As the year-end approaches, the providers again face the participation-non-participation dilemma because status change notifications are accepted until January 1 only. The doctor must choose between higher reimbursements and patient collections or lower reimbursement and direct deposit. The choice is complicated because the Congress has not yet completed the debates about an upcoming 10.1% Medicare cut to physicians. The Congress delay and the unprecedented cut size dramatize the possibility of being locked for another year under a newly reduced fee schedule and raise the urgency and importance of this decision.
"Unless Congress takes immediate action ... Medicare will begin across-the-board cuts on January 1," said AMA President Ron Davis, MD. "Congressional action is not guaranteed, so physicians interested in changing their Medicare participation status for 2008 should review the information now, fill out the forms and prepare to mail them prior to December 31," (http://www.ama-assn.org/amednews/2007/12/24/gvl11224.htm).
The physician has three options about participating in Medicare, namely, participation (PAR), non-participation (non-PAR), and private contracting:
Participation: The physician participating in Medicare (PAR) agrees to standard--and possibly reduced in 2008--Medicare fees for every submitted claim. The participating doctor gives up the right to "balance-bill" patients for the difference between the standard Medicare fee and doctor's "reasonable and customary" fee. But payment timing predictability and the convenience of direct deposit using electronic file transfer (EFT) are major participation decision factors: first, Medicare typically pays the "clean" claims submitted electronically within 14 days since claim submission, and second, Medicare pays the physician directly.
Non-Participation: The non-participating physicians (non-PAR) can decide on a per-patient basis to accept the reduced fee (accept "assignment") or balance-bill patients up to 15% more. Therefore, the non-PAR physician that balance-bills every patient, may receive up to 9.25% more than a PAR doctor for the same services. The downside of non-PAR is that Medicare reimburses the patient directly and the physician must invoice the patient for the full amount: the payment, co-payment and balance-billing charge. If the physician postpones invoicing the patient until the patient receives reimbursement from the insurance, the doctor risks collection problems with financially irresponsible patients.
Private contracting: Private contracting means that physicians opt out of Medicare completely for at least two years. During these two years, neither the opted-out physicians nor their patients can bill Medicare for any services.
Other par-non-par decision considerations:
Collections work-around: The number of collection problems from patients may be negligent or it can be completely eliminated the physician who collects the entire fee at the time of visit.
Saving grace: Financing out-of-pocket fees for more needy patients with higher fees collected from balance-billed patients might be the saving grace alternative to turning away patients.
Patient perception: Patients who are used to all of their medical costs covered by a system of primary, secondary (and perhaps tertiary) insurance companies, might protest higher out of pocket fees.
Note also that "participation dilemma" is not exclusive to Medicare. While some insurance companies, e.g., Oxford (United Healthcare) and Cigna still send checks to non-PAR doctors, others, like Horizon BCBS, penalize non-PAR doctors by paying directly to patients.
An AMA document (www.ama-assn.org/ama1/pub/upload/mm/399/medicarepayment08.pdf) outlines participation options and status change procedures."With a 10% cut about to be imposed, many physicians may consider balance billing an extra 9% as one means of helping close the gap between 2007 and 2008 payment amounts," the document says. "When considering whether to be non-PAR, however, physicians should consider whether their total revenues from Medicare, including amounts the program pays, patient co-pays and balance billing, would exceed their total revenues as PAR physicians, particularly in light of collection costs, bad debts and claims for which they do accept assignment."
By: Yuval Lirov
