Although Congressional leaders have said that they will enact legislation to stop the scheduled cut and also potentially eliminate the Sustainable Growth Rate (SGR) formula, such action is not guaranteed to occur before March 1. Additionally, differences between the House and Senate health system reform bills mean that the impact of further legislation on individual physicians is not yet clear.


Published 2/1/2010
Matthew Twetten

Medicare participation options for physicians

Physicians have until March 17 to decide

On Dec. 19, 2009, President Obama signed into law legislation postponing the scheduled 21.2 percent cut in the Medicare physician payment conversion factor. Without further action by Congress, however, the cut will go into effect on March 1. All other changes promulgated in the 2010 final physician fee schedule rule went into effect Jan. 1.

As a result, the Centers for Medicare & Medicaid Services (CMS) has extended the deadline for physicians to change their 2010 Medicare participation (or non-participation) status to March 17, 2010. This means that physicians who have not already changed their status can still do so, and those who have made a change can now revise it if they wish. (Note: Because the decision is retroactive, those who switch from non-participating to participating would have to refund any balance billing collected from their patients between Jan. 1, 2010, and their new decision date.)

Medicare status for physicians
Physicians must register with Medicare if they provide services to Medicare beneficiaries. A physician may register as a participating physician, as a non-participating physician, or as a private contractor.

Regardless of your final participation decision, the AAOS recommends that you consult with an attorney to ensure that you are fully compliant with all existing statutes and regulations and are not obligated to have a certain Medicare status under contractual arrangements with hospitals, health plans, or other entities.

Physicians have the following three basic options when registering their Medicare status:

  • Participating physician—Participating physicians agree to accept Medicare’s allowed charge as payment in full for all services provided to Medicare beneficiaries.
  • Non-participating physician—Non-participating physicians can make assignment decisions on a case-by-case basis and may bill patients for more than the Medicare allowance for unassigned claims.
  • Private contractor—Private Medicare contractors agree to bill patients directly and forego any payments from Medicare to their patients or themselves.

The CMS enrollment extension means that providers have until March 17, 2010 to make changes to their Medicare status. The following summary provides more information about options for changing or not changing Medicare status.

No changes to status
Physicians who want to continue their existing status as participating, non-participating, or private contractor as they filed for 2010 need not do anything. Absent any changes, the existing status carries over.

Changing Medicare status
Physicians who wish to switch their status need to supply written notification to their contractor. The document must be received or postmarked on or before March 17, 2010. The decision will be retroactive to Jan. 1, and will be binding throughout the calendar year unless CMS reopens the enrollment period or the physician’s practice situation changes significantly (ie, relocation to a different geographic area or a different group practice).

Participating status
Participating physicians agree to take assignment on all Medicare claims and to accept Medicare’s approved amount for each service provided as payment in full for all covered services for the duration of the calendar year. The patient or the patient’s secondary insurer is still responsible for the 20 percent co-payment, but the physician cannot bill the patient for amounts in excess of the Medicare allowance. Although participating physicians must accept assignment on all Medicare claims, Medicare participation agreements do not require physician practices to accept every Medicare patient who seeks treatment from them.

Medicare provides the following incentives for physicians to participate:

  • The Medicare-approved amount for participating physicians is 5 percent higher than the Medicare-approved amount for non-participating physicians.
  • Directories of participating physicians are provided to senior citizen groups and individuals who request them.
  • Carriers provide toll-free claims processing lines to participating physicians and process their claims more quickly.

Non-participating status
The Medicare-approved amounts for services provided by non-participating physicians (including the 80 percent from Medicare plus the 20 percent patient co-payment) are set at 95 percent of Medicare- approved amounts for participating physicians. Non-participating physicians, however, are allowed to charge up to 115 percent of the Medicare-approved non-participation amount, which equals a maximum allowable change of 109.25 percent of the participating physician rate.

Physicians who are considering whether to be non-participating providers should determine whether their total revenues from Medicare (including reimbursements, patient co-pays, and balance billing) would exceed their total revenues from Medicare as participating physicians, particularly in light of collection costs, bad debts, and claims for which they do accept assignment.

The American Medical Association (AMA) has estimated that non-participating physicians would need to collect the full 109.25 percent charge amount roughly 35 percent of the time they provide a given service for the revenues from that service to equal those of participating physicians. This means that non-participating physicians who collect the full 115 percent charge for more than 35 percent of the services they provide will have higher Medicare revenues than participating physicians who provide the same services.

Private contracting
Provisions in the Balanced Budget Act of 1997 give physicians and their Medicare patients the freedom to “opt out” of Medicare and privately contract with each other for healthcare services. Few providers have chosen to act as private contractors, in part because of the restrictions Medicare places on them.

Private contracting decisions may not be made on a case-by-case or patient-by-patient basis, which means that once a physician opts out of Medicare, he or she cannot submit claims to Medicare for any Medicare patients for a 2-year period.

Physicians who choose to opt out of Medicare must file an affidavit with Medicare for each beneficiary with whom the physician has a private contract. These contracts must meet the specific requirements detailed at the CMS Web site and should be reviewed by an attorney.

View samples of physician-beneficiary private contracts for providers who chose to opt out of Medicare (PDF)

Emergency and urgent care services
Physicians who have opted out of Medicare under the Medicare private contract provisions may furnish emergency or urgent care services to a Medicare beneficiary with whom the physician has previously entered into a private contract, provided that the physician and the beneficiary entered into the private contract before the onset of the emergency or urgent medical condition.

In addition, providers who have opted out of Medicare under the Medicare private contract provisions may furnish emergency or urgent care services to a Medicare beneficiary with whom the physician has not previously entered into a private contract, provided the provider meets the following requirements:

  • A claim is submitted to Medicare in accordance with the conditions for Medicare payment and Medicare instructions (including but not limited to complying with proper coding of emergency or urgent care services furnished by physicians and practitioners who have opted out of Medicare).
  • The provider collects no more than the Medicare limiting charge, in the case of a physician (or the deductible and co-insurance, in the case of a practitioner).

Next steps?
The AAOS is not advising or recommending any of the above options to orthopaedic surgeons; however, it is important that decisions are made with complete information about the available options. Providers will need to decide whether to be participating, non-participating or private contractors, and this decision should not be made rashly or lightly.

Matthew Twetten is the senior health policy analyst for the AAOS. He can be reached at (847) 384-4338 or

For more information…
The AAOS will continue to update orthopaedic surgeons on the status of healthcare legislation through articles in AAOS Now, AAOS Headline News Now links, and AAOS Advocacy Now updates.

For detailed information regarding Medicare enrollment, visit