Behind the complex decision to opt out of Medicare

It seems both ironic and inevitable: I won’t be getting any more “meaningful use” checks.  It’s not that I didn’t qualify for the money; I saw plenty of patients on Medicare and met all of the requirements.  I was paid for my first year money without much hassle.  The problem I am facing is this: I am probably going to be “opting out” of Medicare, and once I do that I will cease to exist as far as HHS is concerned, and they are the ones who write the “meaningful use” checks.  No existence equals no money.

This is ironic because I have gotten famous for how well I’ve used electronic medical records, have written advice for physicians trying to qualify for “meaningful use,” and am esteemed enough to be often asked for my opinion on the subject (culminating in a presentation last year for CDC public health Grand Rounds).  I have spent much of the past 16 years disproving the myths that small practices couldn’t afford EMR, that EMR decreases profitability, or that they reduce quality of care.  We not only could afford EMR, we flourished, using it as a tool to increase both productivity and profitability.  Not to overstate the issue, but my practice (and others like it) paved the way for the existence of “meaningful use.”  I don’t know if that’s a good or a bad thing.

But, as fate would have it, I am leaving the practice in which I did all of this work and am starting a new practice with a different payment system.  Instead of charging for office visits or tests done in my office, I am charging a monthly “subscription” fee for access to my care and to the other resources I offer.  But there isn’t a Medicare code for a monthly subscription fee, and the rules of Medicare are such that, as far as I can tell, I cannot have the practice I intend to build and be listed as a Medicare provider.  This is the case even if I never charge Medicare for any of my services.

Regarding my status as a Medicare provider, there are three options:

  1. Accept Medicare as a “participating” provider. This means that I see Medicare patients and accept what they say I will be paid.  I bill CMS for my services, which are based on my “procedure codes.”  My main procedure is the office visit, but I can also bill for things like immunizations, lab tests, and office procedures.  The more procedures I bill for, the more I get paid, but I must justify this billing in my documentation or run the risk of being accused of fraud.
  2. Become a “non-participating” Medicare provider. In this scenario, I am paid by the patient for the encounter and then they are reimbursed for what they paid me.  The choice of what I bill happens the same way, and I still must set fees based on what CMS tells me (although I can bill a little bit more than I would if I was a participating provider).  Billing is, once again, based on the documentation of the visit.
  3. “Opt out” of Medicare altogether. Opting out means that I am no longer in the Medicare database as a provider and won’t get paid by them at all.  Patients are free to come to me, but they must pay what I charge, and I set my fees based on what I think is best.

So why does this matter if I am not planning to send any charges to Medicare?  Why do they care if I charge a monthly fee for my services if patients agree to do this outside of Medicare’s coverage?  By becoming a provider for Medicare (participating or not) I agree to accept their payment for my services.  The exception to this is for services that are not normally covered by Medicare, for which (with the proper waiver signed by my patients) I can charge what I want.  Cosmetic surgery is a good example (and one for which many Florida plastic surgeons are thankful) where the patient may opt to pay out of pocket for non-covered services.

Many of my services would actually fall under non-covered status, including electronic visits, my help with the PHR, annual care plan review, and the premium education content I will include on my website.  But since my Medicare patients will be able to receive care that is normally reimbursed (office visits, lab tests), the monthly subscription could be seen as accepting payment for these services outside of the agreed-upon Medicare rate.

As an “opted out” provider, I can see Medicare patients as long as they have signed a contract with me that meets Medicare’s requirements.  Since this will be the case with all of my patients, it should be no problem seeing Medicare patients in my office.  Unfortunately, opting out of Medicare has some pretty major downsides:

  1. I could only see Medicare patients who have signed a contract with my practice.  This means that I could not work in an ER or a prompt care to supplement my income (unless I figured out a way to see only non-medicare patients).  It takes away a pretty big financial “safety net.”
  2. I would be unable to get back to provider status for two years.  The mandatory opt-out period is for two years (so physicians don’t go on and off of Medicare frequently).  Again, this raises the stakes for me, as I can’t just go back to the old way if this practice doesn’t succeed.
  3. Many of my Medicare patients would think they couldn’t keep me as their doctor.

Giving up the $12,000 check for “meaningful use” is a minor consideration compared with these two things.

So why not stay in Medicare?  Let me count the ways:

  1. I have to bill for care.  Simplicity is one of the cornerstones of a direct-care practice, while complexity is synonymous with medical billing.  I don’t want to have people owing me money, I want them to pay at the start of the month for everything.
  2. Billing for Medicare would also mean I’d have to bill all other patients for the same services, as I am not allowed to charge others less than I do for Medicare beneficiaries.
  3. I’d have to get (and pay for) a billing system.
  4. I’d have to hire staff to do the billing and collect on it.
  5. I’d have to write my notes to meet the requirements for payment (as opposed to writing them for better patient care).
  6. I’d have to submit my bills using the proper procedure codes, paired with the proper diagnosis codes, submitted in the proper format, sent to the proper vendor.
  7. I’d have to deal with denied claims and the appeals process.
  8. Failure to do any of this (either by intent or mistake) would leave me open to fraud charges (even if my doing so was to my own financial detriment).

So, I am left with the choice: accept the consequences of opting out, or stay in the world of codes, complexity, and the ever looming threat of fraud accusation.  But this isn’t the real choice for me; the real choice is a much easier one: who do I want to work for, the patient or the payor?

I guess it’s only fair that I put my future in the hands of my patients, since they’ve been trusting their futures to me for the past 18 years.

Rob Lamberts is an internal medicine-pediatrics physician who blogs at More Musings (of a Distractible Kind).

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  • Rules4FreeRadicals

    It is a nightmare when top doctors like this are forced out of Medicare.

  • ninguem

    When I talk with physicians who have opted out of Medicare, the reason is more Medicare RULES than Medicare PAY.

  • Linda Walker

    GOOD FOR YOU!!!!! I’m a healthcare administrative consultant and I’ve taken physicians out of Medicare. YES sometimes it will hurt the wallet in the short run. Hopefully you don’t par with your state’s Medicaid as a physician can easily OWE money by participating with Medicaid. The govt NEVER asked doctors what their thoughts were on the ACA and NEVER bothered to ask them how it would affect their practices. IMAGINE if physicians were able to unionize? Physicians are in business too and good for you for taking the stand. :) :)

  • katellington

    My questions: Can you work with PCORI to develop the model? What will patients notice in their care by shifting to this payment system? Does the burden shift to patients?

    • Brian Stephens MD

      the government/society has already decided that healthcare is not to be a universal privilege (at least not yet) therefore politicians are scrambling to control the cost (since they cant just mandate it.)

      So, the BURDEN is already rapidly shifting back to the patient.
      Obamacare is trying to shift the burden to the providers which will only drive more physicians and good healthcare out of the government subsidized system. The care that is left will cont to become more mediocre and inefficient.

      The direct care model (as above) will shift cost back to the patient but people will be paying directly for superior product and therefore will demand better. Thus true free market healthcare.

      at this point, nothing short of a complete government take over of healthcare will stop the burden from being shifted back to the patient.

      you will have a choice.

      mediocre, inefficient government subsidized care


      Direct pay care that will work hard to earn your dollars.

      We are to poor to buy cheap things.

  • Brian Stephens MD

    Welcome to the future of medicine.
    as I stated below. Physicians and patients all now will have a choice.

    Mediocre, inefficient, frustrating government subsidized “cheap” (if that is even possible) care


    Direct care where your doctor works for YOU and has every incentive to give you the best care.

    For Dr Lambert,
    I ask a question. what happens when the government ties getting a medical license (or DEA) to accepting medicare?

    or even more insidiously, treats “opted out” physicians like an HMO where they will not pay for ANYTHING that an opted out physician has ordered? (i.e. MRI, CT, etc.)

    these are the 2 questions that have scared me the most and makes me drag my own feet to opt out.

    both those seem “unAmerican” but hey, these are strange times we live in….

  • Dave James

    Then there’s my choice. Retire several years earlier.

  • Dan Reedy

    Interesting post. It is too bad that lower income seniors are likely unable to afford these monthly membership fees, and thus will lose access to your medical expertise.

    I can certainly understand the frustration of constantly answering to payers rather than focusing on patient care. The interesting thing is that the model you are hoping to set up is really what CMS/the ACA is hoping to achieve: a shift from billing fee-for-service to a model based on population health and integrated care. I hope CMS is able to simply these models such that they would be practical options for physicians such as yourself (not requiring massive billing staff) and not just for major hospital systems.

    Also, an important note: none of the complaints listed in this article result from the Affordable Care Act. The fee-for-service system has been in place since long before the ACA, as have the options to be an opt-out provider, non-participating provider, or participating provider. If anything, the ACA does take steps in the direction of incentivising population health and moving away from fee-for-service reimbursement.

    • lissmth

      Dan, the ACA concept is shaping up to be a nightmare. It is a capitated HMO on steroids.

      • Dan Reedy

        I disagree.

        However, the author of the article above is not complaining about capitation. He is complaining about the fee for service system, which was in place well before the ACA.

  • lissmth

    At one point, Medicare was going to require a PECOS registration before a non-participating doctor could order outside services (tests, CT, etc.). Is that a problem?

  • buzzkiller

    Slightly off topic, but how are you going to deal with call? Will you carry a pager 24/7/52? Will you pay someone to cover for you on vacation> Do you know how other direct pay docs deal with this?

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