Opt-Out Provider

A healthcare provider who has formally opted out of the Medicare program, choosing to see Medicare beneficiaries only under private contracts rather than billing Medicare.

Opting out of Medicare means you have made a formal decision not to participate in the Medicare program. You can still see Medicare patients, but only under a private contract where the patient agrees to pay you directly and waive their Medicare benefits for your services. Why would anyone opt out? The most common reason is dissatisfaction with Medicare reimbursement rates. Some providers, particularly psychiatrists, psychologists, and certain specialists, find that Medicare rates are too low to sustain their practice. By opting out, they can charge their full fee without being bound by the Medicare fee schedule. The opt-out process requires filing an affidavit with your Medicare Administrative Contractor. The opt-out period is two years, and it automatically renews unless you terminate it during a specific window. While opted out, you cannot bill Medicare for any services. Every Medicare patient you see must sign a private contract before you provide care. The private contract must clearly state that the patient agrees to pay your full fee, that Medicare will not reimburse the patient for services you provide, that Medigap plans will not pay either, and that the patient cannot appeal to Medicare for payment. Opting out has implications for credentialing. If you opt out of Medicare, some commercial payers may question why. It does not prevent you from credentialing with commercial payers, but it removes Medicare revenue from your practice, which is significant for most providers since Medicare beneficiaries represent a large portion of the patient population. If you are considering opting out, do the math first. Calculate how much of your revenue comes from Medicare patients, whether your remaining patients can sustain the practice, and whether your patient population is willing and able to pay private-pay rates. For some practices it makes sense, for most it does not.