Navigating Medicare: Find the path that fits your practice

Medicare participation isn’t one-size-fits-all—especially for family physicians.

Whether you're launching a new practice, reevaluating your current status, or seeking more control over how you're reimbursed, understanding your options is essential. From guaranteed payments to greater billing flexibility or complete independence from Medicare, each path comes with its own benefits—and responsibilities.

Here's a breakdown of the three primary Medicare participation options to help you choose the approach that best fits your practice and your patients:

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.

Medicare participation choices: What physicians need to know

Participating (PAR) physicians

PAR physicians agree to take assignment on all Medicare claims, which means that they must accept Medicare's approved amount (which is the 80% that Medicare pays plus the 20% patient copayment) as payment in full for all covered services for the duration of the calendar year. The patient or the patient's secondary insurer is still responsible for the 20% copayment but the physician cannot bill the patient for amounts in excess of the Medicare allowance. 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:

• The Medicare payment amount for PAR physicians is 5% higher than the rate for non-PAR physicians.
• Directories of PAR physicians are provided to senior citizen groups and individuals who request them.
• Medicare administrative contractors (MAC) provide toll-free claims processing lines to PAR physicians and process their claims more quickly.

Considering non-PAR status? Know the trade-offs.

Medicare pays non-PAR physicians 95% of what it pays PAR physicians. While non-PARs can charge up to 115% of that rate, the real increase is only about 9.25% above PAR rates. To break even, non-PARs must collect the full limiting charge on about 35% of services. Factor in collection costs, bad debt, and claims with assignment before making the switch.

Assignment acceptance, for either PAR or non-PAR physicians, also means that the MAC pays the physician the 80% Medicare payment. 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.

Private contracting: Opting out of Medicare

Provisions in the Balanced Budget Act of 1997 give physicians and their Medicare patients the freedom to privately contract to provide health care services outside the Medicare system. Private contracting decisions may not be made on a case-by-case or patient-by-patient basis, however. Once physicians have opted out of Medicare, they cannot submit claims to Medicare for any of their patients for a two-year period.

A physician who has not been excluded under sections 1128, 1156 or 1892 of the Social Security Act may, however, order, certify the need for, or refer a beneficiary for Medicare-covered items and services, provided the physician is not paid, directly or indirectly, for such services (except for emergency and urgent care services). For example, if a physician who has opted out of Medicare refers a beneficiary for medically necessary services, such as laboratory, DMEPOS or inpatient hospitalization, those services would be covered by Medicare.

To privately contract with a Medicare beneficiary, a physician must:

• Enter into a private contract that meets specific requirements, as set forth in the sample private contract below.
• In addition to the private contract, the physician must also file an affidavit that meets certain requirements, as contained in the sample affidavit below.
• To opt out, a physician must file an affidavit that meets the necessary criteria and is received by the MAC at least 30 days before the first day of the next calendar quarter. There is a 90-day period after the effective date of the first opt-out affidavit during which physicians may revoke the opt-out and return to Medicare as if they had never opted out.

Emergency and urgent care during opt-out

Physicians who have opted-out of Medicare under the Medicare private contract provisions may furnish emergency care services or urgent care services to a Medicare beneficiary with whom the physician has previously entered into a private contract so long as the physician and beneficiary entered into the private contract before the onset of the emergency medical condition or urgent medical condition. These services would be furnished under the terms of the private contract.

Physicians who have opted-out of Medicare under the Medicare private contract provisions may continue to furnish emergency or urgent care services to a Medicare beneficiary with whom the physician has not previously entered into a private contract, provided the physician:

• Submits a claim to Medicare in accordance with both 42 CFR part 424 (relating to conditions for Medicare payment) and Medicare instructions (including but not limited to complying with proper coding of emergency or urgent care services furnished by physicians and qualified health care professionals who have opted-out of Medicare).
• Collects no more than the Medicare limiting charge, in the case of a physician (or the deductible and coinsurance, in the case of a qualified health care professional).

Note that a physician who has been excluded from Medicare must comply with Medicare regulations relating to scope and effect of the exclusion (42 C.F.R. § 1001.1901) when the physician furnishes emergency services to beneficiaries, and the physician may not bill and be paid for urgent care services.

Sample Medicare Private Contract and Affidavit

The sample affidavit and private contract contain the provisions that Medicare requires (unless otherwise noted) to be included in these documents.

Private contracts must meet specific requirements:

• 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 the following 2-year period (either directly, on a capitated basis or from an organization that received Medicare reimbursement directly or on a capitated basis).
• Medicare does not pay for the services provided or contracted for.
  The contract must be in writing and must be signed by the beneficiary before any item or service is provided.
• The contract cannot be entered into at a time when the beneficiary is facing an emergency or an urgent health situation.

In addition, the contract must state unambiguously that by signing the private contract, the beneficiary:

• gives up all Medicare payment for services furnished by the "opt out" physician;
• agrees not to bill Medicare or ask the physician to bill Medicare;
• is liable for all of the physician's charges, without any Medicare balance billing limits;
• acknowledges that Medigap or any other supplemental insurance will not pay toward the services; and
• acknowledges that he or she has the right to receive services from physicians for whom Medicare coverage and payment would be available.

If you determine that you want to "opt out" of Medicare under a private contract, we recommend that you consult with your attorney to develop a valid contract containing other standard non-Medicare required provisions that generally are included in any standard contract.