Opt-out providers, privately contracting: Physicians and practitioners who choose to enter into private contracts with their Medicare patients “opt-out” of the Medicare program entirely.
These opt-out providers may charge Medicare patients any fee they choose.
They may register with Medicare as (1) a participating provider, (2) a non-participating provider, or (3) an opt-out provider who privately contracts with each of his or her Medicare patients for payment (Figure 1).
This issue brief describes these three options and then examines three current provisions in Medicare that provide financial protections for Medicare beneficiaries.
These provider options have direct implications on the charges and out-of-pocket liabilities that beneficiaries face when they receive physician services (Figure 2).
They also play a major role in several financial protections in current law—namely, the physician participation program, limitations on balance billing, and conditions for private contracting—which help beneficiaries understand the financial implications of their provider choices and encourage providers to accept Medicare’s standard fees.Non-participating providers: Non-participating providers do not agree to accept assignment for all of their Medicare patients; instead they may choose—on a service-by-service basis—to charge Medicare patients higher fees, up to a certain limit.When doing so, their Medicare patients are liable for higher cost sharing to cover the higher charges.Non-participating providers must submit claims to Medicare on behalf of their Medicare patients, but Medicare reimburses the patient, rather than the nonparticipating provider, for its portion of the covered charges.A small share (4%) of providers who provide Medicare-covered services are non-participating providers.This issue brief describes these three protections, explains why they were enacted, and examines the implications of modifying them for beneficiaries, providers, and the Medicare program.Under current law, physicians and practitioners have three options for how they will charge their patients in traditional Medicare.Physicians and practitioners who agree to accept assignment on services that they provide to Medicare patients are “participating providers” and are listed in Medicare provider directories.Beneficiaries who select a participating provider are assured that, after meeting the deductible, their coinsurance liability will not exceed 20 percent of the charge for the services they receive (Figure 2).Surveys conducted by the Physician Payment Review Commission (PPRC), a congressional advisory body and predecessor of the Medicare Payment Advisory Commission (Med PAC), revealed that prior to the participating provider program, beneficiaries often did not know from one physician to the next whether they would face extra out-of-pocket charges due to balance billing and how much those amounts might be.The establishment of the participating provider program in Medicare instituted multiple incentives to encourage providers to accept assignment for all their patients and become participating providers.