In a January 26, 2012 memo from the HHS Office of the Inspector General (OIG) to CMS Acting Administrator Marilyn Tavenner, the OIG explains its inability at this time to conduct a full review of physicians opting-out of Medicare due to a lack of data.  Apparently, neither CMS nor its Medicare contractors maintain anything close to complete and accurate records.  Obviously, this makes it difficult to ascertain the scope of the problem.

The attempted research was in furtherance of an evaluation titled Impact of Physicians Opting-Out of Medicare.  According to the OIG, “the objectives of the evaluation were to determine the extent to which and reasons why physicians opt-out of the Medicare program and the effects of physician opt-out on Medicare beneficiaries.” 

Despite the setback, however, the OIG notably was able to at least acknowledge the following, likely for the first time:  “Monitoring the number of opted-out physicians and their specialties is important to ensure that Medicare beneficiaries have sufficient access to providers.  Based on the limited data we received, the number of opted-out physicians appears to have increased each year from 2006 to 2010.  More physicians may opt out in the near future, given the potential for legislated decreases in Medicare reimbursement for physician services.”  (emphasis added)  The OIG is likely referring in its last sentence to the dramatic physician reimbursement reductions relied upon in the President’s government takeover of healthcare law.  It is an issue now confronted by a bipartisan, bicameral congressional conference committee as a direct result of the President’s failure to address the problem despite 2,700 pages of health law legislation.

In assessing the potential seriousness and scope of future opt-outs, the OIG quotes from the Texas Medical Association (TMA) website: “continued uncertainty is forcing some physicians to make a difficult decision to either opt-out of Medicare, limit the number of patients they treat, or retire early.  A TMA survey [from August 2011] indicates that 50 percent of Texas physicians are considering opting-out of the Medicare program altogether.”  Such high opt-out potential is confirmed in other recent surveys as well.

It is imperative that OIG or other research go forward to determine the scope and impact of Medicare opt-out because of the seriousness and significance of doctors making such an election.  This is usually a decision which comes only after other less drastic options such as reducing access to current Medicare beneficiaries or refusing to accept new beneficiaries have proven insufficient.

Doctors who opt-out of Medicare can no longer bill Medicare for anything or anyone with very limited exceptions.  So opting-out is not a decision to take lightly especially for physicians who see a significant number of Medicare beneficiaries.  Moreover, again with very limited exceptions, a doctor who opts-out cannot resume as a Medicare provider for a period of two years.[1]

During this period, the Medicare Benefit Policy Manual explains “Medicare covers no services provided by that individual and no Medicare payment can be made to that physician or practitioner directly or on a capitated basis.  Additionally, no Medicare payments may be made to a beneficiary for items or services provided directly by a physician or practitioner who has opted-out of the program.”[2]

It is also an all-or-nothing choice.  The manual continues “Under the statute, the physician/practitioner cannot choose to opt-out of Medicare for some Medicare beneficiaries but not others; or for some services but not others. The physician/practitioner who chooses to opt-out of Medicare may provide covered care to Medicare beneficiaries only through private agreements.”

And what happens to beneficiaries whose doctors opt-out or otherwise do not accept Medicare?  A Medicare beneficiary can try to obtain alternative primary coverage, pay out-of-pocket through private agreements, or find a new doctor who accepts Medicare.  

As reported recently, however, finding a new doctor can be an unpleasant experience:  For example, “Kay Haneline, 67, said she and her husband were both dumped by their clinic they had been going to when they hit 65.  They could have stayed and paid cash at their old clinic but then couldn’t have used their Medicare or secondary insurance.   ‘The whole experience was distasteful,’ she said.  ‘I called over 30 different doctors and none of them would take us.’” 

If, in fact, Medicare reimbursement goes the way of Medicaid or even lower as provided for in the President’s government takeover of healthcare law, it is safe to say “opting-out” will become an all too familiar phrase for many Medicare providers and beneficiaries.