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More physicians are opting out of Medicare
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Faced with the specter of significant reimbursement cuts and frustrated by complex and costly administrative demands, more physicians are choosing to opt out of Medicare.
An opted-out physician differs from participating and non-participating Medicare providers. A participating provider agrees to accept assignment on all Medicare claims. CMS reimburses the physician directly for 80% of the cost; the remaining 20% is paid by the patient or the patient’s supplemental insurance.
A non-participating provider is paid 5% less than a participating provider; however, he or she is able to charge the patient up to 115% of Medicare’s limiting charge. The provider bills the patient, and the patient gets the money from the government.
An opted-out provider is not a part of the program and cannot submit Medicare claims. Instead, the physician follows a fee-for-service, private contract model of practice. The physician bills the patient directly for services rendered and, under the current law, the patient cannot submit bills to Medicare.
Paul Gorman, MD, opted out of Medicare
participation 8 years ago and cited the
administrative/regulatory burden as one
reason for leaving.
Image: Trinity Hand Specialists, PLLC
The opt-out movement is small, but growing. According to CMS data, the number of opted-out physicians has nearly tripled since 2009. In 2009, 3,700 physicians walked away from the program; by 2012, that number increased to 9,539 doctors.
Data from the American Academy of Family Physicians 2012 Practice Profile Survey demonstrated similar changes in Medicare participation status. In 2010, 90% of family physicians participated vs. 87% in 2012. Among this same group, 7% were non-participating providers in 2010 compared with 9.9% in 2012.
To explore this trend and how surgeons have made this decision, Orthopedics Today spoke with physicians who have opted out of Medicare and those who remain committed to participating in the program.
Varied reasons for leaving
“Under the umbrella of a larger orthopedic group, you are somewhat insulated from personally having to keep up with all of the rules and regulations of CMS,” Gorman told Orthopedics Today. “I knew as a solo practitioner that was going to be inordinately burdensome.”
Fear of government prosecution forced one orthopedic surgeon from Medicare.
“The key issue that forced me to opt out of Medicare was the malicious prosecution of physicians by the government,” said
As part of the recovery audit program, auditors from CMS review charts to assess how well physicians adhere to nearly 11,000 regulations that cover medical practices.
“Each mistake was considered fraud and abuse, and was subject to a “$10,000 or $11,000 fine,” Harris said. “If they walked into your office, you could go bankrupt, and not from errors of commission.”
Harris continued: “Fear of the prosecution was the biggest issue because there was no way I was going to be able to keep track of the regulations as they came and they changed.”
Government interference in health care is also an issue. “The interference … is probably the top item for a lot of physicians who have opted out,”
“I think most physicians are basically tired of having government bureaucrats, many of whom only have a high school education, telling them what is medically necessary and what is not medically necessary,” Huntoon said.
Gorman said interference affected patient care in his practice.
“In hand surgery, there were things that Medicare would not pay for that particularly affected my ability to get the right kind of therapy for some of my patients after injury or reconstructive surgery,” Gorman said. “CMS and most other third-party payers are sort of that invisible camel in the room between you and your patient, dictating more than you realize about how treatment is going to be rendered [and] what tests are going to be ordered.”
The threat of fluctuating reimbursements has driven away other physicians.
“Physicians do not get ‘reimbursed’ for their work, they get ‘paid.’ Reimbursement is when you lay out funds and somebody pays you back for the money that you have advanced. When a professional provides a service, fair payment is expected,” Harris said, explaining the difference between reimbursement and payment.
“The payment structure has always been a great problem in Medicare, due to the sustainable growth rate (SGR) formula,” Huntoon said. “Although there are proposals to get rid of the SGR, it is likely that whatever comes after it will be equally bad, if not worse.”
The next reimbursement cut demanded by the SGR — a 24.7% decrease — is scheduled to take effect in 2014, unless a Congressional intercession delays it. Still, some physicians leave the program for personal reasons.
“As more of an ideological or conscientious objection, I do not believe that government has any constitutional authority to be overseeing, much less managing or taking over, health care,” Gorman continued.
Preparing to opt out
Before beginning the opt-out process, an orthopedic surgeon should assess the cost of doing business, something many physicians do not know, according to Gorman.
The most effective way of conducting this assessment is with a relative value unit (RVU) cost analysis, said
As he considered his opt-out decision,
Gorman’s RVU analysis showed that the break-even point for his hand surgery practice was 125% of Medicare.
Physicians mulling an opt-out must consider their practice mix — how many of their patients have private insurance vs. Medicare vs. Medicaid. “They have to have some idea of what this will mean to their referral sources,” said Pohlgeers, who also helps physicians opt out through his company, Sunesis Medical.
Expect a drop in volume
Practices must be prepared for a change in patient volume after opting out — many patients will choose to seek care with a Medicare-enrolled physician.
“The surgeon must realize that long-standing relationships with patients may be lost and could potentially lead to disruption in continuity of care,” Plancher said. “This is why it is essential, during a surgeon’s decision-making process, to consider the needs of your current patient caseload to provide reasonable and customary charges for patients when paying out of pocket for health care services.”
That small decrease in patient volume should only last a few months, according to Gorman. “It is quickly replaced by self-pay patients, cash-paying patients, private contract Medicare patients and/or patients who have other third-party payers,” he said.
It is important to develop a fair price list. “Patients will want to know the cost of continuing care with the surgeon who does not participate in Medicare,” Plancher said. “Developing a fair price list is an essential tool in communicating cost for services to the patient.”
When developing a price list, the surgeon must consider patient demographics and possible financial constraints. In some cases, this might mean providing free care to longtime patients who simply cannot afford to pay out of pocket, Plancher said.
Opt-out process
Once the preparatory work is complete, the physician is now ready to begin the opt-out process. The first step is to notify patients as soon as possible.
“Physicians need to send a letter to current patients informing them of the effective Medicare opt-out date; essentially, when the physician will be out of network with Medicare,” Pohlgeers said. In addition, he suggests physicians hold a town hall meeting, where concerned patients can ask questions.
“The important thing is to communicate to patients that the physician is not denying them care,” Pohlgeers said. “The physician is not refusing to see them; the physician is refusing to participate with their insurance.”
Second, the physician must file an affidavit with all Medicare contractors to which it currently sends claims. For Medicare participating physicians, CMS only accepts these affidavits at the beginning of each quarter: January, April, July or October. The affidavit must reach CMS at least 30 days before the start of the quarter. Physicians who are non-participating in Medicare can file opt out affidavits anytime during the year.
Third, according to government regulation, the physician must sign private contracts with all Medicare-eligible patients. There is a 90-day grace period, which applies to the first opt out period only, if a physician or practice decides that opt out status will not work for their practice. The Association of American Physicians and Surgeons has sample affidavits and contracts on its website.
Fourth, the physician must establish procedures to prevent an accidental Medicare filing. This is especially important in practices where there is a mix of participating and opted-out physicians.
Physicians should also mark the calendar to re-file the affidavit in 2 years. For first-timers, there is a grace period.
“During that grace period, you can revoke [the affidavit] and go back to whatever status you had in the Medicare program,” Huntoon said.
Finally, for the opt-out to be successful, it is critical to educate patients, referring physicians and staff.
“It takes a good deal of continued marketing and information delivery to your referring physicians and patients,” Gorman said.
Benefits
Among the benefits of opting out is a reduction in administrative costs.
“You are jettisoning so much administrative [work] and the cost associated with that administrative burden that the Medicare program imposes that you are saving a lot of money in terms of being able to run the practice more effectively and efficiently,” Huntoon said. “You get rid of a huge cost associated with the administrative costs of Medicare — filing claims, re-filing claims, hearings to appeal things.”
Leaving Medicare improved the delivery of care for Harris. “Now, I am less busy, spend more time with my patients and my income has gone up,” he said.
Plancher said, “We were not financially impacted by the decision to opt out.”
Harris revels in the greater freedom. “When I choose to, I can provide discounted surgery or charity work,” he said, something that was not possible when he was enrolled in the Medicare program.
Not the only solution
Because of alternate cost-saving programs on the horizon, not everyone believes that opting out is the best solution.
“I have not [chosen to]opt out because I do not know what the Medicare reimbursement mechanism is going to be for Medicare patients in the future,”
Jack M. Bert
With the increase of bundled payments and accountable care organizations (ACOs), opting out may become a moot point.
“If someone opts out of ACOs or bundled payments that are coming, basically, you are taking yourself out of a huge network of patients who require care,” Bert told Orthopedics Today.
Some commercial payers have engaged in bundled payments with a few medical groups throughout the United States and have reduced costs, Bert said.
With a bundled payment, the entire episode of care, from the day the patient enters the physician’s office with their bad knee until 90 days after surgery, is tied together under one fee, Bert said.
Part of a bigger issue
Although in some cases opting out makes good sense, the action does not address the underlying problem, according to
David Lewallen
“In some markets and in some practices, there may be a compelling business case for [opting out] as they try to respond to the pressures of running a small business,” Lewallen told Orthopedics Today. “Individuals in private practice are running a business like a corner grocery store. They have to make their budget or they get to fire friends of theirs who work for them.”
However, the larger issue is how to determine reasonable and appropriate reimbursement for procedures, and more importantly, what to do when those reimbursements have gotten out of alignment.
“There are some things that are paid a lot of money that may not always be that effective for patients but for historical reasons, going back decades in some cases, they are pegged at a certain reimbursement level,” Lewallen said.
Other highly effective procedures, such as total hip and total knee replacement, have been the target of intense cost control. The solution lies within national, registry-based data, similar to what they have in Sweden and Australia, Lewallen said.
“We have to do a better job of tracking the outcomes of patients, documenting the effectiveness of operative procedures in medicine that work at changing lives, and then provide appropriate reimbursement and resources to maintain access for patients who need those services,” he said. “Likewise, when we develop the same data about other things and find it is a bad value — it is not a good expenditure for the benefit gained — we need to not continue to support those procedures at the same level.”
Going forward, physicians will not only have Medicare to consider, but also the full implementation of the Affordable Care Act.
“There is much to think about as we go forth,” Gorman said. “Nobody knows if Obamacare will be [fully] funded or implemented. Unless something happens fairly quickly, it at least would be unwound slowly. I am hopeful that like in Europe, there will be allowed a whole free-market tier of access to and delivery of health care, where people will decide to just opt out of any government payer and go see those physicians who have done likewise.”
“There are noble reasons for going into and staying in medicine, but at the end of the day, it is a commodity and people should be able to choose if they want it or not,” Gorman said. “Patients and physicians should be able to freely engage each other. Health care is not a right by any means. It is a privilege and a responsibility.” – by Colleen Owens
References:
For more information:
Paul Gorman, MD, can be reached at Trinity Hand Specialists, 2335 Knob Creek Rd., Suite 100, Johnson City, TN 37604; email: pwg@trinityhand.com.
Adam I. Harris, MD, can be reached at San Antonio Orthopaedic Specialists, 7950 Floyd Curl Dr., Suite 709, San Antonio, TX 78229; email: aiharris@saorthospecialists.com.
Lawrence R. Huntoon, MD, PhD, can be reached at Private Neurology, Chapel Park Villa, Suite 6, 7008 Erie Rd., Derby, NY 14047; email: editor@jpands.org.
David G. Lewallen, MD, can be reached at the department of orthopedic surgery, Mayo Clinic, 200 1st St. SW # W4, Rochester, MN 59905; email: lewallen.david@mayo.edu.
Kevin D. Plancher, MD, can be reached at Plancher Orthopaedics and Sports Medicine, 1160 Park Ave., New York, NY 10128; email: kplancher@plancherortho.com.
Dan Pohlgeers, MBA,OTR, CHT, can be reached at Trinity Hand Specialists, 2335 Knob Creek Rd., Suite 100, Johnson City, TN 37604; email: djp@trinityhand.com or www.sunesismedical.com; email: djp@sunesismedical.com.
Disclosures: Bert is an Orthopedics Today Editorial Board member; Gorman has no relevant financial disclosures; Harris is a member of the board of American Association of Physicians and Surgeons, editor of the Rush Alumni Magazine, and on the speaker’s bureau for Baxter; Huntoon has no relevant financial disclosures; Lewallen is medical director of the American Joint Replacement Registry; and Pohlgeers is employed by Paul Gorman, MD, at Trinity Hand Specialists. Pohlgeers owns a small consulting business, Sunesis Medical, in which he assists physicians and groups with practice administration. Medicare opt-out assistance and RVU analysis is part of the business model. Orthopedics Today was unable to determine whether Plancher has relevant financial disclosures.
Is opting out the best current option for addressing the problem of equitable Medicare reimbursement?
Although not ideal, it is a method for dealing with the crisis
I am in a large group of 29 orthopedists in Atlanta. About 3 years ago, we started looking into opting out. Part of our concern was Medicare payments were going down. However, the main issue was that through its Recovery Audit Contractor (RAC) program, the CMS was targeting physicians who made any kind of coding mistake and then charging penalties.
I was president of the group at the time. We were looking at all these issues with RACs, and my fiduciary responsibility to the group was to limit our liability as much as possible. We hired a full-time equivalent (FTE) person — a coding specialist — to come in and screen all Medicare charges before they went out. This is a mid-level administrator with full benefits.
Xavier Duralde
We had an insurance program, Medicare, which did not cover the costs for delivering care. In addition, we now had to hire a FTE in order to send out the bills properly.
The RACs were what we considered the “line in the sand.” We started to investigate if it was worth it to go off Medicare.
In our group, six people out of 29 opted out of the program. We did it partially as an experiment to see if it was feasible, and partially just because the whole concept of being penalized for taking care of a patient group on whom we were already losing money was offensive.
Opting out of Medicare is not ideal, for a lot of different reasons. One is that there is this entire population of patients we want to take care of, but cannot. I went from a point where 25% of my practice was Medicare to where I am now. I still see a fair number of Medicare patients who sign a contract and come to me for care because I have an established practice and they want me to take care of them. I charge them significantly reduced rates compared to our commercial contracts, but the number of Medicare patients that I see is not as large as it could be or should be.
We have faced some challenges with opting out. If a doctor is still taking call and not taking Medicare, he does a lot of free work on his on-call night. Despite what CMS says, they will not reimburse you for emergency care, such as a hip fracture. You do a lot of work basically for free, which is sort of like cutting off our own nose.
One of our congressmen told us that until health care access becomes an issue, nothing will change. The only way to affect a change in Medicare is to have angry patients call their congressmen and senators and say, “You have to change something.” Until that happens, they are not going to do anything.
The primary benefit of opting out is that it creates an access problem, and the access problem may lead some seniors to call their congressmen and complain that they are having trouble getting access to appropriate medical care. Unfortunately, it puts the patient in the middle, which is troubling to me.
I am happy that I am not doing Medicare any more for the fact that it was costing me to take care of those patients. However, I hate the fact that it is an issue. I love to take care of the patients themselves and doing those kinds of cases. I do a fair amount of shoulder arthroplasty and rotator cuff repairs commonly needed in that population.
Xavier Duralde, MD, is a shoulder surgeon at Peachtree Orthopaedic Clinic in College Park, Ga.
Disclosure: Duralde is a consultant for Zimmer.
Opting out is the wrong choice
At first glance it may seem to be the easy business choice to walk away from Medicare, with its decreasing reimbursements, increasing regulations and the ever-present risk of double-digit percentage cuts to payments. But, despite that sunny outlook, I think that walking away from Medicare patients is the absolute wrong choice to make as physicians. Our profession cannot turn its back on a group of people who have done nothing wrong, other than turn 65 years. I am not naïve to the problems with Medicare, and most notably the sustainable growth rate (SGR), so instead, I would suggest that physicians get involved and help solve the problem, not walk away from the issue.
John M. Froelich
We currently are at a historic health care policy crossroads where repealing the SGR is obtainable and the current mark-up in H. R. 2810, the Medicare Patient Access and Quality Improvement Act of 2013, stands a good chance of being part of a fall budget deal. It features a 0.5% increase in payments through 2019 as well as helps to develop more stable payment models in the future. It would be the exact wrong message that we need to send to our patients and the wrong action we need to take as physician providers for those individuals who need us the most.
I believe that is our time to pressure the government and the Medicare structure by addressing the issue head-on through grassroots advocacy and political engagement. We need to reach out to our elected officials to position ourselves in a way that allows us to continue to provide the highest level of care for our Medicare patients. At the end of the day, I cannot argue against spreadsheet medicine, but those patients in your office are not a number on a spreadsheet; but instead are someone’s mother, brother, grandfather or aunt. They are a person. It may be easier for you to walk away from the sandbox and take your toys, but this is not about just you. I believe we owe it to our patients, our profession, our colleagues and to ourselves as we look in the mirror to say that we have done anything and everything we can to protect those patients. So, instead, I challenge you to stay in the sandbox, get your hands dirty and help us fix the problem.
John M. Froelich, MD, is an assistant professor of hand surgery at the Department of Orthopedics at the University of Colorado in Aurora, Colo.
Disclosure: Froelich has no relevant financial disclosures. He sits on the board of the Colorado Orthopedic Society. The views expressed are those of Dr. Froelich and not of the University of Colorado or the Department of Orthopaedics.
Read more about opting out of Medicare in a commentary written by Anthony A. Romeo, MD.