Medicare Participation: Options for Massachusetts Physicians for 2010

March 3, 2010

Congress has postponed the pending 21 percent cut in Medicare physician payment rates through March 31, 2010.

In recognition of the ongoing uncertainty about 2010 payment levels, the Centers for Medicare and Medicaid Services has extended the deadline for physicians to change their Medicare participation or non-participation status in 2010 to March 17, 2010.

CMS may or may not open another new par/non-par enrollment period at the end of any new short-term delay in the scheduled cuts. Therefore, those who wish to change their status from participating to non-participating or from non-participating to participating may not be able to do so after March 17.

Due to Massachusetts state law, the options available to Massachusetts physicians are somewhat different than for physicians in other states. Please read the material below carefully.

The MMS is not advising or recommending any of the options described in this document. The purpose of the document is to ensure that physician decisions about Medicare participation are made with complete information about the options available to Massachusetts physicians.

Physicians who are currently participating (PAR) and who want to remain PAR for 2010 do not need to do anything to maintain their current status. Likewise, physicians who are currently nonparticipating (non-PAR) and who want to remain non-PAR for 2010 do not need to do anything to maintain their current status. To switch from being PAR to non-PAR for the coming year, however, or from non-PAR to PAR, physicians will need to notify their Medicare carrier in writing before March 17, 2010.

Once made, the decision about participation will be binding throughout calendar year 2010 (unless the decision period is re-opened) except where the physician’s practice situation has changed significantly, such as relocation to a different geographic area or a different group practice. To become a private contractor, physicians must give 30 days’ notice before the first day of the quarter the contract takes effect.

Those considering a change in status should first determine that they are not bound by any contractual arrangements with hospitals, health plans or other entities that require them to be PAR physicians. In addition, Massachusetts has enacted a law that prohibits physicians from balance-billing their patients.

Physicians practicing in Massachusetts have two options: 1) participating physician, 2) non-participating physician.

Participating physician

A physician must sign a participation agreement to become a participating physician for Medicare. A participating physician agrees to accept payment from Medicare based on a fee schedule that lists all covered services, as well as the approved charge that Medicare will pay for a particular service. This Medicare physician fee schedule is normally updated and published annually in the Federal Register in early November. A participating physician agrees that payment for Medicare services based on the fee schedule represents the approved and full charge. This means a physician cannot collect or balance bill an amount in excess of the approved charge listed on the fee schedule for services furnished to Medicare patients.

A participating physician also agrees to accept assignment on all Medicare claims. This means that Medicare will pay 80% of the approved fee schedule amount directly to the physician. The physician is responsible for collecting the remaining 20% of the Medicare approved charge from the patient.

The advantages of being a participating physician are threefold: (1) physicians are reimbursed at 100% of the Medicare fee schedule amount for covered services furnished to patients, (2) physicians also receive 80% of payment due directly from Medicare, which makes the claim process easier and more certain, and (3) participating physicians are listed in a "Medicare Participating Physician/Supplier Directory". This directory is made available to individuals who contact Medicare requesting the name of participating doctors as well as various senior citizen groups.

Non-participating physician

A physician who does not participate in Medicare still faces limits with respect to the amount he or she can collect from Medicare for covered services furnished to patients. Medicare pays non-participating Massachusetts physicians who accept assignment up to 95% of the Medicare fee schedule. Non-participating physicians can charge their patients for only the remaining 5% of the Medicare fee schedule.

If a non-participating physician does not accept assignment, Medicare pays the patient for the claimed benefit, not the physician. Thus it is up to the physician to collect the entire payment for covered services directly from the patient. Under current Massachusetts law the maximum allowable charge for a service is equal to the Medicare fee schedule.

Non-participating physicians must also collect the entire reimbursement from the patient, thus assuming a higher level of risk and effort to collect fees. Furthermore, a non-participating physician's patient volume may be lower because most patients prefer to see participating physicians.  It is easier and less costly for patients to see participating physicians.

Sample Medicare Private Contract "Opt Out" Affadavit. (.pdf, 2 pages)