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Opting out of Medicare is a personal and professional decision
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The question of opting out of Medicare immediately incites an emotional response for many. But there is more to the question and decision when a careful, non-emotional analysis is applied.
Medicare is one of the four major categories of payment for health care in the United States: private insurance, Medicare, Medicaid and personal payment from the patient. Most other professions, including dentistry, require personal payment for services and yet do not elicit the same emotional response. This is different for medicine because the perception is that if physicians opt out of Medicare, they are stating they will not take care of elderly patients. Some people may even remark that these physicians refuse to take care of their parents or grandparents.
Leverage factors
Politicians, hospital CEOs, academic leaders and professional society leaders have a tendency to leverage the idea that opting out of Medicare equals refusal to care for elderly patients. Some leaders raise ethical issues about the denial of care when discussing opting out of Medicare. They suggest orthopedic subspecialty care is a right for all and should not be restricted based on a patient’s economic status, without any consideration of the continued reduction in reimbursement, aggressive regulation and oversight to practicing physicians.
Anthony A. Romeo
They fail to disclose conflicts of interest, including balancing budgets, and that they are appeasing their constituents for politicians or ensuring good standing with government officials to keep reimbursement flowing. They also fail to disclose the incredibly valuable payments they receive for graduate medical education, as residents are profitable cheap labor for hospitals and teaching institutions. For example, in the major teaching hospitals in Chicago, special funding is provided through Medicare, with subsidies of $34.2 million for Northwestern Memorial, $44.1 million for University of Chicago and $46.3 million for Rush University Medical Center in 2011, which is the highest in the state. In fact, the Medicare funding for teaching hospitals nationwide is greater than $10 billion per year.
Opting out
Opting out of Medicare does not mean physicians will not take care of Medicare patients. In fact, they would readily take care of any Medicare patient, but have decided not to accept the economic proposition or the ever-increasing regulatory constraints set by the government as well as the additional risks that come with serving a governmentally insured population. Furthermore, with the increasingly draconian oversight of governmental programs primarily by paid bounty hunters, these burdens and the economic uncertainties related to providing services hang over the physician’s head for an unacceptably long time.
A physician can opt out of Medicare, and yet still care for a Medicare beneficiary. Instead of accepting the government-set fee, regulation and risk, the physician would negotiate a fee and arrangement directly with the Medicare beneficiary outside the Medicare program.
Medicare patients are currently covered for hospital expenses (Part A) at 65 years old. If they paid taxes while working, they receive this benefit for free; otherwise, they pay approximately $6,000 per year with a $1,184 deductible per benefit period in 2013. For Part B, which covers the fees for physicians who are members of the Medicare program, the annual charges are approximately $1,250 with a deductible of $147 per year, plus 20% of all charges with the fee schedule set by the government and the physicians are prohibited from balance billing.
After paying into the system for years and now having to pay more when their incomes are likely to be fixed at a lower amount than during their working days, patients expect to receive health care from their chosen physicians. This was the implicit guarantee of the government — pay taxes and pay into the Medicare program as you work, then you will get the needed health care as a senior citizen.
The implication is that all providers are equal — with equal skills, risks and benefits, and costs. The government will pay a reasonable cost so all physicians can operate the business of providing adequate health care without concerns of financial distress. But we know that not all providers are equal. Surgeons who have more experience and perform more of a certain type of procedure get better outcomes and are more cost-effective for the system. Because value is equal to the benefit divided by the cost, these surgeons are more valuable to the health care system. However, there is no mechanism to recognize and reward their efforts. Their Medicare reimbursement does not differ from that of less experienced or low-volume surgeons.
Distorted perceptions
In a recent study by Foran and colleagues, patients were asked what surgeons should get paid for elective hip and knee replacement surgery. The patients “guessed” that a surgeon should be paid an average of $14,358 for a total hip replacement (THR) and $13,332 for a total knee replacement (TKR). Those estimates or patient perceptions were 10 times greater that actual reimbursement, where the Medicare fee for a THR is $1,378, and $1,430 for a TKR. The same disparity is likely to be seen in spine and tumor procedures, as well as many other aspects of orthopedic surgical care.
As with any economic analysis, all factors that affect the bottom line need to be considered. It is clear that the politically “acceptable” idea of reducing Medicare payments to physicians, which represents 20% of the total national health care spending, is not going to solve the health care cost crisis. Furthermore, with continued increases in other expenses, such as malpractice insurance, the ability to establish and maintain a financially responsible practice is becoming exceedingly difficult based on the government-set fee schedules. If malpractice insurance is $50,000 per year, a joint replacement surgeon will need to perform 35 hip replacements before he covers this fixed overhead expense for insurance alone.
Not palatable for some
For many surgeons, the idea of opting out of Medicare is not palatable. In fact, more than 90% of physicians accept Medicare. An increasingly common practice, which is typically hidden from the public, is to severely limit the number of available opportunities to schedule a Medicare patient in a practice. In an American Medical Association (AMA) survey released in May 2010, it was found that 17% of more than 9,000 surveyed physicians restrict Medicare patients in their practices, including 31% of primary care physicians. For some, this allows them to address their financial concerns, as well as avoid any personal ethical dilemmas and potential backlash from their partners who may be concerned about increasing the number of Medicare patients in the practice.
More physicians of all specialties are completely opting out of Medicare. In one of the few states that track this information, the Texas Medical Association found that 78% of physicians took Medicare in 2000, which further decreased to 58% in 2012. The Health and Human Services Office of Inspector General apparently cannot define the problem nationally because Medicare and its contractors do not keep adequate data on physicians who opt out.
Is opting out for you?
If you consider the ever-increasing overhead costs of running a practice, the failure to pass meaningful tort reform, the inability to recognize value-driven care based on expertise and volume, the forced pay cuts, and the ever-increasing bureaucracy of providing care to a Medicare beneficiary and avoiding audits and possible treble damage penalties, you may want to see if you have the emotional and intellectual strength to write this letter:
Dear Mom and Dad,
I have decided to opt out of Medicare. This means I will not accept the government reimbursement for the care I provide to you, your peers and other senior citizens. This was a tough decision for me because I went into medicine to help people. But medicine is also a business. I need to be able to cover my costs while I am providing care, or I will not be able to continue helping people. I have a hard time understanding how the government seems to think that reducing my fees without any help for my overhead is going to solve the problems of the health care crisis, but that seems to be a popular idea among elected officials.
Fortunately, I will still be able to care for Medicare beneficiaries. They will be responsible for paying for my fees, which will be based on usual and customary charges, not the ones the government sets, which are 10 times less than what patients think we should receive. I will certainty take into consideration the ability of a patient to pay, and will make adjustments, including compassionate care for patients who cannot afford care. Despite this plan, some of my peers and the public may say some hurtful things about my decision. I hope in the end, this plan will allow me to practice medicine better and in a way I think is best for my patients.
Steps to take
If you can write this letter and it makes sense to opt out of Medicare from a patient-volume and practice financial position, then you need to take the following steps:
First, you should ask for help, either from your practice manager or a third-party consultant because the consequences of incorrectly opting out of Medicare can be devastating and lead to a full audit of your practice and your partners’ practices. Second, notify your patients, colleagues and other referral and administrative parties. You need to send a letter to your patients explaining what it means to opt out, including the fact that while you will no longer be accepting the government-based reimbursement, you will happily continue to provide care to Medicare beneficiaries but the terms of your services will now be directly negotiated with you. They are not allowed to take your bill and submit the charges to Medicare for reimbursement. They are solely responsible for your fees.
Then, you need to file an affidavit with Medicare. You are notifying them at least 30 days before the first day of the calendar quarter following your opt-out date, and within 10 days of entering into your first private contract with a Medicare patient. You need to privately contract with the Medicare patients who wish to continue their care with you. This contract confirms that the patient understands you are opting out of Medicare, and they will be responsible for the fees. You will need to initiate office procedures to ensure compliance with the opt-out rules, including the clear definition of payment arrangements when making appointments and scheduling patients for additional visits or procedures. Finally, you will need to be aware that renewing opt-out status is required every 2 years. Failure to renew your status means you have established private contracts with Medicare beneficiaries, which is inappropriate. In contrast, if you decide after 2 years that opting out of Medicare was not the best decision for you, then you can re-enroll in Medicare by completing a new physician enrollment form.
Personal and professional decision
Opting out of Medicare is both a personal and professional decision. The rules and regulations continue to increase, along with the penalties for even the slightest errors, while simultaneously lowering reimbursement. More orthopedic surgeons are now faced with the reality that privately contracting with patients provides an opportunity to continue to care for senior citizens without the incredibly complex challenges created by the Medicare system, which most politicians and health care leaders believe is “broke” and needs a complete overhaul to be “fixed” for future generations.
Reference:
Furan JR. J Arthroplasty. 2012;doi:10.1016/j.arth.2011.10.007.
www.ama-assn.org/resources/doc/washington/medicare-survey-results-0510.pdf
www.senate.state.tx.us/75r/Senate/commit/c802/handouts12/0426-TMA.pdf
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Disclosure: Romeo receives royalties, is on the speakers bureau and a consultant for Arthrex Inc.; does contracted research for Arthrex Inc. and DJO Surgical; receives institutional grants from AANA and MLB; and receives institutional research support from Arthrex Inc., Ossur, Smith & Nephew, ConMed Linvatec, Athletico and Miomed.