Opting Out Of Medicare: Practical Tips for Opting Out

by Timothy C. Kriss, M.D.

Dr. Kriss practices neurosurgery in Versailles, KY. This pamphlet is based on his presentation at the 60th annual meeting of AAPS, September, 2003.

Opting out of Medicare begins with a philosophic choice. Believers in a free market will find government regulation and bureaucracy stifling, while others may find it tolerable. You must ask yourself whether participation in the program is consistent with your values. You may be able to serve your patients better—even Medicare-eligible patients—if you opt out.

Opting out of Medicare also involves an economic choice. It will result in a loss of income—possibly temporary, possibly permanent. Your practice may “recover” (fill in with better payers), or you may see fewer patients. It is important to consider that the lost work and lost income are not proportional. Medicare pays less and costs more per patient on average. More time off with less income may be a desirable choice for you (“they can’t tax your time off”).

So why would you take this insurance?

A Black Box Analysis of Insurer X

     
  • Your Worst Payor
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  • Has the oldest, sickest patients
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  • Has the most demanding patients
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  • Has a false appeals process
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  • Overrules all your medical decicisons
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  • Imposes thousands of stupid rules
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  • Has literally twice the billing work
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  • Has the maximum bureaucracy
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  • Can confiscate your life savings
  •  
  • Can put you in jail
  •  

Practical Tips for Opting Out

I found that AAPS is your best source for information on opting out. The website, http://www.aapsonline.org, offers sample documents and a forum to share experiences. AAPS can put you in contact with other doctors who have opted out.

Be aware that the Center for Medicare and Medicaid Services (CMS) is neither a knowledgeable nor reliable source of information about opting out. We received a new wrong answer each time we spoke with a new CMS bureaucrat. Remember that CMS is not responsible for its own advice.

You must do your own research. It is well worth it to hire an attorney experienced in health-care law. AAPS members can receive individualized assistance from the Limited Legal Consultation Service.

Be sure to document all contacts with CMS. Always send everything certified mail to CMS.

Medicare provides quarterly “exit points”; you will need to plan ahead.

When you have made the decision to opt out, send your affidavit to CMS and all Medicare carriers that you have previously billed.

Educating Patients and Physicians

Be sure that all prospective patients and your colleagues understand that:

1. You are “out of network” for Medicare.

2. Medicare should pay for tests ordered by an opted-out doctor (experience has varied), and Part A coverage is not affected.

3. If patients want to use their Medicare Part B benefits for physician fees, they must see a Medicare doctor. Send your referring physicians a letter explaining your position and motivation for leaving Medicare. Your closest colleagues deserve a personal phone call. Also write to your current Medicare patients to explain their options for future care. Both patients and physicians must understand that your services are still available under private contract (see “caveats” below).

Preparing Your Staff

You need to have written, rehearsed “canned” explanations, such as:

     
  • Dr. Smith terminated his contract with Medicare.”
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  • “Dr. Smith is “out of network” for Medicare.
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  • “Secondary insurances, in our experience, may not pick up the tab. If a patient files a Medicare claim—which will be rejected because the doctor opted out—the secondary insurer may pay.”

Support your staff: be prepared to take the heat personally.

Train your staff to determine whether a patient is a Medicare beneficiary: that includes anyone over the age of 65 who has accepted Part B; anyone on Medicare disability; “dual eligible” persons on Medicaid; and former non-Medicare patients who turned 65. Such patients should not be scheduled. You may make an exception for Medicare-eligible patients who clearly desire to contract privately.

Before You Opt Out

You should decrease your Medicare Accounts Receivable and percentage of Medicare patients prior to opting out. Expect CMS to bury your existing CMS A/R the minute you opt out. If your practice has decreased its dependence on Medicare, the economic risk will be lessened, and a smaller Kierkegaardian “leap of faith” will be required.

If you are unsure whether or not to proceed with opting out, float some test balloons. Stop Medicaid first. Stop seeing new Medicare patients. Limit the number of Medicare patients per week. Check for any sizable ripple effect on the rest of your practice and for significant economic impact. Note any increased efficiencies.

What Actually Happens After You Opt Out?

There will be a Stun Factor. Jaws drop. People ask, “You did what? I didn’t know you could do that.”

Initially, you will notice that you have more time off. Your office staff will feel unchained. It is impossible to overestimate the lift you and your staff will get when you finally dump the biggest albatross of all time. All that extra energy and resources that used to spiral down the CMS drain can now be redirected into the remaining practice. You can provide better service. Your employees will be happier employees. Your Accounts Receivable will improve. Everything will be more efficient, especially the “back office.” Every practice process will benefit, either directly or indirectly.

You may be surprised by the support from patients who are unhappy with Medicare and from physicians who approve of your moral stance and admire your courage. They will say, “I wish I could do that.”

Best of all, CMS will no longer own you. You have escaped tremendous risks that can be eliminated in no other way. You are free to ignore future edicts and hassles from Big Brother. Imagine getting the current CMS bulletin full of rules and being able to ignore it and throw it away—priceless!

Caveats

Renewals. You must renew your opt-out status every two years. Failure to do this has serious repercussions. Put reminders on every calendar. Schedule reminders into your practice management software. Assign your staff, partners, lawyer, and accountant to remind you. Did you opt out in an even or odd year? Renew your opt out every even or odd year thereafter. Send in your opt-out renewal well in advance of the deadline.

Keep all your opt-out documents on your word processor so that you can easily renew by changing the dates. Do check the AAPS web site for any changes to the procedure.

Private Contracts with Medicare-Eligible Patients. You may see Medicare patients in the office after opting out, but only if they sign a “private contract” acknowledging that (1) you have opted out; (2) Medicare will not pay for your services; and (3) the patient is responsible for your bill. Additional jargon is also needed (see the AAPS web site), and you must keep the “private contracts” on file, in case the carrier demands a copy. Do not provide paperwork, such as CPT codes, that a family member could use to file a Medicare claim without your knowledge.

Urgent/Emergent Medicare Patients. You must treat such patients and submit the bill to Medicare with the “GJ” modifier. Don’t expect to get paid, as Medicare will deem your services “Non-Urgent.” Or there may be a marked delay in payment with numerous follow-up calls to clueless carrier staff. In any event, once the patient is “stable,” you must offer a choice: (1) Enter into a private contract with you outside Medicare; or (2) Transfer to a Medicare physician.

Do Not Bill Medicare Accidentally. Disable the billing software for Medicare Billing, and delete the Medicare billing address. Fill it in manually each time you bill for a GJ emergency.

Avoid “Surprise” Medicare Patients. Don’t schedule patients in the categories listed above. Incorporate a Disclaimer into your “Consent for Treatment Form”: “I am not a Medicare Beneficiary.”

Final Thoughts

Weigh the risks of not opting out. Remember that CMS can interpret billing errors as criminal acts. It reminds me of the old Soviet Union: Stalin randomly picked names out of the phone book and executed those persons. Random terror is a very effective means of controlling the masses. The best defense: take your name out of the phone book.