Leaving Medicare is Easier Said than Done

Before Congress voted to override President Bush's veto of HR 6331 this week, there were a lot of public warnings and discussions about physicians dropping Medicare. Every journalist, lobbyist, and legislator seemed to have a touching anecdote or a troubling statistic handy to illustrate the impact of a 10.6% reduction in Medicare payments.

Now that the cut is off the table for the time being, that possibility doesn't go away for many doctors, even though the public attention will.

Physician dissatisfaction with Medicare has been brewing for years, and it isn't always just about money. The administrative and regulatory burdens are often too costly and frustrating to deal with, particularly for primary care physicians in smaller practices. I argued last week that Congressional intervention was a blessing in disguise, because it was just enough to keep the sinking Medicare ship afloat without plugging the holes.

Moving away from Medicare is still in the back of many physicians' minds. But it is easier said than done.

In fact, completely opting out isn't as good of an idea as it might seem, says healthcare lawyer Randi Kopf, RN, MS, JD. Physicians who officially opt out must file a formal affidavit and can't participate for a two-year period. During the opt-out period, neither the physicians nor their patients may submit any claims for payment to any Medicare carrier. If the patient forgets and submits a claim, it could raise a red flag and trigger an audit.

"A lot of practitioners think they can easily opt out," Kopf says. "If they don't do it properly, they're going to be violating regulations. There are too many hazards."

However, physicians can choose nonparticipation, which is similar to essentially becoming an out-of-network provider. Six months before they want to go non-par, physicians must notify CMS in writing that they don't wish to participate in Medicare, and they must also provide adequate written notice to their Medicare-eligible patients.

Non-par physicians still receive limited reimbursement—they cannot charge patients more than the Medicare limiting amount. They also still must file Medicare claims for patients, and the carrier is supposed to send reimbursement directly to the patient. But claims can be filed electronically, and nonparticipation eliminates some of the operational burden.

"[Physicians'] finances may not change actually, but their practice style so radically changes that they can spend more time with the patient," says Kopf.

Choosing nonparticipation is still a difficult decision. Consider these four questions before moving forward:

Are you considering dropping all insurance? If your practice will be accepting other insurance, dropping Medicare shouldn't be an option, Kopf says. If you already have a staffer to handle those claims, then you won't see significant cost savings by selectively dropping Medicare.

Does the compensation you receive for participating allow you to practice medicine comfortably? For most, the answer to this is a resounding "no." It's an important question to consider, because you probably won't see a reimbursement spike after going non-par. However, if you would like to spend more time with patients and end the assembly-line practice of medicine, it may be worth pursuing.

What percentage of your practice has Medicare as their primary insurer? The greater your reliance on Medicare patients, the riskier it is to go non-par. For physicians seeing only a handful of Medicare patients, Kopf recommends nonparticipation or seeing the Medicare eligibles for free. "Some physicians, those who are not proceduralists, are basically seeing them for free anyway. As a non-par, you have the same medical liability, but you don't have all the paperwork headaches."

How many staffers do you having managing and filing insurance claims? This is the key financial question, because any bottom-line improvement will come from eliminating the need for a highly trained staffer to handle billing.

For some physicians, such as surgeons or proceduralists, nonparticipation may be a bad move because it's hard for patients to pay out-of-pocket. Even for primary care doctors, it's a decision that "takes a little courage," Kopf says. Physicians may find themselves a lot braver, however, if Congress hasn't fixed the system when the next cuts roll around in 2010.