Ep. 59 – Treating Medicare Beneficiaries as a Cash-Based Practice

Cash-based practices, or providers who neither participate with nor bill insurers, are becoming increasingly common, especially in certain specialties such as primary care, women’s health, and mental health. While providers may choose which insurance to accept and participate with, Medicare requirements follow the Medicare patient. Meaning, if the provider undertakes the care and treatment of a Medicare patient, he or she must comply with Medicare billing requirements unless he or she has formally opted out of the Medicare program. Providers hoping to start a cash-based practice often misunderstand their responsibilities when it comes to Medicare beneficiaries which can lead to compliance problems.  

On the podcast this week, we walk through the three types of Medicare providers, with particular emphasis on non-participating and opt-out providers and the requirements applicable to each. 

Participating Providers:

Providers who participate in Medicare are enrolled in Medicare and accept assignment on all Medicare claims, meaning they bill Medicare directly for the covered services they provide.  

Non-Participating Provider:

• Enrolls in Medicare but does not agree to accept assignment on all Medicare claims. However, it must submit claims to Medicare. For claims the non-participating provider accepts assignment on, Medicare will pay the provider directly. For claims the non-participating provider is not accepting assignment on, the provider charges the beneficiary and Medicare pays the beneficiary once the claim is submitted by the provider.
• May decide on a claim-by-claim basis whether to accept assignment, but certain services must be billed as assigned which include clinical laboratory services, vaccines, and covered drugs/biologicals. 
• For claims that the non-participating provider does accept assignment for, Medicare pays the non-participating provider less than what it pays participating providers. Reimbursement from Medicare on assigned claims submitted by non-participating providers is 95% of the Medicare-approved amount.
• For non-assigned claims that are paid to the provider by the beneficiary, once the provider submits the claim to Medicare, Medicare will reimburse the beneficiary but only for 80% of the Medicare-approved amount.
• For claims where the provider is not accepting assignments, there is still a limiting charge on what the provider may charge the Medicare beneficiary. The current limiting charge for physician services is 115% of the Medicare-approved rate.  Therefore, Medicare beneficiaries who seek care from a non-participating provider pay 35% of the Medicare-approved amount.
• Medicare rules and policies are applicable given the provider is enrolled in Medicare and Medicare is ultimately paying for the service. This includes non-inducement provisions that prohibit providers from providing anything of value (with some exceptions) to Medicare beneficiaries to entice them to receive services that are billed to and paid for by Medicare.
• Decide when you enroll to be non-participating and then each year thereafter in advance of the upcoming calendar year. Your designation as “non-participating” is in effect for the calendar year.

Opt-Out Provider:

• The provider must submit an affidavit to opt out of Medicare. The opt-out is valid for 2 years and automatically renews for additional 2-year terms unless the physician notifies Medicare 30 days before the start of the next 2-year period.
• For providers who have never enrolled in Medicare, if the provider does not have an NPI, the provider must include his/her SSN on the opt-out affidavit. Note, that if the provider wants to order services that will be provided by Medicare providers, it will need an NPI.
• The provider must enter into a contract with the Medicare beneficiary which clearly states that the provider is excluded from Medicare:
  • The beneficiary accepts full responsibility for all charges; Medicare limits on charges do not apply;
  • The Medicare beneficiary will not submit a claim to Medicare or ask the provider to submit a claim to Medicare;
  • The Medicare beneficiary understands that they have the right to obtain Medicare-covered items/services from Medicare providers;
  • The date of the opt-out period;
  • Medigap plans do not make payments for items/services not paid for by Medicare;
  • Signed by the beneficiary.

A copy must be provided to the beneficiary and the provider must keep it for the duration of the 2-year opt-out period.

• Providers who opt out of Medicare may still order services that can be paid for by Medicare as long as the provider has acquired an NPI, reports his/her SSN to Medicare, has a valid opt-out affidavit on file with Medicare, and the services are actually furnished by a provider enrolled with Medicare. For example, a provider who opts out can order laboratory tests or prescribe medication that is provided by a Medicare-enrolled provider and submitted by that Medicare provider to Medicare for payment.
• If the provider provides services “incident to” the provider’s professional services, those services may also not be billed to Medicare. Incident to services are those that are provided in connection with the physician’s office visit and the physician is in the office for supervision purposes. 
• Suppliers, such as clinical laboratories, are not allowed to opt out of Medicare.  Certain providers, including chiropractors, physical and occupational therapists, speech pathologists, and audiologists, are also not allowed to opt out of Medicare.
• The provider can charge Medicare beneficiary whatever he/she wants without limitations but may be subject to any licensure requirements of his/her specific state regarding billing.
• No claim is submitted to Medicare.
• The provider cannot cancel the opt-out during the 2 years and to avoid the opt-out automatically renewing, must cancel at least 30 days before renewal. There is one exception to this- if it is the provider’s first opt-out and he/she changes his mind within 90 days of the effective date of the opt-out, he may cancel it provided he notices Medicare within the initial 90-day period and then takes measures to refund payments made by Medicare beneficiaries during the opt-out period.

Any provider who is establishing his/her practice should carefully consider the Medicare participation options with his/her advisors, including the benefits and limitations of each.