I recently attended a meeting of some of my patients and business advisers who encouraged me to write a brief explanation of some of the different pay relationships that doctors have with Medicare. They thought that it would be helpful to explain particularly what it means for a doctor to have a non-participating relationship with Medicare.
The short answer is this: We charge Medicare rates plus 10%. You pay the doctor at the time of the office visit. We file your claim with your insurances. They repay your money in three-to-four weeks — all except 15% of the cost of the office visit itself.
A “non-participating” relationship with Medicare means that the doctor does not accept the (90%) discounted pay rate used by Medicare to pay doctors. The doctor can legally charge the patient 10% more than Medicare pays, but the fee schedule is still determined by Medicare. With this method, the patient pays the doctor 100% of the pay rate up front for the office visit. Laboratory fees are charged directly to Medicare and reimbursed at 100% (i.e., you are not charged for lab tests although they may appear on your EOB). Doctors who choose this payment option can file with Medicare and secondary insurances on behalf of the patient and the patient is paid back directly by his insurance companies, usually within three-to-four weeks. The patient is repaid 85% of what he/she paid for the office visit with 100% for everything else.
A “participating” relationship with Medicare means that the doctor accepts the discounted Medicare fee and submits the bill up to Medicare and secondary insurances on his/her own behalf. Medicare repays the doctor in 14 to 240 days (in my experience).
When Medicare makes changes to the fee schedule, it withholds payment to doctors until the charges are finalized (usually determined by Congress). For instance, this year Medicare withheld payments to doctors on five different occasions. If you don’t have a direct relationship with Medicare, these holdbacks do not affect your cash flow.
A doctor who has a “non-participating” relationship with Medicare can opt to accept Medicare payment “at par” for patients who are pensioners and have a hard time paying 100% of the money up front, even if it is only for three-to-four weeks. The level of income at which the doctor decides to directly bill Medicare is determined by the individual doctor. In our office, the cutoff gross income levels are $30,000 per year for a single person and $40,000 for a couple. The doctor has to document the patient’s income with a copy of the 1099 in the chart so that the rule is not applied arbitrarily; the 1099 form must be updated annually.
As Medicare payments are reduced and delayed, there are more doctors who choose to relate directly to their patients with regard to payment, and they either opt out of Medicare (in states such as Florida and California where there are large numbers of Medicare patients) or refuse to take new Medicare patients (in states elsewhere).
One form of opting out of Medicare is to have a concierge practice where the patient pays the doctor a global fee for Medicare delivered by that doctor in the office, nursing home or hospital. Medicare isn’t charged at all by the concierge doctor for this care except when care is rendered by another doctor (referrals, hospital care, etc.). A concierge doctor can charge a high global fee that covers all of the care he renders to a patient or a lower global fee for “wellness” care, annual physical, online services to book appointments, track test results, a computerized device containing the patient’s medical history, etc. With this arrangement the concierge doctor will bill Medicare for any care of the patient that involves illness.
Because Obamacare covers wellness physicals, this option may become obsolete.
On Longboat Key, 60% to 80% of patients seen are Medicare patients, and two-thirds are snowbirds. It isn’t realistic in today’s medical/financial climate to have Medicare and secondaries hang on to 10% to 15% of revenues for three-to-six months. The numbers disparity in winter/summer is even more exaggerated on the barrier islands than on the mainland. The recession had contributed to a 25% to 30% reduction in office visits in general. The BP oil spill created a disastrous reduction in tourism throughout coastal Florida that further contributes to the lack of revenue in an area where Medicare shortfalls are subsidized by tourist dollars. So, the business of medicine is affected by these economic forces in the same way that they affect all business on Longboat Key.
Dr. Pamela J. Letts, of Centre Shops Family Practice & Urgent Care, is a board certified family physician and has been practicing on Longboat since 1996.
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