Chapter 4
Assignment and Participation

 

4.1 Overview

Under the participation program, an eligible provider or supplier may enter into an agreement to accept assignment for all services rendered to Medicare patients. To accept assignment means to receive direct payment from the Medicare program and to agree to accept the Medicare approved amount as payment in full for the service. The approved amount is composed of the Medicare Part B payment and the applicable deductible and coinsurance. A participating practitioner or supplier may not ordinarily collect from the beneficiary more than the applicable deductible and coinsurance for covered services.

All providers and suppliers eligible to receive payments under Part B of the Medicare program may enter into a participation agreement. All nonparticipating providers and suppliers will receive a copy of this agreement during the open enrollment period every December. Please see page 4-5 for a copy of the Medicare Participating Physician or Supplier Agreement.

4.2 Why Participate?

If you bill for physicians' professional services, services and supplies (such as drugs and biologicals) provided incident to physicians' professional services, outpatient physical and occupational therapy services, diagnostic tests, and radiology services:

The numbers choosing to participate in the Medicare program continue to grow. During 1998 and 1999, eighty-two percent of of all physicians, practitioners, and suppliers billed under Medicare participation agreements this was a 3.2 percent increase over the number of 1997 participants.

a. Applicable Services

Once a participation agreement has been signed, the participant has agreed to accept assignment for any item or services for which payment is made on a fee-for-service basis by Medicare Part B carriers. The agreement applies in all localities and to all names and identification numbers under which the participant does business. Therefore, when signing an agreement, the participant should list all names and identification numbers under which the participant submits claims to the carrier--this means all names and identification numbers of the legal entity entering into the agreement, whether that entity is an individual, partnership, or corporation.

NOTE: A participant is not required to accept assignment where an entity (other than the beneficiary) that is eligible to request direct payment from the Medicare program for the services pays the participant and the participant accepts that payment in full.

For example, a private supplementary health benefits plan which is eligible to do so may pay the participant an amount which the participant accepts as payment in full and then collects the Part B payment directly from the Medicare program.

This procedure, called "indirect payment" or "payment to organizations," permits a participant to submit a single claim for the Medicare and private plan benefits to the private health benefits plan. The participant may accept plan payment in excess of the Medicare approved charge.

b. Guidelines for Hospital/Medical Groups

Generally, if a hospital, medical group, or other entity bills for physicians' services in the name of the entity (i.e., the physician is not billing for his or her own services), one participation agreement signed by the entity binds all physicians for services billed by the entity. However, in university medical centers, participation decisions can be made at the departmental level, rather than having the entire medical center subject to one participation choice.

If a physician who is associated with a particular entity has an individual practice outside the scope of the practice for which the entity bills and receives payment, he or she may choose whether to participate with respect to his/her outside practice without regard to the participation status of the entity.

If the individual physicians work for an entity and receive payment in their own names for the services furnished for the entity, they make individual decisions as to whether to participate. These decisions apply both to the physicians' services for the entity and to any outside practice.

c. Length of Agreement

Once a year, all Medicare carriers conduct an enrollment period for the practitioners and suppliers in their areas. During this period, which usually occurs toward the end of each calendar year, the carriers give nonparticipants an opportunity to sign an agreement and participants an opportunity to terminate an agreement.

Once an agreement is signed, the participant is bound by that agreement until he/she terminates the agreement in writing during an "enrollment period." Written notice of termination must be sent to all carriers with whom the participant has filed the agreement or a copy of the agreement.

Note, however, that new providers/suppliers may file an agreement within ninety (90) days after:

4.3 Participation Specifics

Instructions on how to change your Medicare participating status are included in the material which is distributed during our open enrollment period during the months of November and December of each year. If you have a question regarding your participation status, you may contact our customer service department. (See Chapter 1 for telephone numbers.)

We have listed below some instructions to follow when you receive the open enrollment package.

If you choose to be a participant:

If you decide not to participate:

*Please see the enclosed copy of the Medicare Participating Physician or Supplier Agreement.

4.4 Participating Physicians

When a provider or supplier of covered Part B items or services accepts "assignment", by completing the Medicare Participating Physician or Supplier Agreement, that provider agrees to accept Medicare's approved amount as payment in full. Medicare's payment (80% of the approved amount) goes directly to the provider or supplier. The provider or supplier must make a reasonable effort to collect deductible and coinsurance amounts. There are certain exceptions where the approved amount is reimbursed at a higher or lower percentage. For example, outpatient psychotherapy services are reimbursed at 80% of the 62.5% approved amount and clinical laboratory services are reimbursed at 100% of the Medicare approved amount.

4.5 Non-Participating Physicians

If the provider/supplier does not sign a Participation Agreement, he/she may elect to accept assignment or not on each claim that is filed with the exceptions noted below under Mandatory Assignment. Each claim is considered a separate contract. Generally, services performed on the same day should be submitted on the same claim form and assignment should be accepted, or not, for all services. Please see Chapter 14 (Comprehensive Limiting Charge Compliance Program) about how this affects the amount a provider can charge for a service.

If the provider/supplier of services does not accept assignment, Medicare Part B will still pay 80% of the approved amount. The approved amount is reduced by 5% for non-participating physicians. The Medicare payment will be sent to the beneficiary who in turn is responsible for paying the provider or supplier.

4.6 Mandatory Assignment

There are a few situations in which the provider/supplier MUST accept assignment on the Medicare claim:

Medicare/Medicaid: The Omnibus Budget Reconciliation Act (OBRA) of 1989 included a provision requiring providers and suppliers to accept assignment on Medicare claims involving Medicaid recipients. As a result, payment for services furnished to an individual enrolled under Medicare who is eligible for Medicaid may only be made on an assignment related basis.

Clinical Laboratory Services: Assignment must be accepted on all clinical laboratory services whether performed by a laboratory or a physician. Claims for clinical laboratory services submitted on a non-assigned basis will be denied.

Certain practitioners who provide services under the Medicare program are required to accept assignment for all Medicare claims for their services. The following practitioners must accept assignment for all Medicare covered services they furnish on or after January 1, 1995:

Effective for 1995 and subsequent years, these practitioners will be automatically enrolled as participants in the Medicare participation Program, so that they may receive the various advantages available. These practitioners do not need to file a Medicare Participating Physician or Supplier Agreement.

Sample of the HCFA 460 Participating Physician or Supplier Form

4.7 Private Contracting Between Beneficiaries and Physicians/Practitioners

The Balanced Budget Act of 1997 permits a physician or practitioner to enter into private contracts with Medicare
beneficiaries to provide covered services. Recent clarification has been received from HCFA for this provision. Please note
the following:

a. Emergency Services

Physicians or practitioners who opt out of the Medicare program but provide an emergency or urgent care service to a patient
with whom they have not signed a private contract, still must submit the claim to Medicare for payment. The claim must be
submitted on a nonassigned basis and the provider must abide by the limiting charge provisions. When the claim is submitted,
the provider should report the appropriate HCPCS code and HCPCS modifier GJ (Opt out physician /practitioner emergency
or urgent services).

b. Violation of Claim Submission Rules

Under the "Opt Out" provisions, providers are not permitted to submit claims for Medicare payment except for emergency or
urgent care services rendered to a patient with whom a private contract has not been signed.

If an "opt out" provider submits a claim for payment that is not an emergency or urgent care situation, the provider will have
been deemed in violation of the "opt out" provisions and his private contracts with any and all beneficiaries will be deemed
null and void. Thereafter, he must submit all Medicare claims to the carrier for the duration of his opt out period (though
payment will not be made by the carrier). In addition, the provider must abide by the limiting charge provisions, thus
collecting payment from only the beneficiary up to the limiting charge amount.

c. Participating Physicians and Practitioners Can Opt Out

If you did not terminate your participating agreement during the participating enrollment period, you may still be able to opt
out of the Medicare program. Based on the latest HCFA ruling, participating providers who wish to sign private contracts
with their Medicare patients, thus opt out of the Medicare program, can do so on the first day of each calendar quarter. In
order to opt out, the participating provider must submit their affidavit at least 30 days prior to the beginning of the calendar
quarter. Thereafter, on the first day of the calendar quarter, the providers participating agreement will be terminated and all
services performed on or after the first day of the calendar quarter fall under the "opt out" provisions.

d. Questions and Answers

1. What is a "private contract" and what does it mean to a Medicare beneficiary who signs it?

As provided in 4507 of the Balanced Budget Act of 1997, a "private contract" is a contract between a Medicare
beneficiary and a physician or other practitioner who has "opted out" of Medicare for two years for all covered items and
services he or she furnishes to Medicare beneficiaries. In a private contract, the Medicare beneficiary agrees to give up
Medicare payment for services furnished by the physician or practitioner and to pay the physician or practitioner without
regard to any limits that would otherwise apply to what the physician or practitioner could charge.

2. What has to be in a private contract and when must it be signed?

The requirements of a private contract are as follows:

In order for a private contract with a beneficiary to be effective, the physician/practitioner must file an affidavit with all
Medicare carriers to which he/she would submit claims, advising that he/she has opted out of Medicare. The affidavit must
be filed within 10 days of entering into the first private contract with a Medicare beneficiary. Once the physician/practitioner
has opted out, such physician/practitioner must enter into a private contact with each Medicare beneficiary to whom he/she
furnished covered services (even where Medicare payment would be on a capitated basis or where Medicare would pay an
organization for the physician's or practitioner's services to the Medicare beneficiary), with the exception of a Medicare
beneficiary needing emergency or urgent care.

If a physician/practitioner has opted out of Medicare, he/she must use a private contract for items and services that are, or
may be, covered by Medicare (except for emergency or urgent care services). An opt out physician/practitioner is not
required to use a private contract for an item or service that is definitely excluded from coverage from Medicare.

A non-opt physician/practitioner, or other supplier, is required to submit a claim for any item or service that is, or may be,
covered by Medicare. Where an item or service may be covered in some circumstances, but not in others, the
physician/practitioner, or other supplier, may provide an Advance Beneficiary Notice to the beneficiary, which informs the
beneficiary that Medicare may not pay for the item or service, and that if Medicare does not do so, the beneficiary is liable
for the full charge.

3. Who can "opt out" of Medicare under this provision?

Certain physicians and practitioners can "opt out" of Medicare. For purposes of this provision, physicians include doctors of
medicine and of osteopathy. Practitioners permitted to opt out are physician assistants, nurse practitioners, clinical nurse
specialists, certified registered nurse anesthetists, certified nurse midwives, clinical social workers, and clinical
psychologists.

The "opt out" law does not define "physician" to include optometrists, chiropractors, podiatrists, dentists, and doctors of oral
surgery; therefore, they may not opt out of Medicare and provide services under private contract. Also, physical therapists in
private practice and occupational therapists in private practice cannot opt out because they are not within the "opt out" law's
definition of either a "physician" or "practitioner".

4. Can physicians or practitioners who are suppliers of durable medical equipment (DMEPOS), independent diagnostic
testing facilities, clinical laboratories, etc., opt out of Medicare for only these services?


No. If a physician or practitioner chooses to opt out of Medicare, it means that he or she opts out for all covered items and
services he or she furnishes. Physicians and practitioners cannot have private contracts that apply to some covered services
they furnish but not to others. For example, if a physician or practitioner provides laboratory tests or durable medical
equipment incident to his or her professional services and chooses to opt out of Medicare, then he or she has opted out of
Medicare for payment of lab services and DMEPOS as well as for professional services. If a physician who has opted out
refers a beneficiary for medically necessary services, such as laboratory, DMEPOS or inpatient hospitalization, those
services would be covered. (See #18.) In addition, because suppliers of DMEPOS, independent diagnostic testing facilities,
clinical laboratories, etc., cannot opt out, the physician or practitioner owner of such suppliers cannot opt out as such a
supplier.

5. How can participating physicians and practitioners opt out of Medicare?

Participating physicians and practitioners may opt out if they file an affidavit that meets the criteria and which is received by
the carrier at least 30 days before the first day of the next calendar quarter showing an effective date of the first day in that
quarter (i.e. 1/1, 4/1, 7/1, 10/1). They may not provide services under private contracts with beneficiaries earlier than the
effective date of the affidavit.

Non-participating physicians and practitioners may opt out at any time.

6. What happens if a physician or practitioner who opts out is a member of a group practice or otherwise reassigns his
or her Medicare benefits to an organization?


Where a physician or practitioner opts out and is a member of a group practice or otherwise reassigns his or her rights to
Medicare payment to an organization, the organization may no longer bill Medicare or be paid by Medicare for services that
the physician or practitioner furnishes to Medicare beneficiaries. However, if the physician or practitioner continues to
grant the organization with the right to bill and be paid for the services he or she furnishes to patients, the organization may
bill and be paid by the beneficiary for the services that are provided under the private contract.

The decision of a physician or practitioner to opt out of Medicare does not affect the ability of the group practice or
organization to bill Medicare for the services of physicians and practitioners who have not opted out of Medicare.

7. Can organizations that furnish physician or practitioner services opt out?

No. Corporations, partnerships, or other organizations that bill and are paid by Medicare for the services of physicians or
practitioners who are employees, partners or have other arrangements that meet the Medicare reassignment-of-payment rules
cannot opt out since they are neither physicians nor practitioners. Of course, if every physician and practitioner within a
corporation, partnership or other organization opted out, then such corporation, partnership, or other organization would have
in effect, opted out.

8. Can a physician or practitioner have "private contracts" with some beneficiaries but not others?

No. The physician or practitioner who chooses to opt out of Medicare may provide covered care to Medicare beneficiaries
only through private agreements.

To have a "private contract" with a beneficiary, the physician or practitioner has to opt out of Medicare and file an affidavit
with all Medicare carriers to which he or she would submit claims, advising that he or she has opted out of Medicare. The
affidavit must be filed within 10 days of entering into the first "private contract" with a Medicare beneficiary. Once the
physician or practitioner has opted out, such physician or practitioner must enter into a private contract with each Medicare
beneficiary to whom he or she furnishes covered services (even where Medicare payment would be on a capitated basis or
where Medicare would pay an organization for the physician's or practitioner's services to the Medicare beneficiary), with
the exception of a Medicare beneficiary needing emergency or urgent care.

Physicians who provide services to Medicare beneficiaries enrolled in the new Medical Savings Account (MSA)
demonstration created by the BBA of 1997 are not required to enter into a private contract with those beneficiaries and to opt
out of Medicare under 4507.

9. What has to be in the "opt out" affidavit?

To be valid, the affidavit must:


10. Where and when must the "opt out" affidavit be filed?

An "opt out" affidavit must be filed with each carrier that has jurisdiction over the claims that the physician or practitioner
would otherwise file with Medicare and must be filed within 10 days after the first private contract to which the affidavit
applies is entered into.

11. How often can a physician or practitioner "opt out" or return to Medicare?

If a physician/practitioner changes his/her mind once the affidavit has been approved by Medicare, the opt out may be terminated within 90 days of the effective date of the affidavit. To properly terminate an opt out, a physician must:

12. Can a physician or practitioner "opt out" for some carrier jurisdictions but not others?

No. The opt out applies to all items or services the physician or practitioner furnishes to Medicare beneficiaries, regardless
of the location where such items or services are furnished.

13. What is the effective date of the "opt out" provision?

A physician or practitioner may enter into a private contract with a beneficiary for services furnished on or after January 1,
1998.

14. How can a provider renew his/her "opt out" when the 2 year commitment is up?

A physician/practitioner may renew an "opt out" without interruption by filing an affidavit with each carrier, provided the affidavits are filed within 30 days after the current "opt out" period expires.

15. Does the statute preclude physicians from treating Medicare beneficiaries if they treat private pay patients?

No. Medicare does not preclude physicians from treating Medicare beneficiaries if they treat private pay patients, whether
such private pay patients are persons not eligible for Medicare under age 65 or are individuals who are entitled to Medicare
benefits but have chosen not to enroll in Part B.

16. Do Medicare rules apply for services not covered by Medicare?

If a service is one of a type that Medicare categorically excludes from coverage, Medicare rules, including opt-out rules, do
not apply to the furnishing of the noncovered service. For example, Medicare does not cover hearing aids; therefore, there
are no limits on charges for hearing aids, and beneficiaries pay completely out of their own pocket if they want hearing aids.

If a service is one that is not covered because, under Medicare rules, the service is found to be medically unnecessary to
treat illness or injury, no claim need be submitted, but the physician or practitioner who has not opted out may charge the
beneficiary for the noncovered service only if he or she gives the beneficiary an advance beneficiary notice of noncoverage.

If a service is one which Medicare has determined is medically necessary where certain clinical criteria are met, but is not
medically necessary where these criteria are not met, a claim must be submitted since it is possible that the carrier may
determine that the service is covered in the individual beneficiary's case, even where the physician or practitioner who has
not opted out believes that it will not be covered and has given an advance beneficiary notice to that effect. In this case, if
Medicare denies the claim on the basis that the service was not medically necessary, the physician or practitioner who has
given the advance beneficiary notice may bill the beneficiary.

Where a physician or practitioner has opted out of Medicare and agreed to provide covered services only through private
contracts with beneficiaries that meet the criteria specified in the law, the physician or practitioner who has opted out is
prohibited from submitting claims for covered services.

17. Is a private contract needed for services not covered by Medicare?

No. Since Medicare rules do not apply for services not covered by Medicare, a private contract is not needed. A private
contract is needed only for services that are covered by Medicare and where Medicare might make payment if a claim were
submitted.

A physician or practitioner may furnish a service that Medicare covers under some circumstances but which the physician
anticipates would not be deemed "reasonable and necessary" by Medicare in the particular case (e.g., multiple nursing home
visits, some concurrent care services, two mammograms within a twelve month period, etc.). If the physician or practitioner
gives the beneficiary an "Advance Beneficiary Notice" that the service may not be covered by Medicare and that the
beneficiary will have to pay for the service if it is denied by Medicare, a private contract is not necessary to permit the
physician or practitioner to bill the beneficiary if the claim is denied.

18. What rules apply to urgent or emergency treatment?

The law precludes a physician or practitioner from having a beneficiary enter into a private contract when the beneficiary is
facing an urgent or emergency health care situation.

Where a physician or a practitioner who has opted out of Medicare treats a beneficiary with whom he does not have a
private contract in an emergency or urgent situation, the physician or practitioner may not charge the beneficiary more than
the Medicare limiting charge for the service and must submit a non-assigned claim to Medicare on behalf of the beneficiary
for the emergency or urgent care. Medicare payment may be made to the beneficiary for the Medicare covered services
furnished to the beneficiary.

19. Will Medicare make payment for services that are ordered by a physician or practitioner who has opted out of
Medicare?


Yes, provided the "opt out" physician or practitioner ordering the service has acquired a unique provider identification
number (UPIN) and the services are not furnished by a physician or practitioner who has also opted out.

20. Clinical psychologists and clinical social workers are currently not recognized by and enrolled in Medicare unless
they meet certain criteria specified by HCFA, some of which are voluntary. Are the requirements for opting out of
Medicare different for these practitioners?

No. A clinical psychologist or clinical social worker must meet the affidavit and private contracting rules to opt out of
Medicare.

21. What is the relationship between an Advanced Beneficiary Notice and a private contract?

There is no relationship between these instruments. A physician or practitioner may furnish a service that Medicare covers
under some circumstances but which the physician anticipates would not be deemed "reasonable and necessary" under
Medicare program standards in the particular case. If the beneficiary receives an "Advance Beneficiary Notice" that the
service
may not be covered by Medicare and that the beneficiary will have to pay for the service if it is denied by Medicare, and
payment for the service is denied as a "medical necessity denial," a private contract is not necessary to bill the beneficiary if
the claim is denied.

22. Are there any situations where a physician or practitioner who has not opted out of Medicare does not have to
submit a claim for a covered service provided to a Medicare beneficiary?

Yes. A physician who has not opted out of Medicare must submit a claim to Medicare for services that may be covered by
Medicare unless the beneficiary, for reasons of his or her own, declines to authorize the physician or practitioner to submit a
claim or to furnish confidential medical information to Medicare that is needed to submit a proper claim. Examples would be
where the beneficiary does not want information about mental illness or HIV/AIDS to be disclosed to anyone. Moreover, if
the beneficiary or their legal representative later decides to authorize the submission of a claim for the service and asks the
physician or practitioner to submit the claim, the physician or practitioner must do so.

The Health Care Financing Administration does not seek to limit or interfere in the right of a beneficiary to obtain medical
care from the physician or practitioner of his or her choice. However, once a physician or practitioner who has not opted out
of Medicare has furnished a covered item or service to a beneficiary who is enrolled in Part B of Medicare, the law requires
that the physician or practitioner submit a claim to Medicare for the covered services.

23. How do the private contracting rules work when Medicare is the secondary payer?

When Medicare is the secondary payer, and the physician has opted out of Medicare, the physician has agreed to treat
Medicare beneficiaries only through private contract. The physician or practitioner must therefore have a private contract
with the Medicare beneficiary, not withstanding that Medicare is the secondary payer. Under this circumstance, no Medicare
primary or secondary payments will be made for items and services furnished by the physician or practitioner under the
private contract.