Looming 30 percent cuts have Medicare physicians considering their participation options

There are three Medicare participation options available to physicians:

• Participation.  PAR providers accept Medicare’s allowed charges as payment in full for their Medicare patients.
• Non-participation.  Non-PAR providers can take assignment on a case-by-case basis and can balance bill patients for more than the Medicare allowance on unassigned claims.
• Private contracting.  These providers bill patients directly and forego any payments from Medicare to patients or themselves.

This series of articles will provide you with the tools you need to effectively weigh your options and make the participation decision that is best for your practice setting and your patients.  While the Medical Society of Virginia (MSV) encourages you to make an informed decision regarding your contractual relationship with the Medicare program, it is important to note that MSV is not advising or recommending any one of the three participation options.

Frequently Asked Questions

I do not plan to change my participation status.  Is there anything I need to do?
Physicians who want to continue their current status do not need to take any action.

Part 1: Did you know there’s a third Medicare participation option?

A little known provision of the Balanced Budget Act of 1997 has made it possible for physicians and patients to privately contract for health care services.  Important considerations a physician must weigh before choosing this option include:

• Private contracting decisions cannot be made on a case-by-case or patient-by-patient basis.
• Opting out of Medicare – a requirement for private contracting – prevents physicians from submitting claims to Medicare for any of their patients for a two-year period.

To privately contract with a Medicare patient, a physician must take the following actions:

• A physician must execute a private contract with the Medicare beneficiary that meets specific requirements (see resources below).
• A physician must file an affidavit that meets certain requirements (see resources below).

Physicians that choose this option may still provide emergency or urgent care services to Medicare beneficiaries with whom they do not have a private contract agreement, so long as the physician:

• Submits a claim to Medicare with proper coding reflecting that the provider has opted out of Medicare
  Collects no more than the Medicare limiting charge

Additional guidance and sample scenarios can be found in the American Medical Association’s Know your options: Medicare participation guide.

Related resources from the AMA
Know your options: Medicare participation guide
Sample letter to patients
Sample Medicare private contract
Sample Medicare private contract physician affidavit

Part 2: What does Medicare participation mean?

When a physician chooses to participate (PAR) in Medicare, s/he is agreeing to:

• Take assignment on all Medicare claims for all covered services for the year
• Accept Medicare’s approved fee schedule as payment in full (80 percent paid by Medicare plus 20 percent patient copayment)
• To not balance bill the patient for amounts in excess of the Medicare allowance

Medicare participation does not require PAR physicians to accept every Medicare patient who seeks treatment from the practice.

Incentives for participating in the Medicare program include:

• The Medicare approved amount is 5 percent higher than that for non-PAR physicians
• Faster claims process than non-PAR physicians
• Inclusion in PAR physician directories that are provided to senior citizen groups and on individual request

Related resources from the AMA
Know your options: Medicare participation guide

Part 3: I’m considering going non-PAR with Medicare; how will this impact my practice?

Choosing to opt-out of Medicare participation (non-PAR) means that:

• Non-PAR Medicare-approved amounts (including 80 percent from Medicare and 20 percent patient copayment) are set at 95 percent of the Medicare-approved amounts for PAR physicians.  This is the amount non-PAR physicians would be paid for assigned claims, which Medicare pays directly to the physician.
• For unassigned claims, non-PAR physicians can balance bill up to 115 percent of the non-PAR Medicare-approved amount which is equal to 9.25 percent above the PAR-approved amount.  Unassigned claims are submitted by the physician to Medicare; however, Medicare will pay the patient and the physician must collect from the patient.

Physicians considering the non-PAR option should carefully weigh whether their total revenues from Medicare would exceed their total revenues as PAR physicians (when considering collection costs and bad debts stemming from unassigned claims). 

The American Medical Association (AMA) has calculated that non-PAR physicians would need to collect the full limiting charge amount (the maximum amount that non-PAR physicians can charge for unassigned claims) for more than 35 percent of the services they provide for their Medicare revenues to exceed those of PAR physicians.

Additional guidance including sample financial scenarios can be found in the AMA’s Know your options: Medicare participation guide.

Related resources from the AMA
Know your options: Medicare participation guide
Medicare payment calculator: Estimate how much your total Medicare revenue will change as a result of a change from PAR to non-PAR.
PAR/Non-PAR decision worksheet for physicians
Sample letter to patients

This series is adapted from the American Medical Association (AMA) guide Know your options: Medicare participation guide.  To view the AMA’s resources on this topic, please visit www.ama-assn.org/go/medicareoptions.