Some ophthalmologists opt out of CMS reimbursement system, exclusively accept private pay
Faced with declining reimbursements, administrative burdens and legal concerns, some ophthalmologists have chosen to opt out of Medicare and private insurance and only accept private pay. Others receive reimbursement for basic procedures and charge patients for refractive services. Participating in Medicare as a non-covered entity under HIPAA is also an option.
Jason P. Brinton, MD, said that the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) includes a provision so that physicians who choose to opt out of Medicare only have to do so once.
“New legislation has simplified the opt-out process and made it less onerous for physicians seeking to depend less on Medicare,” Brinton, an OSN Refractive Surgery Board Member, said.
Luke Rebenitsch, MD, who has never enrolled in Medicare,said, “It’s becoming easier. In the past, if you opted out, you opted out for 2 years. Now, with the recent law passed, it’s not for 2 years, but it can be for an extended period of time until such time as you decide not to opt out. It’s becoming a lot easier for physicians who wish to opt out without having to worry about an administrative headache every couple of years.”
Physicians who opt out of third-party reimbursement do not necessarily lose patients over time, according to Brinton.
“The notion that physicians must contract with Medicare for practice success is a canard. Those of us who work in private-pay ophthalmology have found that many patients prefer to receive care in an office that is independent from insurance companies. The advent of health savings accounts, the proliferation of high-deductible health plans and the potential loss of patient privacy associated with billing and audits have further extended the appeal of private-pay medicine to a broader demographic,” he said.
However, opting out of Medicare is not a viable option for most ophthalmologists, according to John B. Pinto, OSN Practice Management Section Editor.
“To the typical practice, it’s about 60% of cash flow, so unless you’re one of those few luminaries in ophthalmology who work in a market where you’ve developed over many years a reputation as the only go-to guy and you have kind of a concierge business that comes to you that way, or you’re a refractive surgeon purely, it’s really difficult to opt out of Medicare as an ophthalmologist,” Pinto said. “Financially, it just doesn’t work at all. There are so many providers willing to work with the system.”
Other specialties, such as orthopedics, depend less on Medicare reimbursement, Pinto said.
“They’re in a position to be able to say, ‘I just don’t think I’m going to be a Medicare provider. I’m going to taper the number of Medicare patients that I accept,’” he said.
When he began his practice, Brinton chose a private-pay model rather than enrolling in Medicare or contracting with insurance companies.
“We wanted the relationship between our patients and our practice to be as straightforward, open and transparent as possible. The private-pay environment lent itself to the personal level of care we were looking for and came with a greater measure of professional autonomy. For example, we could invest in a new technology without concern for whether CMS would approve it for reimbursement. Medicare calls us providers rather than physicians or doctors. I didn’t want to be a provider; I wanted to be a physician,” Brinton said. “Any time a third party is involved, you have to balance your time and effort to serve two different customers.”
Lance Kugler, MD, said his practice specializes in refractive cataract surgery in a combined third-party and private-pay setting, a typical arrangement for that niche in the refractive subspecialty.
“We certainly are looking very hard at opting out as an option and looking forward toward a time when we will do that, but we aren’t there yet,” Kugler said. “We are a refractive surgery practice, primarily. We also do refractive cataract surgery but very little standard cataract surgery. When we do have a reimbursed cataract surgery, we are also providing refractive services to that patient as well. So, we have a mix of private-pay and third-party payers for our cataract procedures.”
The practice provides premium IOLs, lens-based or surgical astigmatism management, and other services in order to attain desired refractive outcomes, Kugler said.
Rebenitsch performs LASIK, PRK, refractive lens exchange and Kamra inlay (AcuFocus) implantation. His practice considered a hybrid reimbursement and private-pay model but decided against it.
“We’ve debated going to the hybrid system,” Rebenitsch said. “The reason we don’t is that we estimated that our overhead was increased 20% to 30% by just having a billing department. Then we found that it’s easier for patients. For those who want to have their insurance pay for part of it, we refer out to excellent surgeons throughout the community.”
Rebenitsch said his patients sign a contract and pay a single fee for all services, including refractive enhancements.
“We don’t have to worry about whether the patients will be getting a bill in the future. It’s an upfront cost,” Rebenitsch said. “To patients, it’s much more of a palatable pricing to them. They know exactly what they’re getting from the get-go. It has really increased our word-of-mouth referrals.”
A non-covered entity
Jeffrey Liegner, MD, said he is a non-covered entity exempt from federal HIPAA rules. He accepts Medicare, but because he is exempt from HIPAA, he does not have to comply with Medicare reporting requirements.
“I’m exempt from HIPAA. I’m exempt from EHR requirements. I’m exempt from Meaningful Use. I have a waiver. I don’t get penalized. I’m exempt from e-prescribing,” Liegner said. “The essence of being a non-covered entity is that you only file paper claims and you have fewer than 10 full-time equivalent of employees (20,800 hours/year) within your medical corporation. As long as you do not violate that and do not surrender your HIPAA exemption — and you can voluntarily surrender it at any time — you are a non-covered entity under HIPAA, and therefore, you don’t have to comply with those things.”
Being a non-covered entity has no adverse consequences for his practice, Liegner said.
“In theory, I get paid later than people who file electronically, but I’m paid the same as people who file electronically,” he said.
Liegner said he was not affected by a suspension in Medicare payments in early 2015.
“I didn’t notice that at all because my reimbursements are spread out over a larger period of time,” he said.
In addition, being a non-covered entity involves significant cost savings, Liegner said.
“If you were to count the headaches and the distraction of the physician who ultimately is responsible, I think it’s substantial,” he said. “And then you add the fact that all those things are designed to ultimately create ambush traps for the physician that carry with it criminal prosecution opportunity. I think the savings, actually, are quite substantial.”
Liegner said he has a $1 million regulatory protection policy in the event of prosecution for a violation.
“Prosecution has a sort of indelible quality to modify our behavior. We might down-code in order to avoid coding issues. We might not provide a surgical service because of liability. There’s half a dozen things. So, modifying one’s risk exposure by not participating in Medicare is a very powerful incentive,” Liegner said. “Regulations are unevenly applied to the population, sometimes capriciously or arbitrarily enforced, so having a protection policy from capricious prosecution of a regulatory system gone amok provides me a level of insulation from the risk.”
Some ophthalmologists opt out of Medicare because of reimbursement cuts, Pinto said.
“I’m certainly aware of doctors who have left the profession in part because of Medicare fee frustrations, and I know doctors who have retired prematurely or slowed prematurely because of those frustrations. So, the market is voting with its feet, only it’s not the patient who votes as a customer, it’s the provider of care,” Pinto said.
Medicare 2016 Fee Schedule
The CMS issued a final rule on the 2016 Medicare Physician Fee Schedule on Oct. 30, 2015.
Relative Value Units are subjective and not an accurate gauge of value, according to Pinto.
“Obviously, any system that’s developed that’s outside of a market-based system where we ask what the patient is willing to directly pay is going to be arbitrary,” he said.
MACRA repealed the SGR, a key factor in annual Medicare reimbursement updates, and created the Merit-Based Incentive Payment System.
Administrative burdens, impact on care
Physicians enrolled in Medicare bear administrative costs associated with participating in quality reporting and incentive programs such as the Physician Quality Reporting System (PQRS), value-based modifiers and Meaningful Use of electronic health records. In addition, many insurance companies follow Medicare’s lead, compounding and perpetuating the effect of these regulations, Brinton said.
“They say that when Medicare sneezes, U.S. physicians catch a cold. CMS regulations that increasingly resemble a house of mirrors have already had a chilling effect on the time physicians spend face-to-face with patients, and for insurance-based practices, the forecast doesn’t predict a thaw anytime soon,” he said.
Some physicians consider opting out of Medicare solely because of the reporting requirements, according to Donna McCune, CCS-P, COE, CPMA.
“I think their biggest issue now has to do with the PQRS program, the value-based payment modifier and the electronic health record requirement in Meaningful Use,” McCune said. “They’re finding that their staff and they are spending a tremendous amount of time and effort to meet the requirements. They question whether or not this is defining quality. I know that’s a frustration for many physicians because they don’t feel that the measures themselves define quality yet they’re being held to these standards.”
Some ophthalmologists are also concerned about Medicare’s Physician Compare website, which is designed to let patients compare physicians and practices, McCune said.
“That includes whether or not they have successfully participated in these programs. That seems to be a concern. I think physicians are just now starting to look at that and appreciate what that means, and they’re a little nervous about that particular aspect,” she said.
In addition, some physicians opt out of commercial insurance plans because they fear being dropped as providers, McCune said.
“The insurance companies, whether it’s Medicare or some of the others, are changing the way [physicians] are paid but also compelling them to do some things that they don’t want to or the possibility that they’re just going to get dropped or that they’re going to be put into one of the tiered programs where the patient co-pays are higher just because the doctor tends to do certain services with a greater frequency,” McCune said.
Liegner said there are hurdles associated with private insurance.
“Medicare is actually well-behaved in terms of getting pre-authorizations or interfering with our clinical practice,” Liegner said. “But insurance companies have their panels. Insurance companies have their restrictions. Insurance companies have their pre-authorizations, and all of these things are time-sucking, money-decreasing activities that are not reimbursed. It’s still necessary to jump through the hoops. It is all dedicated to creating barriers to care that ultimately reduce the amount of care rendered.”
Medicare and private insurance discourage the use of benefits by design, according to Kugler.
“Typically, the private insurance plans are a little easier to work with than Medicare is. Their rules are less onerous, but they really all have the same goal. Their goal is to reduce the utilization of their coverage by their customers, both patients and physicians. This is accomplished by reducing reimbursement as well as making it less convenient to use the benefits,” Kugler said.
Pinto said that, despite reductions in reimbursement, Medicare providers fare better than some who accept private insurance.
“For example, in Los Angeles, we routinely see doctors who are receiving only 70% or 80% of Medicare allowable amounts, and they’re still keeping their practices open,” Pinto said. “What Los Angeles has shown us is that if the private payers pay 80% of Medicare rates, the doctors still provide care to those patients, so as far as what the provider market will bear, we haven’t seen that yet.”
McCune made a similar observation.
“I think that the declining reimbursement is a concern, but at the same time, there are still a fair number of physicians who do comment that, from a payment perspective, Medicare is not so bad in comparison to some of their other payers,” she said.
Private-pay practices retain more autonomy in determining practice patterns than those that work with third-party payers, Brinton said.
“For example, CMS determined that if an ophthalmologist performs a surgical procedure bilaterally on the same day, the second eye surgery is reimbursed at 50%. In an era where an increasing number of developed nations are moving to bilateral IOL surgery, we see practice patterns where U.S. ophthalmologists operate on one eye in the afternoon and the second eye the next morning. The intervening midnight resets the reimbursement clock and provides a clear illustration of the law of unintended consequences,” he said.
Brinton noted that countries such as Sweden, Finland and Spain, along with several independent health care networks in the U.S., have started to shift to bilateral cataract surgery.
“The United States has been behind on this evolution in practice patterns in no small part because of the reimbursement landscape. In areas where remuneration for bilateral surgery is not reduced, as with the Kaiser system in Colorado, bilateral cataract surgery is routinely performed with a great deal of success in terms of safety, visual outcomes and efficiencies to the system,” Brinton said. “In our practice, we offer good candidates the option of bilateral IOL surgery primarily due to the improved speed of visual recovery, quicker adaptation to binocular pseudophakic vision and higher patient satisfaction. It simplifies postoperative visits and simplifies eye drop regimens so that patients aren’t tapering to twice a day in the right eye and four times a day in the left eye. It has improved compliance and the overall patient experience. We strictly follow iSBCS safety guidelines in these procedures. We are always very conservative, so we adopted this approach only after the medical literature had demonstrated its safety.”
A question of value
Third-party payers typically do not reimburse physicians for the true value of services provided for patients, according to Kugler.
“Regardless of the level of service you provide, the reimbursed rate is the same,” Kugler said. “There are doctors who are providing value far above the value set by the insurance company, and there are doctors who are providing a level of service at or below the set value. And yet everybody is getting paid the same thing. ... In a reimbursed system, the value that we deliver is irrelevant to what we are paid.”
In private pay, patients pay fees that are commensurate with the services they receive, Kugler said.
“The private-pay model injects some transparency into the market. People are willing to pay a price for a service that is commensurate to the results that they receive,” he said. “As with any industry, a free market necessarily injects transparency and forces people to meet the expectations of the patient, and it also increases the chance that the patients pay fees commensurate with the incredible results that their doctors are achieving for them.”
Pay-for-performance in Medicare reimbursement and some private insurance models is on track, at least in concept, but does not reflect the true value of services rendered, Kugler said.
“[The problem] is the metrics that they’re using are not an accurate description of what the value really is to the patients,” he said. “The metrics do not reflect the change in quality of life that’s being delivered by these services. They are looking more at complication rates and those sorts of things, which are important but are not capturing the value that’s really being delivered through these services.” – by Matt Hasson
- 2016 Medicare Physician Fee Schedule final rule released. American Society of Cataract and Refractive Surgery website. http://www.ascrs.org/node/23095.
- 2016 Physician Fee Schedule. CMS website. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Relative-Value-Files-Items/RVU16A.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=descending.
- CMS finalizes 2016 Medicare payment rules for physicians, hospitals and other providers. CMS website. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-10-30.html.
- Direct payment/cash-friendly practices. Association of American Physicians and Surgeons website. http://www.aapsonline.org/index.php/site/article/direct_payment_cash_friendly_practices/.
- HIPAA administrative simplification. Association of American Physicians and Surgeons website. http://www.aapsonline.org/confiden/hipaafaq.htm.
- How to opt out of Medicare. Association of American Physicians and Surgeons website. http://www.aapsonline.org/index.php/article/opt_out_medicare/.
- Restoring free markets to medicine. Association of American Physicians and Surgeons website. http://www.aapsonline.org/index.php/article/restoring_free_markets_to_medicine/.
- For more information:
- Jason P. Brinton, MD, can be reached at Brinton Vision, 17300 N. Outer 40 Road, Chesterfield, MO 63005; email: firstname.lastname@example.org.
- Lance Kugler, MD, can be reached at Kugler Vision, 13923 Gold Circle, Suite 101, Omaha, NE 68144; email: email@example.com.
- Jeffrey Liegner, MD, can be reached at Eye Care Northwest, One Wilson Drive, Sparta, NJ 07871; email: firstname.lastname@example.org.
- Donna McCune, CCS-P, COE, CPMA, can be reached at Corcoran Consulting Group; email: email@example.com.
- John B. Pinto can be reached at J. Pinto and Associates, 1021 Scott St., Suite 356, San Diego, CA 92106; email: firstname.lastname@example.org.
- Luke Rebenitsch, MD, can be reached at ClearSight Center, 7101 Northwest Expressway, Suite 335, Oklahoma City, OK 73132; email: email@example.com.
Disclosures: Brinton reports he is a speaker/consultant for Alcon, Abbott Medical Optics, ArcScan, Nidek and STAAR Surgical. Kugler reports he is a shareholder in Strathspey Crown LLC. Liegner reports he is an investor in and a consultant for Imprimis Pharmaceuticals. McCune and Pinto report no relevant financial disclosures. Rebenitsch reports he is an ophthalmic consultant for the FDA and has a financial interest in the Refractive Surgery Alliance.
Is it time to opt out of Medicare?
Disenrolling legal but misunderstood
“Opt out” does not mean what it sounds like. In order to “opt out” (by the CMS definition), the physician has to continue to enroll in the program itself. This was once a year but recently changed to every other year. This CMS form of “opting out” still requires compliance with any number of unacceptable CMS requirements, ie, making a contract with a patient not to seek reimbursement, even at the typical discounted Medicare rates. Why should we physicians be required to limit the patient’s choices and rights, especially about a “health insurance” program they had no choice in paying into over their career?
The only true “opting out” of the Medicare program is to disenroll, or to actively unenroll from the Medicare program. In the case of new doctors, it is to avoid enrolling in the first place. This is perfectly legal yet poorly understood by attorneys and completely ignored by CMS despite being described in its own documents. Both doctors and patients then can maintain their rights, but only completely outside of the CMS system over which the federal agency has control. Disenrolling is the real opting out to which you refer. That name, however, has been co-opted by CMS into something else.
Trevor Woodhams, MD, is Medical Director of Woodhams Eye Clinic, Atlanta. Disclosure: Woodhams reports no relevant financial disclosures.
Medicare drives profitable premium business
Nearly 60% to 70% of my private practice patient base is Medicare or Medicare Advantage plan-derived. For me to opt out of Medicare as a nonparticipating provider would be financially crippling to my practice.
Many surgeons who have opted out of Medicare have turned to complete elective self-pay boutique clinics for their patient base. Most locations in the U.S. do not have economy scales to support this move. My private practice is located in a community that is primarily middle class at best. The majority of my patients are covered by a Medicare or Medicare Advantage plan. The good news is that I still benefit from the self-pay premium options available to my cataract patients due to the CMS guidelines for presbyopia-correcting IOLs, astigmatism management and digital imaging associated with femtosecond laser cataract surgery.
Up to 89% to 92% of my cataract patient base that has Medicare or a Medicare Advantage plan sign ABN forms and choose femtosecond laser technology for astigmatism management and up to 52% to 58% of my patients are electing a presbyopia-correcting and/or toric IOL implant. Medicare and the Medicare Advantage-covered patients are what drive the premium part of my practice and generate what is considered the profitability for my practice. Without remaining a participating provider of Medicare, I would lose significant income to my practice.
Opting out of Medicare would be detrimental in my private practice setting, and on the contrary, by remaining a participant, Medicare actually drives the premium business for my practice, so opting out of Medicare remains a bad move for me at the start of 2016.
Mitchell A. Jackson, MD, is an OSN Refractive Surgery Board Member. Disclosure: Jackson reports no relevant financial disclosures.