Reimbursement isn’t the only issue to consider when making the decision to opt out.

With an anticipated 10 percent reduction in Medicare physician payments next year, many orthopaedic surgeons may wonder if this will be their last year of participation in the Medicare program. Speaking at the 38th Annual Conference of the BONES Society, Jayme R. Matchinski, of Hinshaw & Culbertson LLP, and Dennis Viellieu, chief executive officer, of Midwest Orthopaedics at Rush University Medical Center in Chicago, discussed the challenges, advantages and pitfalls that physicians might face when electing to opt out of Medicare.

Medicare has three basic levels of participation for healthcare providers—participating, nonparticipating, and opt-out. Most physicians are participating providers, meaning they have a signed contract with Medicare. Participating providers must accept Medicare allowed charges as payment in full for all Medicare patients and agree to charge beneficiaries only for any applicable deductibles or coinsurance. They receive reimbursement directly from the Medicare program.

Nonparticipating providers continue participation with Medicare and bill for Medicare services, but don’t accept assignment. They are obligated to accept the Medicare fee schedule and can collect a dollar amount up to the limiting charge from the patient.

Providers who choose to opt out must enter into a separate private contract with each patient. Services cannot be billed to and will not be covered by Medicare, with the exception of certain emergency or urgent-care situations. The opt-out period is 2 years, after which physicians must renew the opt-out option or they will be considered as participating providers again. If that happens, any private contracts will be considered null and void.

Issues in opting-out
Given the all-or-nothing nature of opting-out, physicians and group practices need to review their patient mix, costs, and reimbursement to determine the financial impact of the decision. “The key to the decision is how many patients will you turn away by opting out of the Medicare program versus what kind of reimbursement will you get if you have a private relationship with patients,” said Viellieu.

Once the decision has been made to opt out, a number of administrative issues come into play, and additional staff may be required to handle the greater workload. Private contracts must be drafted and signed by each Medicare patient. Each physician who opts out must file an affidavit with the Centers for Medicare and Medicaid Services (CMS), and put a system in place to ensure that contracts and affidavits are kept up-to-date.

If some physicians in a practice are participating in Medicare while others have opted out, special procedures must be put in place to identify Medicare patients and make sure they are handled correctly, depending on which physician they are seeing. Physicians who have opted out can refer patients for Medicare-covered items and services (unless they have been excluded from doing so). But they cannot be paid for doing so except in the case of emergency or urgent care.

Keep talking…to your patients and your partners
Physicians must also keep lines of communication open with their patients, as many patients may not fully understand the implications of the private contract. For example, physicians may have to remind patients of the new payment arrangements every time the patient makes an appointment.

“The biggest problem you’ll have,” explained Viellieu, “is the patient [who] doesn’t understand it and goes back to Medicare/CMS—instead of coming to you—and complains that you did something that they didn’t want to have happen to them.”

According to Matchinski, communication between physicians can be imperative as well, particularly when some physicians in a group are participating while others have opted out. “Part of the challenge is making sure that the other surgeons don’t feel like they’re getting the leftovers,” she explained, “and that there isn’t cherry picking.”

Because some managed care organizations may require participation in Medicare, physicians need to make sure that opting out will not result in adverse consequences with any of the plans they accept.

Both speakers agreed that there are often real advantages to opting out of Medicare, but the key is to understand all of the issues and be very careful about communication and paperwork. “If you’re thinking of opting out, do your due diligence beforehand, so that you don’t have surprises as you go through the process,” said Matchinski.

For more information on opting out of Medicare, see “Considering dropping out of Medicare,” in the October 2006 AAOS Bulletin (http://www2.aaos.org/bulletin/10-06) or visit the online Practice Management Center at www3.aaos.org/prac_manag

Peter Pollack is a staff writer for AAOS Now. He can be reached at ppollack@aaos.org