Provider Participation in Medicare

Recently, participation in Medicare has become a concern for physicians due to the annual impending cuts to the Medicare Physician Payment System. These payment reductions are based on the Sustainable Growth rate. As you wait to see whether the Congress will avert the impending 21 percent reduction to the Medicare Physician Fee Schedule (MPFS), you should carefully consider all options before deciding whether to participate in Medicare.
The open enrollment season for Medicare participation starts around mid November of the current year until the last day of the same year (December 31). Usually, your Medicare contractor will send notices to gauge your interest in retaining or declining your participation in Medicare. Once you receive the notification from your Medicare contractor, you have forty-five days to decide if you will continue or terminate your participation with your assigned Medicare contractor or Medicare Administrative Contractor (MAC). More information on the MACs

What to do if you receive an enrollment notification from your Medicare contractor:

• New physicians who decide to participate in Medicare will need to complete the CMS 460 form (Medicare Participating Physician or Supplier Agreement) and submit it with the appropriate enrollment application (CMS 855I, 855R, or 855B) to your Medicare carrier or MAC
• Your effective date as a participating or par physician will begin on the post marked date of the application that you send to your MAC
• If you have enrolled in Medicare, you have a 90-day grace period to decide whether you will maintain a par or non-par status.
• If you decide not to participate, you do not need to submit or send any information to your Medicare contractor.
• For current Medicare par providers who choose to maintain par status, Medicare does not require any action
• If you are not a Medicare participant and you choose not to participate, Medicare does not require any action
• If you are a current Medicare participant and you choose to terminate your participation in your Medicare plan, CMS mandates that you notify your Medicare contractor of this in writing. Medicare requires you to postmark this letter by the end of the current year. The effective date of your non-par status will be on the first day of the following year.

There are three options for participation in Medicare:

Participation (PAR providers)
Physicians in this category agree to accept assignment on all Medicare claims by collecting the Medicare approved amount (80%) from Medicare and the patient’s coinsurance (20%) for each covered service they render to Medicare patients. Physicians are not required to see every Medicare patient that requests their treatment. Medicare offers incentives for PAR providers such as:

• A reimbursement rate that is 5% higher than that of the non-par providers
• Providing a directory of participating practitioners to Medicare beneficiaries
• Expedient claims processing times in comparison to the processing times for non-par providers

Non-Participation
The Medicare approved amount for non-par practitioners is 95% of the Medicare approved reimbursement rate. Physicians in this category have the choice of accepting or rejecting assignment on Medicare claims as they receive them. If you choose to accept assignment, you are limited to the 95% of the MPFS, which will be divided into the beneficiary’s 20% copayment and your reimbursement from Medicare (80% of the approved amount).
Consequently, Physicians who choose not to accept assignment can charge the Medicare beneficiary up to 115% of the allowed amount for non- par providers, which will amount to 109.25% (a 9.25% difference from the approved amount for par physicians). Medicare will pay 80% of this amount, and the patient will supply his or her 20% coinsurance. You can balance bill the patient for the additional amount after you deduct the previous payments. It is important to realize that Medicare requires non-par assigned and non-par unassigned physicians to submit their claims to their respective Medicare contractors, which will send the reimbursement to the directly to the patient. Hence, you will need to bill the patient and collect all payments from he or she post-Medicare reimbursement. This process might be challenging to some physicians. More so, the American Medical Association postulates that non-par physicians will need to collect payment from their Medicare beneficiaries 35% of the time they perform services in order to exceed the par physicians’ reimbursement.

Here is an example of your possible reimbursement amount (based on the different participation choices) if you perform an otolaryngological procedure that has an allowed rate of $100:

Private Contracting
Under section 4507 of the Balanced Budget Act (BBA) of 1997, a private contract is an agreement between a Medicare beneficiary and a physician in which the beneficiary agrees to pay fully out-of-pocket for a Medicare-covered service. If you decide to opt out of Medicare, you will be excluded from submitting any claims to Medicare for 2 years. If a provider  has been excluded under sections 1128, 1156, or 1892 of the Social Security Act, he or she can certify a patient’s need or refer a patient for a Medicare covered item or service, as long as the provider is not reimbursed directly or indirectly for these services (except emergency and urgent care services). According to the BBA, “A private contract exempts a physician from two statutory billing requirements:

(1) The claims submission provision, which requires physicians to complete and submit claims to Medicare, and
(2) Balance billing limits, which limit the amount a physician, can charge a beneficiary above the Medicare fee schedule”.

To make a private contract official, the physician and beneficiary will draft a written agreement explaining the patient’s financial obligation to pay out of pocket, and stating that the physician will not submit any claims to the Medicare carrier.
Physicians have a 90-day period after their effective opt-out date to rescind this contract and continue previous status as par or non-par providers.
If a physician performs emergency or urgent care services on a patient during the opt-out period, the services would be furnished under the terms of the private contract
If the physician has opted out of Medicare, but does not have a private contract with the patient, he or she can still furnish emergency or urgent care under certain conditions, which are:

• Physician must submit the claim to the Medicare contractor in line with both 42 CFR part 424 (relating to conditions for Medicare payment) and with proper Medicare coding and billing guidelines
• Physician is limited to collecting reimbursements, which are not more than a combination of the patient’s deductible and coinsurance.

You can view a sample Medicare Private Contract and to access the Medicare Participating Provider and Supplier Agreement (CMS-460 form) on our website

Updated June 2010