Opting Out of Medicare
Why should a direct care physician opt out of Medicare?
The ONLY reason to opt out of Medicare is if you want to 1) see a Medicare patient, 2) under private contract, 3) for covered services. All three of these must be true, or it is not worth your trouble to opt out. Most DPC physicians build a wait list of Medicare patients that want to join the practice prior to taking the step of opting out.
Without opting out, the provider must carefully ensure that all membership charges are levied for “non-covered services” – a dangerous and ever evolving game where the listed reason for the charge must be for a service that does not appear anywhere on Medicare’s schedule of services (you can also run a covered services search here). If you are looking for resources to help you determine which services are covered and non-covered then this CMS Medicare Learning Network Booklet titled “Items and Services Not Covered Under Medicare” should be helpful and the AAFP has an excellent review as well.
In 2004 the Office of the Inspector General (OIG) issued a fraud alert based on a physician's "non-covered services agreement" that included items covered by Medicare. See the quote below:
"The OIG alleged that based on the specific facts and circumstances of this case, at least some of these contracted services were already covered and reimbursable by Medicare. Therefore, OIG alleged that each contract presented to this physician’s Medicare patients constituted a request for payment for already covered services, other than the coinsurance and deductible, and was therefore a violation of the physician’s assignment agreement. In order to resolve these allegations, the physician agreed to pay a settlement amount to the OIG, and to stop offering these contracts to his patients. Participating physicians, suppliers, and providers who consider charging Medicare patients additional fees are reminded that they are subject to civil money penalties if they request any payment for already covered services from Medicare patients other than the applicable deductible and coinsurance."
If you decide to operate in the fee for non-covered services model, legal counsel is highly recommended. MDVIP and other “concierge” groups operate in this manner and employ attorneys tasked with regularly following developments in this area. Concierge groups need to stay one step ahead of Medicare regulators’ attempts to broaden the list of covered services. One way to test if your service is covered by Medicare is by placing an inquiry online. You might also look at the language of section 40.19 of the Medicare Benefit and Policy Manual for "non covered" ideas. As the scope of covered services expands, the ability to structure a membership plan strictly for non-covered services becomes more difficult. Simply naming your services something new may not suffice, as Medicare auditors (such as RACs or ZPICs) could make the argument that services you believe are non-covered, are in fact covered services. By reading this well written 2005 article from Warner, Norcross, and Judd and comparing it to their revised commentary from 2010 it should be clear that these arguments have become more difficult and nuanced. This is a risk I generally do not recommend taking. Either elect to remain in Medicare and do not open your DPC practice to Medicare patients, or opt out of Medicare and sleep soundly without fear that an audit gone wrong could close your practice. If you play the “non-covered services” game this generally comes with an obligation to continue billing Medicare in the traditional fee for service manner for covered services to prove to any auditors that “covered services” were not erroneously included in the periodic fee for “non-covered services.”
Also note that the mere nature of your periodic fee does not mean it is a non-covered service. Medicare has new Chronic Care Management codes that are paid on a monthly basis to physicians jumping through certain documentation hoops when managing chronic conditions. According to Fam Pract Manag. 2019 Jan-Feb;26(1):23-28 “New in 2019 is CPT code 99491 for CCM services performed by a physician or other qualified health care professional, consisting of at least 30 minutes in a calendar month. The other requirements of CCM still apply. The 2019 Medicare allowance for code 99491 is approximately $83.97, which is higher than the allowance of $42.17 for code 99490. The higher rate for code 99491 reflects the fact that the service is personally performed by the physician rather than clinical staff under the physician's supervision.”
Where are some resources to guide providers through this process?
The clearest summary of the steps one must take to opt out of Medicare have been summarized by the Association of American Physicians and Surgeons. Medicare also lists the steps needed in the form of a web bulletin, and has a summary designed for patients attempting to understand physician categories. An excellent overview of options for private contracting with Medicare patients, including the little known option of Medicare "disenrollment" has been authored by Jane Orient, MD. This is discussed more below - I recommend physicians "opt out," but I do not recommend one attempt "disenrollment." This March 2012 letter from HHS clarifies their opinion that "disenrollment" is not a legally acceptable option. The AAFP has an overview page as well that lists a sample Medicare private contract and opt out affidavit that physicians might find helpful. Here is a nice summary from Medscape. “In all of 2013, only 130 physicians opted out of Medicare, according to data from the Centers for Medicare & Medicaid Services (CMS). Then that number rose to 1,600 in 2014, 3,500 in 2015, and 7,400 in 2016.”
Some Medicare carriers appear to have a better grasp of the opt out process than others. Noridian Medical Solutions provides a helpful overview of the opt out process. Most Medicare carriers offer you the ability to look up which physicians have opted out of Medicare (Noridian example) though we are not sure if the lists are accurate. Noridian also has this helpful discussion of Medicare's liberal interpretation of what qualifies as an "emergent" or "urgent" service that can be billed to Medicare by an opted out physician (also see this CMS document). Another document from the Dept of HHS emphasizes a lack of data regarding opted out practices, and this report also provides insight into the historically inconsistent approach that has been used by Medicare carriers to record this information. One you have completed your opt out you can use this CMS page to look up yourself (or any other physician) to confirm that the opt out has been processed.
The American Academy of Family Physicians has a summary of the three Medicare categories. Physicians may be Medicare participating, nonparticipating, or opted out. The nonparticipating status is all but extinct at this stage, as most physicians found it an un-useful category because the charges that can be levied with this status are still limited and controlled by Medicare rates. All physicians are defaulted into the Medicare participating category, and must actively opt out to see Medicare patients in a "pure" DPC practice. The Kaiser Family Foundation has a detailed and well written article along with statistics about each category as well.
Historically this opt-out had to be renewed every two years, but the recent passage of the Medicare Access and CHIP Reauthorization Act of 2015 - section 106(a) changed this requirement. If the physician opts out on June 17, 2015 or later, then the opt out is permanent until the physician revokes the opt out. This revocation cannot occur at any time, but must be during the opportunity to opt back in which will occur on two year intervals. Instead of having the opportunity to opt out every two years, the physician will now have the opportunity to opt back in on a rolling two year basis. In other words, your opt out automatically renews every two years until you revoke it.
The Secretary of HHS shall (by no later than Feb 1, 2016) "make publicly available through an appropriate publicly accessible website of the Department of Health and Human Services information on the number and characteristics of opt-out physicians and practitioners." The public information will include at least the physician's number, professional specialty or "other designation," geographic distribution, how long the physician has been opting out, and the percentage of physicians billing for emergency or urgent care services (presumably using the exception I have already covered else ware). If this information is gathered accurately and not used for malicious purposes, it could actually help power the DPC movement. Also note that opting out decreases your False Claims Act risk.
Will I still be able to order tests and prescribe medications for Medicare patients?
Yes, even if you have opted out you are still able to do these things. Physicians might have difficulty ordering tests and labs if they were to do something much less common and more complicated - like dis-enrolling from Medicare, or if they had never formally enrolled and were unknown to the PECOS system. More information is available here.
Prescribing medications that will be covered under Medicare Part D was supposed to be limited to either participating, nonparticipating, or opted out physicians pursuant to the Affordable Care Act, but enforcement of this requirement has been delayed by CMS until January 1, 2019 largely due to complaints from the American Dental Association and similar groups. Also see this Pro Publica discussion.
You can search this PECOS database with your name or NPI to confirm your enrollment.
Will I still be able to moonlight at other locations if I "opt out?" Yes - see Dr. Eskew's full discussion here.
What if I am confident that I cannot opt out of Medicare at this time?
As a "participating" physician you have four options:
1) Do not accept Medicare patients in the DPC practice on day #1 (just build a wait list and make the jump when you are confident you do not need outside employment)
2) Accept Medicare patients in the DPC practice and charge them in the traditional FFS fashion (hybrid)
3) Do #2 above, AND charge an additional monthly membership fee for "non-covered services" (known as concierge)
4) See these patients for free - see below
Of the three options above I generally recommend #1. If you attempted to do only option #3 without also doing option #2 then this argument would likely fail a government audit. In an ONLY option #3 scenario you would be required to argue that ALL of the services you provided were "non-covered" services- a nearly impossible argument to make.
If seeing patients for free (option #4) remember that for an (unlawful) inducement to occur I need to give you something for free, only to eventually get something in return (from the government) at a later date. If I give a Medicare beneficiary something for free and never receive anything in return (from Medicare), then there has never been an unlawful inducement. See this OIG Special Advisory Bulletin about Offering Gifts and Other Inducements to Beneficiaries.
If I expect to be a DPC-opted out physician, see a Medicare patient for free for twelve months, and then ultimately never opt out and instead decide to start charging Medicare again for care provided to the patient going forward and that care happens to involve thirty extensive (and highly reimbursed) basal cell carcinoma excisions then this starts to smell a little more like an inducement situation.
On the other hand, if you followed through with the opt out after offering twelve months of free care and then you continue to offer this Medicare patient the same care at the same price available to all patients of that age at your practice (not charging them more in an attempt to recoup care that was previously labeled free), then it becomes pretty easy to defend the fact that no inducement ever took place.
Summary: Free care is not a problem as long as you are certain that there are no scenarios where you will be billing Medicare for care provided to that patient at some point in the future.
What if I have a patient with a Medicare Advantage plan? (I have heard that this patient can get reimbursed by the Medicare Advantage plan for my DPC services that were not covered by Medicare due to my opted out status.)
This is a sticky wicket. Medicare Advantage plans are generally written to cover things that Medicare does not cover. As an opted out physician both you (and your patient) sign an agreement stating that due to your opted out status none of your services may be submitted to Medicare. Thus, these would-be "covered" services are now literally "not covered" by Medicare.
You could make an argument to the Medicare advantage plan that you can now submit your claims to them instead. The difficulty comes with the evidence that they might request. They might expect to see a denied Medicare fee for service claim. You would not be able to proffer this evidence because both you and the patient promised you would not submit a claim to Medicare. However the patient would be permitted to attach a copy of any invoice you provided along with an attachment of the opt out agreement as evidence that the service was not covered by Medicare. Whether the Medicare Advantage plan provides any reimbursement is difficult to predict.
Why should I "opt out" rather than "disenrolling?"
1) Opted out physicians may order tests, labs, Rxs, etc. and Medicare will fill the orders. This is not the case when disenrolled.
2) What about the CMS Form 1490S? This allows patients to seek reimbursement from the government for private services rendered by a disenrolled physician but this is not an option when one has opted out. This sounds promising, but I do not recommend this approach for many reasons. According to Medicare this form has a dual purpose; 1) to allow Medicare patients to seek reimbursement when seen by foreign physicians in certain situations (such as traveling through Canada or Mexico); and 2) to provide a mechanism for patients to tattle on US physicians that in the government's eyes should have been accepting Medicare assignment. Medicare carriers have referenced Section 1848(g)(1-4) of the Social Security Act arguing that the provider would be subject to a $2,000 penalty for each violation. Patients have also reported inconsistent results in obtaining reimbursement from Medicare using Form 1490, so this could never be a dependable option anyway.
3) This article from National Government Services provides additional information about why physicians should take the opt out approach rather than attempting disenrollment.
What if I am attempting to see Medicare patients while waiting for my "opted out" status to take effect?
You have several options (make sure not to forget local patient abandonment laws in this scenario):
1) You could see patients for free until your opted out status takes effect. For most practices this might mean three months of care to a relatively small group of patients. Medicare carriers have confirmed in writing that this is a permissible option.
2) You could charge patients on a fee for service basis at the same rate as Medicare (for each visit). This is a narrow and risky exception, but it could be effective in limited circumstances like this. The CMS Medicare Benefit Policy Manual states that if a beneficiary "refuses or his/her own free will, to authorize the submission of a bill to Medicare..." the physician then may not have to submit a claim to Medicare, but "the limits on what the physician, practitioner, or other supplier may collect from the beneficiary continue to apply to charges for the covered service, notwithstanding the absence of a claim to Medicare." You would want to document the patient's refusal to allow you to bill Medicare and then charge the patient an amount equal to what would have been billed to Medicare. You would need to trust your patient, as these patients are free to revoke this stance at any time. In the case of the opted out physician, this means you fall back to option #1 above.
3) You could charge the patient a periodic fee for "noncovered services." This is common in concierge medicine. I generally do not recommend this technique unless you are also charging for covered services in the traditional fashion or in a similar manner under option #2 above (otherwise you would be attempting to argue that you only provide noncovered services - which is simply untrue.)
Five summarizing thoughts:
1) Notify your patients you are opting out of Medicare
2) File an opt out affidavit with each Medicare carrier that has jurisdiction over your claims (see the AAPS webpage for details)
3) Draft a separate private (membership contract) for each Medicare covered patient (in addition to your standard DPC patient contract)
4) If you have been excluded (i.e. kicked out) of Medicare then you must disclose this to patients in your opted out contracts
5) Note your automatic opt out renewal date (occurs on a rolling two year basis) in case you decide to participate in Medicare again (this will allow you to time your participation correctly)