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Opting Out of Medicare

Previous to June 16, 2015, a physician who opted out of Medicare agreed not to see any Medicare patients (barring emergencies or urgent services), except for those with whom she has entered into private contracts, for a period of two years. As of June 16, 2015, when you opt out, that status will automatically renew every two years unless you inform the Medicare Administrative Contractor (.pdf) for your geographical area within 30 days before the next two-year period begins that you wish to change your status.

Since January 1, 1998, physicians have been permitted to opt out of Medicare and enter into private contracts with Medicare beneficiaries that allow them to set their own fees. If you don’t officially opt out, it is illegal to have Medicare patients pay for your services outside of Medicare. Once you’ve opted out successfully, Medicare will not pay for the care you provide in any setting, for as long as you’re opted out, but you will be able to see Medicare patients and have them pay you based on your private contracts with them.

This means that if you work in a situation where you must see Medicare patients as a part of your employment, you cannot opt out of Medicare. It also means that if there is any possibility that your life will change in the next two years, and you may have to see Medicare patients as part of a new employment situation, you also should not consider opting out of Medicare.

The rules for opting out are very specific. In order to opt out you must file an opt-out affidavit with the Medicare Administrative Contractor (MAC) or Carrier that administers any jurisdiction you practice in. A template for this affidavit that conforms to Medicare rules follows. A private contracting template also follows, which you can use for entering into private contracts with your Medicare patients once you have opted out. These contracts must be kept on file in your office, available to be sent to the MAC, Carrier, or to the Centers for Medicare and Medicaid Services (CMS), which oversees the MACS and Carriers, should they be requested.

APA has developed a medicare opt out affidavit template as part of the Opting Out of Medicare Practice Management Guide for APA members to use. APA members can access the Practice Management Guides here.

Notice and Disclaimer

Opting out has serious implications for your status, rights, and responsibilities as a Medicare provider. This summary and the attached sample affidavit and private contract template are based on sources believed to be reliable. The information contained herein doesn’t constitute legal advice nor should it be relied on exclusively. The APA assumes no responsibility for any physician’s decision to opt out or reliance on the sample agreements that follow. If you have any questions concerning these materials or opting out in general, please call the Practice Management HelpLine 800-343-4671.

Who may opt out and when?

Non-participating physicians may opt out of Medicare at any time. Their continuous two-year opt-out period begins the date the affidavit is signed, provided it is filed with the MAC or Carrier within ten-days after the physician signs his first private contract with a Medicare beneficiary.

Participating physicians must file their affidavits with their MAC or Carrier at least thirty days before the first date of the next calendar quarter, with the affidavit showing an effective date of the first day of that quarter (i.e., 1/1, 4/1, 7/1, 10/1).

Physicians who have never enrolled in Medicare, but want to be able to treat Medicare patients under private contracts, must also file an affidavit with the MAC or Carrier that serves their area. These physicians will be provided with a UPIN (Unique Physician Identification Number), based on the physician tax identification number that must be entered on the affidavit.

Essential things to know about opting out

  • The first time you opt out of Medicare, there is a ninety-day grace period during which you can change your mind about opting out. You just have to notify the MACs or Carriers you filed an opt-out affidavit with and refund any money you received from patients with whom you had private contracts that called for fees exceeding the Medicare-approved charges.
  • Once you opt out of Medicare, you cannot see any patients under Medicare during each two-year period you have opted out for.
  • If you have been seeing Medicare patients, once you have opted out, they will only be able to continue seeing you under a private contract. This means any payments from them to you will be out of pocket. Not only will Medicare not reimburse for your services, neither will any supplemental Medigap policies your patients have. Other secondary policies may or may not continue to reimburse the patient—generally, if they do, for no more than they would have if you were still a Medicare provider.
  • If you mistakenly file a claim with Medicare during your opt-out period, or your patient does, and you are contacted by the MAC or Carrier with a request for an explanation, you must be certain to respond within the time period allotted. Otherwise, your opt-out status will be rescinded, and you will no longer be able to do private contracting. If this happens, you will once again be tied to the laws of Medicare, but Medicare will not pay for any of your claims that occur during your original opt-out period.
  • It is vital that you keep current private contracts on file for any Medicare patients you see while you have opt-out status (to ensure your status will not change if the occurrence mentioned in the previous bullet occurs).
  • Patients who reach Medicare age but are still employed and covered by their employers’ insurance can choose not to enroll in Medicare Part B and will then not be Medicare beneficiaries for the purpose of their treatment by physicians.
  • If a Medicare-eligible patient is covered under her employer’s insurance, but chooses to enroll in Medicare Part B so that Medicare will serve as the secondary payer, you must still have an opt out contract with this patient or you will be bound to the Medicare-allowed fees (even though Medicare is not the primary payer).
  • Since April 2012, if you want to be in the system as being able to order and refer (so that Medicare will pay for services for your patient that you’ve ordered or referred them to), you must check the box at the bottom of the affidavit and provide two pieces of extra information: your date of birth and Social Security Number.
  • When a Medicare beneficiary signs a private contract with one physician, it does not mean Medicare will not cover medical services provided to the same beneficiary by others who have not opted out. This means that if an opted out physician refers a patient to a lab to have blood work done, or to another specialist who has not opted out of Medicare, the services the patient receives as a result of the referral will be covered by Medicare (if they are services that Medicare ordinarily covers).

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