Contracts required for Medicare opt-out

Contract Language. By Steven M. Harris, amednews contributor. Dec. 9, 2002.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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This column is the first of two articles with an overview of requirements imposed on doctors who elect to opt out of Medicare and will specifically focus on private contracts you sign with your Medicare-eligible patients.

What you should know first is that opting out of Medicare is an all-or-nothing deal. You're in or you're out. No in between.

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The opt-out statute, born in the Balanced Budget Act of 1997, enables physicians to enter into one or more private contracts with Medicare beneficiaries to furnish items or services that would otherwise be covered by Medicare. You would then bill the patient privately for the provision of such services.

Physicians who are considering opting out of Medicare must recognize that opt-out physicians are not allowed to participate in Medicare during a two-year "opt-out period" beginning on the effective date that the requisite affidavit is filed with the carrier. Except for emergency or urgent care services, Medicare or a Medicare+Choice plan cannot make any payment to a physician who has opted out of Medicare or to any entity to which the physician has reassigned his or her right to receive payment for services.

You should also keep in mind that a group practice is not allowed to opt out with respect to the entire practice; rather, opt-out status must be separately maintained for each opt-out physician. An alternative to opting out would be to limit your acceptance of Medicare patients.

Private contract requirements

The Medicare opt-out provisions impose significant administrative responsibilities on physicians and practitioners who wish to avoid Medicare limiting charge rules and bill patients privately for services.

A physician or practitioner who has opted out of Medicare must use a private contract for items and services that are or may be covered by Medicare, except for emergency or urgent care services. The private contract requirement ensures that beneficiaries and their legal representatives have made informed choices to waive rights to Medicare benefits and to enter into private contracts before they assume liability for payments without regard to Medicare charge limitations.

A physician who elects to opt out of Medicare also needs to enter into private contracts where Medicare payment would be on a capitated basis or where Medicare would pay an organization for the physician's services, except for Medicare beneficiaries needing emergency or urgent care.

Pursuant to federal regulations, the private contract must:

Be in writing and in print sufficiently large to ensure that the beneficiary is able to read the contract.
Clearly state whether the physician is excluded from Medicare.
State that the beneficiary or his or her legal representative accepts full responsibility for payment of the physician's charge for all services furnished by the physician.
State that the beneficiary or his or her legal representative understands that Medicare limits do not apply to what the physician or practitioner may charge.
State that the beneficiary or his or her legal representative agrees not to submit a claim to Medicare or to ask the physician to submit a claim to Medicare.
State that the beneficiary or his or her legal representative understands that Medicare payment will not be made for any items or services furnished by the physician or practitioner that would have otherwise been covered by Medicare if there was no private contract and a proper Medicare claim had been submitted.
State that the beneficiary or his or her legal representative enters into the contract with the knowledge that he or she has the right to obtain Medicare-covered items and services from physicians who have not opted out of Medicare, and that the beneficiary is not compelled to enter into private contracts that apply to other Medicare-covered services furnished by other physicians who have not opted out.
State the expected or known effective date and expected or known expiration date of the opt-out period.
State that the beneficiary or his or her legal representative understands that medigap plans do not, and that other supplemental plans may elect not to, make payments for items and services not paid for by Medicare.
Be signed by the beneficiary or his or her legal representative and by the physician.
Not be entered into by the beneficiary or by the beneficiary's legal representative during a time when the beneficiary requires emergency or urgent care services.
Be provided (a photocopy is permissible) to the beneficiary or to his or her legal representative before items are furnished to the beneficiary under the terms of the contract.
Be retained (original signatures of both parties required) by the doctor for the duration of the opt-out period.
Be available to CMS on request.
Be entered into for each opt-out period.

If a physician fails to properly opt out of Medicare, then the private contracts the physician executed are null and void. Also, both the private contracts and the physician's opt-out are null and void for the remainder of the opt-out period if the physician fails to remain in compliance with the conditions of the opt-out statute or rules.

Part II of this column, appearing next month, will discuss the opt-out affidavit requirements and additional considerations.

Harris, a partner at McDonald Hopkins in Chicago, concentrates on health care law and has counseled physicians, physician networks and health care groups nationally. The author and publisher are not rendering professional advice and assume no liability in connection with its use. He can be reached at 312-280-0111, or by email (sharris@mcdonaldhopkins.com).