill for these services if they are simply provided at a clinical level? The answer to this question appears to be yes, but this is a type of situation that auditors would consider interesting.

Now, what if the Medicare beneficiary has a private contract with a physician, but there is Medicare coverage for other products or services? For instance, say the opt-out physician refers the patient to a specialist enrolled in the Medicare program. Similarly, there is also concern for Part D or outpatient drug coverage. What if the opt-out physician wants to provide a prescription for a given pharmacy item? Does the physician’s opt-out status preclude this? The answer to the latter question is that the opt-out physician may be a referring or ordering physician.

This is a very short list of possible situations. Whether you are a hospital, clinic, or individual physician, the whole world of opt-out physicians and practitioners creates compliance issues, particularly for coding, billing, and reimbursement. To all healthcare providers, think through these types of arrangements and situations so that you are not caught off-guard when compliance issues are discovered.

Program Note:

Listen to the next edition of Monitor Mondays at 10-10:30 a.m. EST when professor Duane Abbey will discuss the compliance issues facing healthcare physicians and practitioners who opt out of Medicare.

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Duane C. Abbey, PhD, CFP

Duane C. Abbey, PhD, CFP, is an educator, author, and management consultant working in the healthcare field. He is president of Abbey & Abbey Consultants, Inc., which specializes in healthcare consulting and related areas. His firm is based in Ames, Iowa. Dr. Abbey earned his graduate degrees at the University of Notre Dame and Iowa State University. Dr. Abbey is a member of the RACmonitor editorial board and is a frequent guest on Monitor Mondays.

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