Two Pennsylvania physicians share their experiences decoupling from Medicare. They’ve lost 12% of their patient population, but say they’re providing more personalized care and the effects on their revenue and financial viability have been positive.
This article appears in the April 2014 issue of Managed Care Contracting & Reimbursement Advisor.
It may come when you are in the office late trying to catch up on paperwork, or perhaps when you’re looking over the reimbursement denials from CMS. Maybe it will hit you when you look at the approved claims and realize how little you make off of Medicare. Sooner or later, most physicians will wonder about the option of quitting Medicare altogether. Is it a crazy idea?
Opting out of Medicare can be a good solution to all the headaches and diminishing reimbursement, but the decision cannot be taken lightly, says Alexander Sapega, MD, a pediatric surgeon in Philadelphia who-along with his partner Michael Sidor, MD-opted out of Medicare 12 years ago. The two were among the first to opt out, making them some of the most knowledgeable physicians around when it comes to the prospect of a practice without Medicare.
Sapega’s decision was prompted partly by a malpractice crisis in Pennsylvania that caused the practice’s overhead to soar. Combined with Medicare cuts, the bottom-line numbers were adding up each month. The Medicare-approved global package reimbursement for a total hip replacement, for instance, had gone from $4,000 in 1983 to about $1,650 in 2000, Sapega notes.
He and Sidor had to decide whether to follow the Medicare strategy that was emerging for physicians in Philadelphia: the mass production track, in which physicians tried to make Medicare participation profitable by maximizing their case loads.
“Some surgeons were doing four cases at the same time, with teams of assistants and rotating from room to room,” Sapega says. “My partner and I didn’t feel comfortable doing that, and we realized that it was impossible to do the quality work we wanted to do and make any money under Medicare.”
The financial situation, however, accounted for only about 75% of their motivation.
“The other quarter was our fear of getting a Medicare audit and the absurd consequences that could result,” Sapega says. “We did not want to be subject to the consequences of an audit where they sample some small fraction of your charts and then extrapolate that error rate over years to every Medicare patient you saw and whack you over the head with that. We asked why we would subject ourselves to that kind of heavy-handed treatment for this level of payment.”
The two physicians researched the requirements for opting out and found that the process involves two key affidavits. In the first, the physician practice formally notifies carriers that it will no longer participate in Medicare. (See sidebar for more details about that form.) A second affidavit is required when the practice sees patients who are Medicare eligible. (See additional sidebar for more information.)
Sapega cautions that practices opting out of Medicare must be diligent about having Medicare-eligible patients sign the affidavit acknowledging the opt-out. Failing to do so and then treating that patient anyway could open you up to charges of fraud and possible investigation.
After submitting the opt-out affidavit, Sapega and Sidor’s practice was officially out of the Medicare game, eliminating about 12% of their current patient population. The Medicare patients were missed, but their revenue was not critical to the success of the practice, Sapega says. Other practices with larger Medicare populations might have a harder time making up the difference if they were to opt out, he notes.
“We price our services right around the usual and customary figure, neither high nor low,” he says. “If the payer pays 60%, that’s fine, but we expect the patient to pay the rest of it.”
“The only way we could do that was to try to get closer to usual and customary reimbursement and not these crazy discounts based on Medicare,” he says
Opting out of Medicare allowed Sapega and Sidor to concentrate more on patient care rather than maximum productivity-in effect creating a more selective, boutique practice. They now schedule a 60-minute visit for new patients and 15- or 30-minute follow-up visits as part of their effort to provide more personalized care.
“The only way we could do that was to try to get closer to usual and customary reimbursement and not these crazy discounts based on Medicare,” he says.
One surprise for Sapega and Sidor was that opting out is not a one-time event. CMS requires physicians to opt out every two years, or else the system will suck them right back in. Sapega’s office administrator keeps a reminder on her calendar that prompts her to file the appropriate paperwork every two years. The affidavit signed by Medicare-eligible patients must also be resubmitted every two years. If a physician fails to renew the opt-out, CMS considers the doctor to be participating in Medicare; if that happens, the opt-out process can take two years to complete.
When Sapega and Sidor first opted out 12 years ago, their move was considered radical. But now Sapega says he’s hearing of a growing interest in the strategy.
“The government is embarrassed by physicians who opt out, because they can’t imagine that Medicare is that bad,” he says. “More are considering it as Medicare has gotten worse and our overhead has gotten higher and higher. The sustainable growth rate hanging over our head also has people concerned.”
Opting out of Medicare has changed the face of Sapega and Sidor’s practice, but the effects on their revenue and financial viability have been positive. They still see the occasional Medicare-eligible patient, and Sapega has performed a few surgeries on patients who paid out of pocket. But the situation can be even more promising for some specialties, Sapega says.
“If you opt out of Medicare and you’re a surgeon, you pretty much won’t see any Medicare patients. They will be sporadic at best,” he says. “If you’re an internal medicine doctor and you have a lot of loyal patients who can afford to pay your fee, that can be a different story. You may not lose so many of those Medicare patients.”
Even so, an internal medicine or family practice physician can expect to lose perhaps 80% of his or her Medicare-eligible patients when opting out because those patients cannot afford the private pay, Sapega says. The impact on any practice will be significant, but losing 80% versus 95% might make a crucial difference for the practice’s financial viability, he says.
Opting out can be the right move when a good portion of your patient population will continue seeking your care, Sapega says. “If not, opting out will simply reduce their practice revenue, and they may have to slow their practice down or change the practice structure to accommodate,” he notes. “If you’re in a situation in which Medicare is your primary payer, you would be crazy to drop out. It’s not for everyone, but it’s a serious option to consider.”
Source: Health Leaders Media
http://www.healthleadersmedia.com/content/HEP-303584/Medicare-OptOut-a-Viable-Physician-Strategy##