A Medicare opt out is a formal agreement between a provider, the federal government, and a Medicare beneficiary not to bill Medicare for services rendered. The decision is legally binding, requiring a signed affidavit and a private contract between the provider and the patient. About 5% of U.S. physicians choose this path, and among these, around 40% work in behavioral health.
If you're a practitioner considering opting out of Medicare, it's important to know that it's a formal decision that typically requires at least a two-year commitment. This decision can work well for those working in a fee-for-service model, but it's highly dependent on the situation. We'll outline the laws governing the process and the legal shifts that have impacted it. We'll also address commonly asked questions, covering topics such as how to opt out of Medicare, provider eligibility requirements, and whether the decision can be reversed.
Medicare Opt-Out Status for Providers: An Overview
Medicare is a federal health insurance program that covers various medical services for people who are 65 years or older as well as some younger people with specific conditions. Ever since the Medicare program was initiated in 1965, the freedom of patients to choose providers has been protected under Section 1802 of the Social Security Act.
In 1997, the Balanced Budget Act (BBA) clarified that a patient's freedom to choose providers includes working with providers under a private contract, outside of the parameters set up by the Medicare program. The BBA established that providers interested in working under this type of private contract must:
- Submit formal paperwork to opt out of Medicare.
- Not participate in Medicare for any patient at any site where services are offered (to prevent bypassing the program for some cases and not others).
- Commit to the decision for at least two years.
In 2015, a new law called the Medicare Access and CHIP Reauthorization Act (MACRA) established auto-renewal of the opt-out status at the two year mark. This made it easier for providers to file paperwork once and stay out of the system indefinitely.
Opting Out of Medicare: FAQ
Separating from the Medicare program is a weighty decision with legal and financial implications for you and your patients. Here are answers to frequently asked questions about the process.
Do all healthcare providers participate in Medicare?
No. There are three categories related to Medicare participation:
- Participating providers fully participate in the program by accepting assignments and billing Medicare. These providers accept the approved Medicare amount as the full payment.
- Non-participating providers accept assignments on a case-by-case basis. They may charge the patient more than the Medicare-approved amount by applying an additional charge, within specific limits.
- Opt-out providers don't participate in the program (except in emergency cases) and don't bill Medicare. Therefore, Medicare limits on charges don't apply — the provider decides what to bill the patient.
What does it mean to "opt out" of Medicare?
This is a legally binding decision that healthcare providers can make if they don't want to work with the Medicare program. They agree not to bill Medicare, and to follow certain standards for letting Medicare beneficiaries know that they do not work with the program. Opting out is sometimes referred to as an "all or nothing" decision, because it applies to all Medicare beneficiaries that the provider works with, not just some.
What are common reasons why a practitioner would opt out?
Practitioners may separate from the program because they:
- Feel that Medicare payments are insufficient.
- Decide that the program's payment adjustments don't keep pace with the rising costs involved in serving patients.
- Want relief from the administrative burden of participation in the program, such as billing, tracking, reporting, and auditing requirements.
- Want more clinical autonomy, free from Medicare's structure.
What are the eligibility requirements for CMS Opt Out?
The Center for Medicare and Medicaid Services (CMS) sets strict regulations for clinician opt out. Only individual providers can gain exclusion from Medicare, not entire organizations. Certain types of providers are eligible, including:
- Doctors of medicine
- Nurse practitioners
- Physician assistants
- Dentists
- Clinical nurse specialists
- Certified registered nurse anesthetists
- Certified nurse midwives
- Clinical psychologists
- Mental health counselors
Some types of clinicians are not eligible for exclusion, including:
- Chiropractors
- Physical therapists
- Occupational therapists
- Anesthesiology assistants
What steps should a practitioner take to opt out?
To separate from the Medicare program, a provider must:
- Confirm eligibility.
- Submit a Medicare opt out form (also called an affidavit) to their Medicare Administrative Contractor (MAC).
Once the affidavit is effective, providers must enter into private contracts with their Medicare patients before providing services and treatments, clearly stating the agreement not to submit claims to Medicare.
How long does the exclusion from Medicare last?
For providers who are opting out for the first time, there's a 90-day grace period in which the decision can be reversed. Otherwise, the opt-out affidavit is effective for two years and will be auto-renewed unless the provider takes action. Providers maintain this status only if they comply with all of the associated requirements.
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