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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 or 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.
In an emergency or urgent care situation, a physician or practitioner who opts out may treat a Medicare beneficiary with whom he or she does not have a private contract and bill for such treatment. In such a situation, the physician or practitioner may not charge the beneficiary more than what a nonparticipating physician or 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 or practitioner (see §40.28 of the CMS Medicare Benefit Policy Manual).
Under the statute, the physician or practitioner cannot choose to opt out of Medicare for some Medicare beneficiaries but not others, or for some services but not others. The physician or 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 or 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 or practitioner furnishes to Medicare beneficiaries.
In a private contract, the Medicare beneficiary agrees to give up Medicare payment for services furnished by the physician or practitioner and to pay the physician or practitioner without regard to any limits that would otherwise apply to what the physician/practitioner could charge.
Pursuant to the statute, once a physician or practitioner files an affidavit notifying the Medicare contractor that the he/she has opted out of Medicare, the physician or 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 or practitioner could elect to return to Medicare or to opt out again. A beneficiary who signs a private contract with a physician or 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 or practitioner must file an affidavit with all Medicare contractors to which the physician or practitioner would submit claims, advising that the physician or 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 or practitioner has opted out, such physician or practitioner must enter into a private contract with each Medicare beneficiary to whom the physician or 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 or practitioner has opted out of Medicare, the physician or 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 or 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 or 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 or 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 or 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:
Reference: CMS Medicare Benefit Policy Manual , (Pub. 100-02), Chapter 15 (PDF, 1.42 MB), Section 40 (in its entirety).
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Last Updated: 12/31/2020
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