The AAFP is not advising or recommending any of the options. The purpose of sharing this information is merely to ensure that physician decisions about Medicare participation are made with complete information about the available options. Please note that the summary below does not account for any payment adjustments that a participating or non-participating physician may incur through one of the Medicare initiatives, such as the Physician Quality Reporting System.
Physicians wishing to change their Medicare participation or non-participation status for a given year are usually required to do so by December 31 of the prior year e. Participation decisions are effective January 1 of the year in question and are binding for the entire year. There are basically three Medicare contractual options for physicians.
Physicians may sign a participating PAR agreement and accept Medicare's allowed charge as payment in full for all of their Medicare patients. They may elect to be a non-PAR physician, which permits them to make assignment decisions on a case-by-case basis and to bill patients for more than the Medicare allowance for unassigned claims.
Or they may become a private contracting physician, agreeing to bill patients directly and forego any payments from Medicare to their patients or themselves. Once made, the decision is generally binding until the next annual contracting cycle except where the physician's practice situation has changed significantly, such as relocation to a different geographic area or a different group practice. To become a private contractor, physicians must give 30 days notice before the first day of the quarter the contract takes effect.
Those considering a change in status should first determine that they are not bound by any contractual arrangements with hospitals, health plans or other entities that require them to be PAR physicians. In addition, some states have enacted laws that prohibit physicians from balance billing their patients.
While PAR physicians must accept assignment on all Medicare claims, however, Medicare participation agreements do not require physician practices to accept every Medicare patient who seeks treatment from them. Medicare provides a number of incentives for physicians to participate:.
Therefore, when considering whether to be non-PAR, physicians must determine whether their total revenues from Medicare, patient copayments and balance billing would exceed their total revenues as PAR physicians, particularly in light of collection costs, bad debts and claims for which they do accept assignment.
For unassigned claims, even though the physician is required to submit the claim to Medicare, the program pays the patient, and the physician must then collect the entire amount for the service from the patient.
Provisions in the Balanced Budget Act of give physicians and their Medicare patients the freedom to privately contract to provide health care services outside the Medicare system. This issue brief describes these three protections, explains why they were enacted, and examines the implications of modifying them for beneficiaries, providers, and the Medicare program.
Under current law, physicians and practitioners have three options for how they will charge their patients in traditional Medicare. They may register with Medicare as 1 a participating provider, 2 a non-participating provider, or 3 an opt-out provider who privately contracts with each of his or her Medicare patients for payment Figure 1.
This issue brief describes these three options and then examines three current provisions in Medicare that provide financial protections for Medicare beneficiaries. Non-participating providers: Non-participating providers do not agree to accept assignment for all of their Medicare patients; instead they may choose—on a service-by-service basis—to charge Medicare patients higher fees, up to a certain limit. When doing so, their Medicare patients are liable for higher cost sharing to cover the higher charges.
When non-participating providers do not accept assignment, they may not collect reimbursement from Medicare; rather, they bill the Medicare patient directly, typically up front at the time of service.
Non-participating providers must submit claims to Medicare on behalf of their Medicare patients, but Medicare reimburses the patient, rather than the nonparticipating provider, for its portion of the covered charges. These opt-out providers may charge Medicare patients any fee they choose. Medicare does not provide any reimbursement—either to the provider or the Medicare patient—for services provided by these providers under private contracts.
Accordingly, Medicare patients are liable for the entire cost of any services they receive from physicians and practitioners who have opted out of Medicare. Several protections are in place to ensure that patients are clearly aware of their financial liabilities when seeing a provider under a private contract. These provider options have direct implications on the charges and out-of-pocket liabilities that beneficiaries face when they receive physician services Figure 2. Beneficiaries who select a participating provider are assured that, after meeting the deductible, their coinsurance liability will not exceed 20 percent of the charge for the services they receive Figure 2.
Surveys conducted by the Physician Payment Review Commission PPRC , a congressional advisory body and predecessor of the Medicare Payment Advisory Commission MedPAC , revealed that prior to the participating provider program, beneficiaries often did not know from one physician to the next whether they would face extra out-of-pocket charges due to balance billing and how much those amounts might be.
The establishment of the participating provider program in Medicare instituted multiple incentives to encourage providers to accept assignment for all their patients and become participating providers.
For example, Medicare payment rates for participating providers are 5 percent higher than the rates paid to non-participating providers. This information makes it considerably easier for providers to file claims to collect beneficiary coinsurance amounts, as well as easing the paperwork burden on patients. Given the strong incentives of the participation program, combined with limits on balance billing discussed in the next section , it is not surprising that the share of physicians and practitioners electing to be participating providers has risen to high levels across the country.
In this case, the provider is paid 95 percent of the fee schedule amount, and can only bill you up to 15 percent more than the Medicare rate. Note that states can further limit this; New York, for example, limits it to 5 percent.
A small number of doctors less than 1 percent of eligible physicians opt out of Medicare entirely, meaning that they do not accept Medicare reimbursement as payment-in-full for any services, for any Medicare patients. If a Medicare beneficiary receives services from one of these doctors, the patient must pay the entire bill; Medicare will not reimburse the doctor or the patient for any portion of the bill, and the provider can set whatever fees they choose. Of the tiny fraction of doctors who have opted out of Medicare entirely, 42 percent are psychiatrists.
And although the number of doctors opting out increased sharply from to , it dropped in , with 3, doctors opting out. Lost your password? If you have Original Medicare , your Part B costs once you have met your deductible can vary depending on the type of provider you see. For cost purposes, there are three types of provider, meaning three different relationships a provider can have with Medicare. Providers who take assignment should submit a bill to a Medicare Administrative Contractor MAC within one calendar year of the date you received care.
If your provider misses the filing deadline, they cannot bill Medicare for the care they provided to you. Be sure to ask your provider if they are participating, non-participating, or opt-out.
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