Published 11/1/2013
Matthew Twetten

Physicians Face Medicare Participation Decisions

With no SGR fix, many may find Medicare participation a difficult option

Last-minute deals are common in Washington, D.C.; the most recent involved reopening the government after a 16-day partial shutdown and raising the debt ceiling until after the holidays. With those two issues out of the way, Congress can get back to addressing the myriad other issues it faces, including what to do about the Sustainable Growth Rate (SGR) factor. Unless Congress acts before the end of the year, physicians face a 24.4 percent cut in the Medicare physician payment conversion factor on Jan. 1, 2014. In addition, the Centers for Medicare & Medicaid Services (CMS) has yet to announce relative value units (RVUs) for many orthopaedic procedures for 2014, which could greatly affect payments to orthopaedic surgeons.

Facing these issues, orthopaedic surgeons must now declare their Medicare participation status. Although the American Association of Orthopaedic Surgeons (AAOS) and other physician organizations are working hard to ensure passage of a permanent fix to the SGR and prevent these cuts, AAOS members must begin now to evaluate their options and establish a contingency plan in case Congress fails to act. The following information will help in assessing your next moves.

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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 nonparticipating 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.
  • Nonparticipating physician—Nonparticipating 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.

Physicians will have until Dec. 31, 2013, to modify their status with the Medicare program. Any change in status will be effective on Jan. 1, 2014. The following summary provides more information about options for changing or not changing Medicare status.

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 Dec. 31, 2013. AAOS fellows who wish to change their current Medicare status must do so by Dec. 31, 2013, even if Congress fails to act to prevent the scheduled payment cuts. This decision is binding throughout the calendar year, unless CMS reopens the enrollment period.

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 copayment, 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 nonparticipating 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.

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

Physicians who are considering whether to be nonparticipating providers should determine whether their total revenues from Medicare (including reimbursements, patient copayments, 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. A form to assist you in calculating this figure can be found below.

The American Medical Association has estimated that nonparticipating 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 nonparticipating 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 website and should be reviewed by an attorney.

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, nonparticipating, or private contractors, and this decision should not be made rashly or lightly.

Matthew Twetten is the senior manager, policy and medical affairs, in the AAOS office of government relations. He can be reached at twetten@aaos.org

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