Why are some physicians opting out of Medicare?

Healthcare professionals choose whether to participate in Medicare every year during a period that starts mid-November through Dec. 31. You will likely receive a postcard in the mail beforehand from the Medicare Administrative Contractor, signaling the annual participation open enrollment period.

Although 98% of providers choose to participate in Medicare, around 30,000 providers choose not to.^[] Centers for Medicare & Medicaid Services (CMS) discourages nonparticipation, but some physicians have their reasons to opt-out.

What it means to opt out

“Medicare ‘participation’ means you agree to accept claims assignment for all Medicare-covered services to your patients,” according to the CMS.^[] “By accepting assignment, you agree to accept Medicare-allowed amounts as payment in full. You may not collect more from the patient than the Medicare deductible and coinsurance or copayment.”

Providers who participate in Medicare receive the full Medicare Physician Fee Schedule allowed, which is doled out in direct payments. They also forward claim information to Medicare supplement coverage insurers (ie, Medigap insurers).

On the other hand, nonparticipating providers can accept assignments case-by-case but have limited appeal rights. Medicare pays nonparticipating providers 5% less than the amount allowed by the Medicare Physician Fee Schedule. These providers can charge the patient more than 115% of the Medicare Physician Fee Schedule amount. 

How to opt out

PECOS, which stands for Provider, Enrollment, Chain, and Ownership System, refers to the online Medicare enrollment management system, and it allows providers to review information currently on file and withdraw from Medicare if desired. There are video and print tutorials to guide physicians through the process.^[]

There’s also the option to withdraw using a paper application. 

The Association of American Physicians and Surgeons (AAPS), which touts itself as a “voice for private physicians,” encourages its members to opt out and provides an online guide.^[]

“It is simple to opt out of Medicare—far simpler than staying in the Medicare program. Thousands of physicians have already opted out, and we have not heard a single regret by any of these physicians,” claims the AAPS.

“For the sake of patients and integrity of the profession, doctors should get out of Medicare,” the Association continued.

Before initiating the process of withdrawing from Medicare, you’ll need to inform your patients. The AAPS provides a transcript of the affidavit that needs to be filed with CMS to withdraw, as well as a template for a private contract to be signed by Medicare Part B beneficiaries, which needs to be re-executed every 2 years. Providers need to opt out only once.

Reasons for opting out

Providers opting out of Medicare are riled by a system that consumes them and throws off the balance between their personal and professional lives, according to Lawrence R. Huntoon, MD, PhD, editor-in-chief of the Journal of American Physicians and Surgeons.^[]

“Many physicians live day to day, trying to keep up with ‘playing the game,’ where the rules constantly change and uncompensated demands on their time constantly increase,” he wrote.

“Medicare largely drives the excessive bureaucracy in the private insurance market as well. The conflict of interest, whereby physicians are used by Medicare and third-party payers as agents of rationing, gnaws away at whatever is left of a physician’s professional ethics,” he added.

Dr. Huntoon cited government interference and the ability to better protect patient information by not filing electronic claims in vulnerable databases. He also noted that Medicare bureaucracy leads to physician burnout, which results in an increase in errors. Burned-out physicians become cynical and view patients as items on a “conveyer belt,” with “productivity” being the goal.