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Changing your Medicare status? Here are some issues to consider

From the December ACP-ASIM Observer, copyright 2002 by the American College of Physicians-American Society of Internal Medicine.

If declining Medicare reimbursements have you thinking about dropping out of the program or becoming a private contractor, you need to act soon. While the deadline to change your status was originally Dec. 31, it has been pushed back to Jan. 31.

Each category of Medicare participation has benefits and drawbacks. Here is an overview of the categories and a look at the issues to consider if you're thinking of changing your status with the program:

  • Participating provider. Medicare pays 80% of all allowable charges; patients pay the remaining 20%. By agreeing to serve as a participating provider, you receive perks such as faster claims processing, access to a toll-free line for questions about claims, and a listing in provider directories that Medicare sends to beneficiaries.

  • Nonparticipating provider. On average, nonparticipating physicians receive 9.25% more for Medicare services than participating physicians. Because of complex Medicare rules, however, beneficiaries—not Medicare—pick up most of the extra fees that nonparticipating physicians receive.

    Besides paying more for their care, beneficiaries who see nonparticipating physicians must also pay physicians for all services at the time of the visit. The nonparticipating physician then submits the claims to Medicare, and Medicare pays its share directly to the patient.

    It's important to note that because of this complex system, nonparticipating providers may experience increased billing expenses, as well as more write-offs and bad debt. These expenses can offset the higher revenue that nonparticipating physicians receive.

    In certain cases, nonparticipating providers can still "accept assignment" and agree to be paid directly by Medicare, not the patient. If nonparticipating physicians want to help low-income beneficiaries reduce their portion of expenses for an office visit, for example, they can submit an assigned claim directly to Medicare.

  • Private contractor. If you're a private contractor under Medicare, you have opted out of the program and your fees aren't governed by allowable charges. Private contractor physicians must forgo all Medicare reimbursements for a two-year period, and their elderly patients must give up all reimbursement from Medicare, Medigap or any other supplemental insurance.

    Participating physicians must file an affidavit at least 30 days before the beginning of a calendar quarter to opt out. Nonparticipating physicians can opt out at anytime during the year, but they must still file an affidavit.

For a more detailed explanation of how switching your Medicare provider status would affect you and your patients, go online.

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