Opting Out of Medicare

One of the issues faced by I&FM providers in starting a practice is that they may not participate with insurance, (either because they don’t want to or because insurance panels in their area are closed). In not participating with insurance, the provider has to make a decision about how to interact with Medicare. In some circumstances, (such as noncovered services discussed below), the provider may just be able to charge Medicare beneficiaries cash. In other circumstances, they may have to choose between not seeing Medicare beneficiaries or having to “opt-out” of Medicare, which allows them to see Medicare beneficiaries on a private contract for covered services.

The process of opting out of Medicare is not complicated. The provider can opt out thirty days before any calendar quarter by sending an affidavit signed by the provider to the Medicare carrier for their jurisdiction. The opt out provider then uses a private contract with all Medicare beneficiaries documenting that the patient knows that the provider doesn’t participate with Medicare and the patient can’t submit the provider’s charges for reimbursement. The affidavit renews every two years until cancelled unless cancelled by the provider at least thirty days before renewal.

I&FM providers who have opted out of Medicare may want to moonlight  at another job that accepts Medicare, especially if they are starting a new practice. The provider may have additional time as the practice grows and moonlighting offers a safety net of additional income. Alternatively, providers working at a Medicare participating position–such as an emergency room–may want to open a private, cash-pay practice on the side. The question is: Can a provider work at a Medicare participating position and an opt out position at another location? 

In answering this question, it is important to understand that Medicare provides some exceptions to the regulations as well as regulations that apply to participating with Medicare in one job while opting out at another job. Here are some of the key points:

Key Points

1.      Opt out providers may work in an area not affected by the opt out rule, such as occupational medicine, correctional medicine or an administrative role.

2.      Opt out providers can apply to participate with Medicare within the two year window if they start work for an entity such as Indian Health Services, Veterans Administration or a public health clinic with a waiver. 

3.      The opt out rules only apply to health care services covered by Medicare. A provider working a second job at a tattoo parlor, for example, would not have to worry about running afoul of compliance because tattoos are not a health care service covered by Medicare. 

4.      The opt out rules allow an opt out provider to work for an entity that participates with Medicare, provided that the participating entity: 1) Doesn’t allow the opt out provider to see Medicare patients; 2) Doesn’t bill Medicare or patients for Medicare patients who are seen by the opt out provider; or 3) Only bills Medicare for the opt out provider in the event of an emergency when no other participating providers available, (which requires a special GJ code).  

5.      While common opt out forms used for the required affidavit ask for the provider or entity’s federal tax ID or employment identification number (EIN), the opt out rules apply to the provider and the provider’s national provider identifier, (or NPI).

These key points can be applied to common situations involving a provider participating with Medicare while also opting out.

Can a provider participate with Medicare at one location while opting out at a second location? Can a provider participate with Medicare under one tax ID while opting out under a second tax ID?

The answer to the location question is pretty clear. Noridian’s Medicare opt out page states explicitly, “Providers cannot be opt out for some services and not others, as well as some locations and not others.” Changing locations doesn’t allow a provider to both participate and opt out.

The tax ID question is also unlikely to be allowable, as it assumes that the provider can essentially have multiple “identities” based on their EIN. Unfortunately, Medicare doesn’t list opt out providers by their EIN. Opt out providers are listed by their name and their NPI. Providers can have only one NPI, which makes pretty clear that having a second EIN doesn’t create a second identity for the provider. Medicare views providers as either participating with Medicare or opted out, especially since claims are submitted under the provider’s NPI. It is unlikely that a provider can participate with Medicare under one tax ID while opting out under a second tax ID.

Can a provider work in an urgent care or emergency room as a participating provider while opting out at another position?   

The rules that for an opt out provider to work at a Medicare participating entity do provide consideration for emergency and urgent care. This exception doesn’t allow the provider to participate with Medicare, however, it simply addresses the community interest of having access to urgent and emergency care. If a Medicare participating provider is available, the opt out provider is not allowed see the Medicare patient and get paid, even for urgent or emergency care. In situations where the opt out provider is the only option to render care, their services must be billed with a GJ code for opt out physician emergency or urgent care services. The opt out provider isn’t actually a Medicare participating provider under the urgent or emergency care consideration.

How do providers work at one location that participates with Medicare while having a second job that does not participate with Medicare?

As addressed in the previous question, providers may work one position that participates with Medicare and a second opt out position. Medicare provides the considerations that have to be addressed. Removing the urgent and emergency care issue addressed, the considerations are: 1) The provider does not see Medicare patients and; 2) The entity doesn’t bill Medicare or Medicare patients if they are seen by the opt out provider. So, technically, yes–an opt out provider may work at a Medicare participating location, but they are still an opt out provider.

All of this assumes that the provider’s services are covered by Medicare, so some providers seek to simply charge patients cash for noncovered services, which allows the provider to operate like opt out providers without opting out. This approach is popular with I&FM providers who claim that I&FM services are not a service covered under Medicare. This may be true, but providers have to be careful in how they present their I&FM services. If a practice is providing a superbill or itemized charge list to patients for private insurance reimbursement, this would indicate that the I&FM services being provided could be a covered service.

What are the risks from being an opt out provider working at a Medicare participating entity?

If Medicare is billed for an opt out provider without following the opt out regulations, the billing entity may be in violation of the False Claims Act, which can apply penalties of three times of the amount of the claim PLUS additional penalties of approximately $10,000 to $20,000 per claim. Opt out providers who work at a location participating with Medicare need to make sure that their opt out status is addressed in their service agreement with the entity. Otherwise, the entity may sue the provider for breach of contract and seek to recover any damages from representing the provider as a Medicare participating provider. Violators of the False Claims Act may lose their license to practice medicine and face prison for alleged criminal activity associated with false claims, including theft and insurance fraud. 

What are the risks from being a participating provider who charges cash for noncovered services?

The Office of Inspector General (OIG) has reached several settlements with providers who charged Medicare beneficiaries extra for covered services. Providers need to make sure that their services are not in the gray area of Medicare coverage, as some OIG settlements with physicians have been six figures. 

Conclusion

The risks involved with operating in the gray area of participating with Medicine in one position while opting out—or charging cash for noncovered services—at another position are obviously significant. While it is tempting to enjoy the benefits of opting out or cash pay at one position and be treated as a Medicare participating provider at another position, providers should make sure that both positions are following the black and white regulations Medicare has established for opting out. If a provider has any doubts, they should seek a written opinion from a qualified health care attorney. 

  1. Opted-Out Moonlighting (DPC Frontier) (CLICK HERE)
  2. Medicaid/Medicare Opt-Out (OIG Compliance NOW) (CLICK HERE)
  3. Opt Out of Medicare (Noridian) (CLICK HERE)
  4. Frequently Asked Questions Regarding Medicare Participation Options (AMA) (CLICK HERE)
  5. Opting Out of Medicare: A Guide for Physicians (AAPS) (CLICK HERE)
  6. Medicare Learning Network: NPI: What You Need to Know (CLICK HERE)
  7. OIG Alerts Physicians about Added Charges for Covered Services, (CLICK HERE)
  8. PECOS Exemption for Medicare Opted-Out Physicians with NPI# (CLICK HERE)