Medicare Provider Enrollment Options Including Opt-Out

Medicare enrolling/enrolled providers have two contractual options with Medicare. 1) Providers may submit an enrollment application and sign a participating (PAR) agreement and accept Medicare’s allowed charge as payment in full for all Medicare patients. 2) Providers may submit an enrollment application and elect not to sign a PAR agreement and therefore become a Non-PAR provider.

“Eligible Providers” have a third option, which is to “Opt-Out” of the Medicare program. Providers who choose to opt-out may not bill Medicare for any reason.

Participating and Non-Participating Providers

Participating providers agree to accept assignment on all claims submitted for Medicare patients. The fundamentals of “Accepting Assignment” means that providers agree to file a claim for all covered services provided to Medicare beneficiaries, accept the Medicare fee schedule as payment in full (80% from Medicare and 20% from the patient), and to hold patients responsible only for amounts up the 20% coinsurance plus any unmet deductibles. Incentives for participating include reimbursement of 100% of the Medicare allowable, prompt payment of claims, and ease of access to assistance from the Medicare contractor.

Non-Participating providers are required to file claims to their Medicare carrier for all covered services of their Medicare patients. The primary difference for Non-PAR is that providers can make the decision to Accept Assignment on a per claim basis. Non-PAR providers receive 95% of the Medicare fee schedule regardless of whether they choose to accept assignment. 80% of the Non-PAR fee schedule is reimbursed by the Medicare contractor.

If a Non-PAR claim is submitted as accepting assignment, then the provider may only bill the patient for their 20% coinsurance plus any unmet deductible and the eligible reimbursement from Medicare is paid by the carrier to the provider. Remember, the 20% co-insurance is calculated from the Non-PAR fee schedule of 95% of the Medicare allowable.

If a Non-PAR claim is submitted without accepting assignment, the the provider may bill the patient up to 115% of the Non-PAR Medicare fee schedule, and the reimbursement from the carrier will be made to the patient. Again, it is important to note that the Non-PAR Medicare fee schedule is 95% of the PAR allowable, so all calculations must be made with the 5% reduction for Non-PAR status. The key reimbursement issue to remember with not accepting assignment is that you must collect the entire amount from the patient because any reimbursement from the carrier will be sent directly to the Medicare beneficiary.

Providers who wish to change their status from PAR to non-PAR or vice versa may do so annually. The participation election is binding until the next annual contracting cycle except in certain situations such as relocation to a different geographic area or a different group practice.

Opt-Out Providers

Designated “Eligible Providers” (“EP”) may become a private contracting providers, agreeing to bill patients directly and forego any payments from Medicare to their patients or themselves. EP’s are defined as:

• Physicians (doctors of medicine, doctors of osteopathy, doctors of dental surgery or dental medicine, doctors of podiatric medicine, and doctors of optometry)
• Physician Assistant;
• Nurse Practitioner;
• Clinical Nurse Specialist;
• Certified registered nurse anesthetist;
• Certified Nurse Midwife;
• Clinical Psychologist;
• Clinical Social Worker;
• Registered Dietitian; or
• Nutrition Professional

Chiropractors, Physical Therapists in independent practice, and Occupational Therapists in independent practice may not opt out of the Medicare program.

Provisions in the Balanced Budget Act of 1997 give EP’s and their Medicare patients the freedom to privately contract to for health care services outside the Medicare system. Private contracting decisions, however, may not be made on a case-by-case or patient-by-patient basis. If an EP elects to opt out of Medicare, he/she cannot submit claims to medicare for any of their patients for a period of two years.

There are specific contractual requirements that must be met and maintained during the opt out period. For details of the opt-out requirements, review Chapter 15 of the Medicare Benefit Policy Manual – section 40.

It is important to note that providers who Opt Out, but who are not excluded, may still order and refer Medicare beneficiaries if they have a Medicare Provider Enrollment record on file. This allows physicians who have opted out to order DME and/or refer patients to specialists and have the services covered by Medicare.