Private Contracts Between Doctors and Medicare Patients: Key Questions and Implications of Proposed Policy Changes
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. Providers are prohibited from balance billing Medicare beneficiaries who have full Medicaid coverage or those who receive Medicaid coverage through the Qualified Medicare Beneficiary program.
Private contracting was authorized in the Balanced Budget Act of 1997 (BBA) under limited circumstances as a way for physicians and practitioners to “opt out” of Medicare and charge their Medicare patients fees that are not limited by Medicare’s set amounts and balance billing rules.
Annual membership fees may only apply to non-Medicare-covered services, though some controversy exists about concierge practices applying annual fees paid by Medicare beneficiaries to enhanced appointment access and extra time with patients. Pasquale, F. “The Three Faces of Retainer Care: Crafting a Tailored Regulatory Response,” Yale Journal of Health Policy, Law, and Ethics Vol.7: Iss. 1, Article 2. 2007.
Approximate fees are drawn from 2014 claims analysis presented in Table 1 of: America’s Health Insurance Plans, “Charges Billed by Out-of-Network Providers: Implications for Affordability” (September 2015). https://www.ahip.org/wp-content/uploads/2015/09/OON_Report_11.3.16.pdf.
Specifically, providers are prohibited from entering into private contracts with Medicare beneficiaries who have full Medicaid coverage (dual eligible) or those who receive Medicaid coverage through the Qualified Medicare Beneficiary (QMB) program.
Once a physician or practitioner opts out of Medicare, this status lasts for a two-year period and is automatically renewed unless the physician or practitioner actively cancels it. Automatic renewal provisions were included in 2015 legislation, The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Pub.L. 114-10, 114th Congress (2015-2016).
Other supplemental insurance, such as employer-sponsored health plans, have the discretion to determine whether or not they will cover services provided under contract with Medicare beneficiaries, so it is not clear how proposed changes to private contracting would affect retiree coverage for these services.
Currently, private contracting is prohibited between physicians and Medicare beneficiaries who receive low-income assistance through Medicaid—either from full Medicaid coverage or partial Medicaid coverage through the Qualified Medicare Beneficiary (QMB) program.
Pollitz, K., “Surprise Medical Bills,” Kaiser Family Foundation, March, 2016. https://www.kff.org/private-insurance/issue-brief/surprise-medical-bills/; Hoadley, J. and S. Ahn, and K. Lucia, “Balance Billing: How Are States Protecting Consumers from Unexpected Charges? How seven states (California, Colorado, Florida, Maryland, New Mexico, New York, and Texas) have approached protecting consumers from certain types of balance billing,” Georgetown University Health Policy Institute, June 2015. http://www.rwjf.org/en/library/research/2015/06/balance-billing--how-are-states-protecting-consumers-from-unexpe.html.
See letter to the Honorable Tom Price from the American Medical Association: https://searchlf.ama-assn.org/letter/documentDownload?uri=%2Funstructured%2Fbinary%2Fletter%2FLETTERS%2Fmedicare-patient-empowerment-act-28april2015.pdf.
In addition to letter cited above, see also: Rabin, Roni C., “When Doctors Stop Taking Insurance,” New York Times, October 1 2012.
Jacobson, G. et al, “Income and Assets of Medicare Beneficiaries, 2014 – 2030,” Kaiser Family Foundation, Sep 10, 2015. https://www.kff.org/medicare/issue-brief/income-and-assets-of-medicare-beneficiaries-2014-2030/.