How To Opt-Out of Medicare and Avoid "Wicked" Compliance Pitfalls
Today's post was authored by FHWN attorney Gary A. Kravitz
Stark regulations, Anti-Kickback safe-harbors, and RAC audits, oh my! There are enough Medicare regulations and mandatory paperwork to make you wish you were somewhere over the rainbow. The relatively recent addition of the Recovery Audit Contractor (RAC) program has exacerbated an already difficult situation. The RAC program uses audit contractors to collect improper Medicare payments, and RACs have considerable authority to review and approve claims and require disclosure of documents. A RAC audit can be time consuming and very disruptive to a practice. Furthermore, health care providers who happen to make billing errors (whether intentional or not) may be subject to considerable fines and penalties under federal and state False Claims Acts.
However, there is a way to avoid the regulations, liabilities and the endless filing requirements associated with Medicare participation, and it does not require repeating “there’s no place like home”. The trick is to opt out of Medicare and only take on private-paying clients.
Opting out of Medicare is tantamount to starting a new practice with a new client base, and requires sound planning and forethought. Assuming a practitioner already participates in Medicare, the opt-out process is relatively simple, but the devil is in the details.
After the jump - a step-by-step guide to opting out and planning for the future
First, practitioners must notify their patients that they intend to opt out of Medicare. This notification should not be a one-line, perfunctory missive. Practitioners who want to increase their odds of retaining some patients (and not leaving the rest bitter) should compose a thoughtful letter explaining the reasons opting out, how the practitioner plans to operate going forward, and provide available options for patients. This letter must be sent far enough in advance to give patients time to weigh their options.
Second, practitioners must give notice (by sending an affidavit) to each carrier to whom the practitioner submits claims advising them of the termination. The Center for Medicare and Medicaid Services allows termination on the following quarterly basis: January 1, April 1, July 1, and October 1. Practitioners must give their carriers a 30-day prior written notice with the effective date being the first day of the following quarter. As with the private contract mentioned below, the affidavit is only valid for two years and must be resubmitted. There are several critical boilerplate statements that must also be included in the affidavit, which can be found in Section 40.9 of Chapter 15 of the Medicare Benefit Policy Manual.
Third, practitioners must enter into a private contract with all patients to whom the practitioner will provide services, and whose services would otherwise be covered by Medicare. Among other things, the contract must state that the signing patient agrees not to submit any claims to Medicare for services provided by the opting-out physician. The contract is valid for only two years and must be renewed at that time. As with the affidavit, the contract must contain certain critical statements (also listed in the Medicare Benefit Policy Manual).
Fourth, practitioners should install safeguards and procedures to ensure that their practice does not file a Medicare claim and that affidavits and private contracts are updated every two years.
It is important to note that not all medical care providers may opt out of Medicare. The Medicare Policy Manual specifically identifies those types of providers who can opt-out, and those that are prohibited from doing so – for example, chiropractors.
While these steps are relatively formulaic, it is the planning that one must do beforehand that will make all the difference. Importantly, a practitioner must first consider the economic impact that opting-out may have on their practice and determine whether there are enough existing private-pay patients to continue. For example, will any current Medicare patients agree to switch over to private-pay? If a practitioner’s existing client base will not be sufficient, he or she must consider how to generate additional private-pay clients if an existing client base will not be sufficient.
It is important not to overlook the direct financial impact of this change, as practitioners will likely see a decrease in patients and, as a result, income. Practitioners should implement any necessary cost cutting measures to deal with this (hopefully temporary) change, both for their business and family.
Practitioners should also consider their practice as a whole and how they envision the practice growing. It might not be practical to continue a specific type of practice without Medicare clients, and health care providers may be faced with the prospect of changing the nature of their business, business plan and marketing strategy. Part of this analysis includes the location of the practice – for instance, a practitioner may work in an area where the majority of potential patients would be Medicare dependent, and may be forced to move his or her practice as part of this significant change.
Health care providers also must review existing contracts to ensure they are not obligated to stay with Medicare, and carefully review any agreements with hospitals, management companies, ancillary service providers, etc. to check for any binding language.
Finally, practitioners should consider the public relations impact of a decision to opt-out. Will the decision upset existing patients, and in turn lead them to spread negative comments about a practice or the individual provider? When notifying patients, practitioners should provide them with options (such as a list of recommended doctors who will accept Medicare) and a detailed explanation of why they are opting out. Advance notice and good public relations are key when making the switch.
Overall, as part of opting out of Medicare, it is best to create a new business and marketing plan. Just like any other business, practitioners must carefully consider their goals and objectives and how they envision reaching them. By opting out of Medicare, health care providers are affirmatively making the choice to seek out a specific type of patient and create a more targeted practice.
Clicking your heels together and wishing will not get you there, but planning and careful marketing will get you on the yellow brick road to future success.
