Medicare Private Contract

What is Medicare?

Medicare is a government-sponsored health insurance program in the United States. It primarily serves people 65 and older, although younger individuals with certain disabilities or specific medical conditions may also qualify. Established in 1965, Medicare provides coverage for various healthcare services, including hospital stays, outpatient care, preventive services, and prescription drugs.

The program is divided into different parts:

• Medicare part A: Also known as hospital insurance, covers inpatient hospital stays, skilled nursing facility care, hospice care, and home health care services.
• Medicare part B: This is known as Medical Insurance and covers sure doctors' services, outpatient care, medical supplies, and preventive services.
• Medicare part C: Also called Medicare Advantage, Part C offers an alternative to traditional Medicare by allowing beneficiaries to receive their Medicare benefits through private insurance plans that Medicare approves. These plans often include additional benefits such as dental, vision, and prescription drug coverage.
• Medicare part D: Part D provides prescription drug coverage. This is available to everyone with Medicare through private insurance companies that contract with Medicare.

Medicare is funded through payroll taxes, premiums paid by beneficiaries, and general revenue. It plays a crucial role in providing healthcare coverage to millions of Americans, particularly older adults and individuals with disabilities.

What does opting out of Medicare mean?

Opting out of Medicare typically refers to healthcare providers choosing not to participate in the Medicare program. When healthcare providers opt out of Medicare, they have decided not to accept Medicare reimbursement for services provided to Medicare beneficiaries.

Providers who opt out of Medicare are not allowed to bill Medicare for any services provided to Medicare beneficiaries, nor can beneficiaries submit claims to Medicare for reimbursement for services received from opted-out providers. 

Instead, opted-out providers must enter into private contracts with Medicare beneficiaries to provide services to them. These contracts specify that the beneficiary will pay for the services received out-of-pocket without any reimbursement from Medicare.

Providers may opt out of Medicare for various reasons, such as dissatisfaction with Medicare reimbursement rates, administrative burdens associated with participating in the program, or the desire for more control over their practice and pricing. 

However, opting out of Medicare can limit the pool of patients that providers can serve, as Medicare beneficiaries constitute a significant portion of the population, particularly among older adults.

What is a Medicare Private Contract?

A Medicare Private Contract is an agreement between a healthcare provider who has opted out of the Medicare program and a Medicare beneficiary. In this contract, the provider agrees to furnish services to the beneficiary and forgo any Medicare payment. Instead, the beneficiary assumes full responsibility for payment, either out-of-pocket or through supplemental insurance. 

This agreement allows the provider to bill the beneficiary directly and charge fees not limited by the Medicare fee schedule. Medicare beneficiaries who choose to receive services from a provider and have opted out of Medicare must sign a private contract with the provider. Both parties must sign this contract and include certain conditions specified in the Social Security Act.

The Medicare Private Contract is typically used for services furnished by physicians, urgent care services, and other medical care provided by non-participating providers who have opted out of Medicare. 

Beneficiaries must understand the implications of signing such contracts, including the potential for balance billing and the limitations on Medicare coverage for services provided by opted-out providers.

What should be in the private contract?

A Medicare Private Contract is a legally binding agreement between a healthcare provider who has opted out of the Medicare program and a Medicare beneficiary. The contract must include key elements to ensure both parties understand their rights and obligations. Here's what should be included in the private contract:

Identification and introduction

The contract section lists the complete names and contact details of the healthcare provider and the Medicare beneficiary, including full names and contact information.

Scope and terms of services

This section describes the healthcare provider's medical services or treatments under the contract. It should include details about the types of services, frequency, and limitations.

Financial arrangements

Here, the contract delineates the financial aspects, such as the fees charged for the services provided, whether payment will be made out-of-pocket or through supplemental insurance, and the agreement by the provider not to bill Medicare.

• Payment terms: Clearly outline the financial arrangements, including the services' fees. Specify whether payment will be made out-of-pocket by the beneficiary or through supplemental insurance.
• Waiver of medicare payment: The contract should state that the healthcare provider agrees not to bill Medicare for any services provided to the beneficiary under the terms of the contract.
• Responsibility for payment: Specify that the Medicare beneficiary agrees to assume full responsibility for payment of the services received under the contract, including any charges that exceed the Medicare fee schedule.

Understanding of Medicare coverage

This section aims to educate the beneficiary about the restrictions of Medicare coverage for services rendered by a non-participating provider who has chosen to opt out of Medicare. 

Duration and termination

The duration of the contract and the circumstances under which it may be terminated are specified in this section, ensuring clarity regarding the duration of the agreement and the procedures for termination.

• Duration of contract: Include the contract's effective date and the agreement's duration. Contracts typically remain in effect for a specified period, such as two years, but may be terminated earlier under certain conditions.
• Advance beneficiary notice (ABN): If applicable, include a statement indicating that the beneficiary has been given an Advance Beneficiary Notice (ABN) informing them that Medicare will not pay for the services and explaining their financial liability.

Legal and documentation

This section includes any necessary legal documents, such as the Advance Beneficiary Notice (ABN), and requires both parties to sign and date the contract, indicating their agreement to its terms.

• Termination cause: Outline the circumstances under which either party may terminate the contract and the procedures for doing so.
• Signature and date: Both the healthcare provider and the Medicare beneficiary must sign and date the contract to indicate their agreement to its terms.

It's essential for both parties to carefully read and understand the terms of the private contract before signing. Additionally, the contract should be printed with sufficiently large print and include original signatures.

Effects of private contracting on Medicare beneficiaries' out-of-pocket costs

The impact of private contracting on Medicare beneficiaries' out-of-pocket costs can vary depending on several factors. Here are some key considerations:

• Provider fees: When Medicare beneficiaries enter into private contracts with healthcare providers who have opted out of Medicare, they may be charged fees not limited by the Medicare fee schedule. This means that beneficiaries may face higher out-of-pocket costs for the services received.
• No medicare coverage: Medicare does not cover services provided under private contracts, so beneficiaries must bear the total cost of these services out-of-pocket. This can lead to increased out-of-pocket expenses, especially for beneficiaries who rely heavily on Medicare for their healthcare needs.
• Supplemental insurance: Some Medicare beneficiaries may have additional insurance, such as Medigap or Medicare Advantage plans, which can help offset out-of-pocket costs associated with private contracting. However, coverage and reimbursement rates may vary depending on the specific plan and provider network.
• Access to providers: Private contracting may limit Medicare beneficiaries' access to certain healthcare providers who have opted out of Medicare. This could result in beneficiaries seeking care from non-participating providers or traveling longer distances to access participating providers, potentially increasing out-of-pocket costs.
• Advance beneficiary notice (ABN): Beneficiaries who enter into private contracts must receive an Advance Beneficiary Notice (ABN) informing them that Medicare will not pay for the services provided. This notice helps beneficiaries understand their financial liability and potential out-of-pocket costs upfront.

Emergency and urgent care services furnished during the "opt-out" period

During the "opt-out" period, when healthcare providers have chosen not to participate in Medicare, Medicare beneficiaries may still seek emergency and urgent care services from these providers. 

In emergencies, Medicare beneficiaries have the right to access emergency medical services from any provider, regardless of their Medicare participation status or whether they have opted out of Medicare.

Emergency care services furnished during the "opt-out" period are typically covered by Medicare, even if the provider has opted out of the program. Medicare pays for emergency services provided by non-participating providers at the same rate as it would for participating providers. This ensures that beneficiaries receive timely and necessary emergency care without facing significant financial burdens.

Urgent care services, which are non-emergency but require prompt attention, may also be furnished by providers who have opted out of Medicare. However, Medicare coverage for urgent care services provided by non-participating providers may be limited, and beneficiaries may be responsible for higher out-of-pocket costs. 

Beneficiaries need to understand their Medicare coverage and potential financial liabilities when seeking urgent care services from providers who have opted out of Medicare. Additionally, providers must inform beneficiaries if they opt out of Medicare and provide them with an Advance Beneficiary Notice (ABN) detailing their financial responsibility for services not covered by Medicare.