Medicare Payment Options – Selecting the One That Works Best for You

In mid-December, Medicare carriers are sending a letter to each physician with information about Medicare’s payment rates for 2003 and a “Medicare Participating Physician/Supplier Agreement.” Physicians will then have 45 days to decide whether or not to sign or continue Medicare participation agreements for 2003. Physicians who wish to maintain their current status need not take any action upon receipt of this information. Physicians who wish to change their status from participating (“PAR”) to non-participating (“non-PAR”) or vice versa, must take affirmative action during this open enrollment period.

Once made, Medicare participation and non-participation decisions are binding for the entire year, unless the physician relocates to a different geographic location or practice group. The purpose of this article is to provide neurosurgeons with some basic information on the various Medicare participation options so they can evaluate which is the most appropriate for their practices and their patients.

Three Basic Options
Physicians have three basic choices with respect to their Medicare status.

1. They can sign participation agreements and agree to accept Medicare’s allowed charge as payment in full, accepting “assignment” for all of their Medicare patients.
   
   
2. They can decline to sign participation agreements, which will allow them to accept assignment on a case-by-case basis; for those claims for which they do not accept assignment, they can bill patients for more than the Medicare allowable (“balance bill”), subject to limits imposed by Medicare and/or state law.
   
   
3. They can opt out of Medicare altogether and enter into “private contracts” with Medicare beneficiaries.

Participation PAR physicians agree to take assignment on all Medicare claims, which means that they must accept Medicare’s approved amount (the 80 percent that Medicare pays plus the 20 percent patient co-payment) as payment in full for all covered services. Medicare pays the physician 80 percent directly, and the patient or the patient’s secondary insurer (Medigap plans, for example) is still responsible for the 20 percent co-payment, but the physician cannot bill the patient for amounts in excess of the Medicare allowed fee. Having a Medicare participation agreement does not, however, require physicians to accept every Medicare patient who seeks treatment from them. Medicare provides a number of incentives for physicians to participate:

• The Medicare payment amount for PAR physicians is 5 percent higher than the rate for non-PAR physicians;
  
  
• Medicare provides directories of PAR physicians to Medicare beneficiaries and senior citizen groups; and
  
  
• Medicare carriers provide toll-free claims processing lines to process claims more quickly.

Non-Participation Non-PAR physicians receive only 95 percent of the Medicare approved amount. Non-PAR physicians may decide on a case-by-case basis whether to accept assignment. If the non-PAR physician accepts assignment for a claim, Medicare pays 80 percent of the non-PAR Medicare approved amount directly to the physician and the physician collects the remaining 20 percent from the patient. If the non-PAR physician does not take assignment on a particular claim, he or she may balance bill the patient an additional 15 percent of the non-PAR rate. In this case, however, even though the physician is required to submit the claim to Medicareeee, theccarrier pays the patient directly and the physician must therefore collect his or her entire fee from the patient; thus physicians must “chase the money.” Physicians therefore need to evaluate whether the ability to balance bill and collect a higher fee from the patient is worth the potential extra billing and collection costs. Furthermore, some hospitals and states — including Minnesota, Pennsylvania, Vermont and New York — prohibit or limit balance billing, so physicians must ascertain whether or not these restrictions apply before making a Medicare participation/non-participation decision.

Private Contracting Physicians and their Medicare patients are also permitted to privately contract for healthcare services outside the Medicare system. Provided certain requirements are met, this allows physicians to charge whatever amount they wish for a given service as long as the Medicare beneficiary agrees to the fee arrangement. Medicare will continue to cover hospital and other non-physician services provided incident to the physician service. Physicians may not enter into private contracts for emergency services, but in this instance, physicians may bill Medicare directly and receive the Medicare allowable for these services. Once physicians have opted out of Medicare, they cannot submit claims to Medicare for any of their patients for a two-year period. There are fairly detailed rules and requirements for private contracting, among them:

• The physician must sign and file an affidavit agreeing to forgo receiving any payment from Medicare for items or services provided to any Medicare beneficiary for a two-year period (although the physician has 90 days to revoke the opt-out and return to Medicare).
  
  
• The contract must be in writing and must be signed by the beneficiary before any item or service is provided.
  
  
• The beneficiary must acknowledge in writing that he or she gives up all Medicare payment for services provided by the opt-out physician.
  
  
• The beneficiary must acknowledge that he or she is liable for all of the physician’s charges and that Medigap or other supplemental insurance will not pay toward the services.

Additional requirements of private contracts and information on the procedure for opting out are available at www.cms.hhs.gov/manuals/14_car/3b3026.asp#r1639_1. For further information on all of the Medicare program options, neurosurgeons should contact their local Medicare carrier.

Katie O. Orrico, JD, is director of the AANS/CNS Washington Office.