Medicare Private Contract

What is a Medicare Private Contract?

A Medicare Private Contract is an agreement between a Medicare beneficiary and a Medicare provider who has opted out of the Medicare program. Under this contract, the service provider agrees to offer services without accepting Medicare claims or adhering to Medicare limits. Instead, the Medicare beneficiary takes on full responsibility for payment, either out-of-pocket or through supplemental insurance.

This contract allows privately contracted providers to bill beneficiaries directly, charging fees beyond the Medicare fee schedule. By signing, the Medicare beneficiary acknowledges they won’t submit a proper Medicare claim for services received and that Medicare will not cover them for these services.

The provider and beneficiary must sign the contract, including specific terms outlined by the Medicare administrative contractor and the American Medical Association. The contract applies to covered services such as physician visits, urgent care, and other treatments from privately contracted providers.

Beneficiaries should consider the implications of entering into a private contract, including potential balance billing and the absence of Medicare coverage for these services.

What should be in the private contract?

While there isn't a standardized Medicare private contract form, the Centers for Medicare & Medicaid Services (CMS) outlines specific requirements in federal regulations that all such contracts must meet (Centers for Medicare & Medicaid Services , 2016). These include:

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 should be clearly defined, including the contract’s effective date and the agreed-upon period for which the agreement will remain in force. Typically, the contract may last for a specified period, such as two years, unless otherwise stated.

Additionally, the contract must outline the circumstances under which it may be terminated before the specified duration ends. It should include provisions for early termination, whether initiated by the physician or the beneficiary or due to other specified conditions, providing clarity on the procedures and any necessary notice periods. This ensures both parties are fully aware of their rights and responsibilities should they wish to terminate the agreement before its expiration.

How to use our Medicare Private Contract

Follow these steps to ensure the contract meets all necessary requirements and protects both parties involved in private contracting.

Step 1: Download our template

Download the Medicare Private Contract template to get started. Click "Use template" to access the fillable form via the Carepatron app or choose "Download" for a PDF copy.

Step 2: Fill in provider and patient information

Add the necessary details, including the physician’s name, address, and the Medicare beneficiary’s information. This ensures the contract is specific to both the provider and the patient.

Step 3: Specify the terms of the agreement

The contract should clearly outline the physician’s opt-out period, specifying the dates during which the physician is not participating in the Medicare program, allowing them to provide services outside of Medicare's coverage.

Additionally, it must state that the Medicare beneficiary is responsible for all payments related to the services provided under the private contract, acknowledging that Medicare will not make any payments for these services. This ensures that the beneficiary understands they will bear the full financial responsibility for the care received during the opt-out period.

Step 4: Outline Medicare coverage and rights

Make sure to inform the Medicare patient that they retain the right to obtain Medicare-covered services from non-opted-out providers. Additionally, clarify how supplemental insurance may or may not apply to services under the private contract.

Step 5: Finalize the contract

Have both the Medicare beneficiary and the provider sign and date the contract. Ensure that both parties understand their obligations and the implications of the private contract, including that no claims will be submitted to Medicare.

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 Medicare providers who have opted out of Medicare, they may be charged fees that are not limited by the Medicare fee schedule. As a result, beneficiaries may face higher out-of-pocket costs for services furnished.

No Medicare coverage

Medicare does not cover services furnished under private contracts. This means beneficiaries are responsible for the entire cost of such services out-of-pocket, leading to increased costs, especially for those who rely on Medicare for most of their healthcare needs.

Supplemental insurance

Some Medicare beneficiaries may have additional coverage, such as Medigap or Medicare Advantage plans, which can help reduce out-of-pocket expenses related to private contracting. However, coverage and reimbursement rates vary depending on the specific plan and Medicare provider network.

Access to providers

Private contracting can limit access to certain healthcare providers who have opted out of Medicare, potentially forcing Medicare beneficiaries to seek care from non-participating providers or travel longer distances to reach participating ones. This can increase out-of-pocket costs for beneficiaries.

Reference

Centers for Medicare & Medicaid Services. (2016, April). CMS manual system pub 100-02 Medicare benefit policy. https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R222BP.pdf

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