Please Note: There is no Medicare information on our corporate website. Please select a specific contract in the 'Search Within' box for Medicare related information.
© 2019 Palmetto GBA, LLC
We frequently update our articles to reflect the latest changes and updates to Medicare, and strongly recommend you visit this article at link below to confirm you have the latest version.
Printed Date: 9/22/2015
Section 1802 of the Social Security Act (the Act), as amended by §4507 of the BBA of 1997, permits certain physicians and practitioners to opt-out of Medicare if certain conditions were met, and to provide through private contracts services that would otherwise be covered by Medicare. Under these private contracts, the mandatory claims submission and limiting charge rules of Section 1848(g) of the Act would not apply.
When a physician/practitioner opts out of Medicare, Medicare covers no services provided by that individual and no Medicare payment can be made to that physician or practitioner directly or on a capitated basis. Additionally, no Medicare payment may be made to a beneficiary for items or services provided directly by a physician or practitioner who has opted out of the program.
Exception: In an emergency or urgent care situation, a physician/practitioner who opts out may treat a Medicare beneficiary with whom he/she does not have a private contract and bill for such treatment. In such a situation, the physician/practitioner may not charge the beneficiary more than what a nonparticipating physician/practitioner would be permitted to charge and must submit a claim to Medicare on the beneficiary’s behalf. Payment will be made for Medicare covered items or services furnished in emergency or urgent situations when the beneficiary has not signed a private contract with that physician/practitioner (see §40.28 of the CMS Medicare Benefit Policy Manual).
Under the statute, the physician/practitioner cannot choose to opt out of Medicare for some Medicare beneficiaries but not others, or for some services but not others. The physician/practitioner who chooses to opt out of Medicare may provide covered care to Medicare beneficiaries only through private agreements.
For purposes of this provision, the term physician is limited to doctors of medicine, doctors of osteopathy, doctors of dental surgery, doctors of dental medicine, doctors of podiatric medicine and doctors of optometry who are legally authorized to practice dentistry, podiatry, optometry, medicine or surgery by the State in which such function or action is performed.
No other physicians may opt out. Also, for purposes of this provision, the term 'practitioner' means any of the following to the extent that they are legally authorized to practice by the State and otherwise meet Medicare requirements:
The opt-out law does not define physician to include chiropractors; therefore, they may not opt out of Medicare and provide services under private contract. Physical therapists in independent practice and occupational therapists in independent practice cannot opt out because they are not within the opt-out law’s definition of either a physician or practitioner.
General Rules of Private Contracts/Opting-Out
The following rules apply to physicians/practitioners who opt out of Medicare:
Definition of a Private Contract
A private contract is a contract between a Medicare beneficiary and a physician or other practitioner who has opted out of Medicare for two years for all covered items and services the physician/practitioner furnishes to Medicare beneficiaries.
In a private contract, the Medicare beneficiary agrees to give up Medicare payment for services furnished by the physician/practitioner and to pay the physician/practitioner without regard to any limits that would otherwise apply to what the physician/practitioner could charge.
Pursuant to the statute, once a physician/practitioner files an affidavit notifying the Medicare carrier that the he/she has opted out of Medicare, the physician/practitioner is out of Medicare for two years from the date the affidavit is signed unless the opt-out is terminated early according to §40.35 of the CMS Medicare Benefit Policy Manual, or unless the he/she fails to maintain opt-out (see §40.11).
After those two years are over, a physician/practitioner could elect to return to Medicare or to opt out again. A beneficiary who signs a private contract with a physician/practitioner is not precluded from receiving services from other physicians and practitioners who have not opted out of Medicare.
Requirements of a Private Contract
A private contract under this section must:
In order for a private contract with a beneficiary to be effective, the physician/practitioner must file an affidavit with all Medicare carriers to which the physician/practitioner would submit claims, advising that the physician/practitioner has opted out of Medicare. The affidavit must be filed within 10 days of entering into the first private contract with a Medicare beneficiary.
Once the physician/practitioner has opted out, such physician/practitioner must enter into a private contract with each Medicare beneficiary to whom the physician/practitioner furnishes covered services (even where Medicare payment would be on a capitated basis or where Medicare would pay an organization for the physician’s or practitioner’s services to the Medicare beneficiary), with the exception of a Medicare beneficiary needing emergency or urgent care.
If a physician/practitioner has opted out of Medicare, the physician/practitioner must use a private contract for items and services that are, or may be, covered by Medicare except for emergency or urgent care services (see §40.28 of the CMS Medicare Benefit Policy Manual). An opt-out physician/practitioner is not required to use a private contract for an item or service that is definitely excluded from coverage by Medicare.
A non-opt-out physician/practitioner or other supplier is required to submit a claim for any item or service that is or may be covered by Medicare.
Where an item or service may be covered in some circumstances, but not in others, the physician/practitioner or other supplier may provide an Advance Beneficiary Notice to the beneficiary, which informs the beneficiary that Medicare may not pay for the item or service, and that if Medicare does not do so, the beneficiary is liable for the full charge.
A physician/practitioner who has never enrolled in the Medicare program and wishes to opt-out of Medicare must provide Palmetto GBA with a National Provider Identifier (NPI).
Requirements of the Opt-Out Affidavit
Under 1802(b)(3)(B) of the Act, a valid affidavit must:
We value your opinion and want to provide the highest-quality and most relevant Medicare knowledge possible. Please let us know if this article was helpful.
It didn't answer my question
This article was helpful
We’re glad we could help you today and appreciate your feedback. When you rate our articles as most helpful, we know that we are on the right track for providing you with important news and information.
We're sorry this article didn't help you today. We'll use your feedback to review this article to try to revise or expand it. Contact us with more feedback or a question on this topic.
Last Updated: 02/07/2018