For new Direct Care providers, deciding whether or not to opt out of Medicare can be one of the most crucial and challenging decisions they can make. In our series of articles, we detail both why a provider would or would not want to opt out of Medicare. For the why you would opt out of Medicare article, click here.
For some Direct Care practices, staying in the Medicare system is beneficial, or needed temporarily as they transition from a hybrid model to a fully subscription based system.
It often makes sense to stay in the Medicare system for many Direct Care providers that use a blended model of partial subscription based and partial third-party payer fee-for-service model.
This allows these practices to transition more of their patients to subscription-based care while retaining some revenue through third-party payers like Medicare. And, not surprisingly, staying in Medicare means that a practice is more likely to retain Medicare enrolled patients. Many patients don’t want the cost of membership fees for a specific practice.
Dr. Bruce Jung of Corbin, Kentucky runs a practice called The Doc Shoppe which is disenrolled from Medicare. Jung admits that since he’s disenrolled, “it’s a hassle for my patients.” Since Medicare will not reimburse membership fees at this time, he’s found it difficult to attract more Medicare patients. When Dr. Jung opted out of Medicare, and moved from a fee-for-service practice to a membership model, he found that "only 40 or so patients came with me."
Opting in also makes sense for many providers that serve larger corporations. Qliance Medical Group is a Direct Primary Care health care business based in Seattle, Washington, that serves both large corporations and individual members. CEO Dr. Erika Bliss describes Qliance as a “hybrid between a capitation [model] and true Direct Care.” If you’re a larger corporation and want to partner with Medicare Advantage program, Dr. Bliss believes that opting in is better. “We struggled with this,” she admits. “If we had 300 Medicare patients paying individually, and [Qliance] opted out, all 300 people would have to adopt that plan: it’s all in or all out.” So if you’re working with a Medicare Advantage partner, Bliss believes that opting in is a less of a headache.
Some providers assume that moonlighting is prohibited for opted-out physicians and don’t know that Medicare allows moonlighting in some circumstances. Some hospitals may also be unaware of this exception and initially offer resistance to opted out physicians. When opting out of Medicare, it is important to communicate this with your hospital/urgent care and educate them on this rule if needed.
It’s not just difficulty with hospitals that makes opting-out problematic for some providers. Some doctors experience limitations with patients at the hospital while being an opted-out provider. Opted out providers will sometimes find their prescriptions were not honored by a pharmacy, and this is likely due to many providers not understanding that the second step of opting out is to register with the Provider Enrollment, Chain and Ownership System (PECOS). Often providers find themselves in a “limbo state,” Dr. Bliss explains, because providers’ status has lapsed in the system and therefore doesn’t recognize them. “It’s critical if you opt out to remind yourself about ninety days before you opt out.”
For many Medicare patients, the additional fees for services provided by a Direct Care practice are too much of a burden. “Right now if you’re a Medicare age person and want Direct Care service, it’s all on you,” Dr. Bliss says, citing the cost. “It’s totally unfair. Medicare pays so poorly that not enough people want to do it and no one wants to give patients the care they need. [Seniors] are paying for the privilege of Direct Primary Care.”
The other decision that Direct Care providers need to address is whether or not they’ll partner with Medicare Advantage. “If you opt out, you opt out for two years. It takes a while to negotiate these Medicare Advantage contracts,” explains Dr. Bliss of Qliance. “If we had 300 paying individuals and we’re opted out and we decided we’re going to opt in with a plan, all 300 people who have to opt in to that plan if we they were going to continue with us. It’s all in or all out.” This creates a lack of flexibility for some patients, exactly the opposite of what Direct Care providers aim to achieve.
On the flip side, if a provider is already opted out but individual patients suddenly become eligible for Medicare, then you may have a problem. “There are companies that we run into where people are working past 65 and are eligible for Medicare and start using Medicare,” she explains. But if you’re an opted out provider, then you’ve got a problem. “Let’s say you have five employees [who enroll in Medicare] who you can no longer have the employer pay you. It gets a little messy.”
Dr. Jung wants DPC providers to know both the strengths and limitations of opting out. Personally, he can attest to a huge cost. Not only has his access to certain types of patients declined and his practice initially suffered a period of contraction, but financially, Jung found that was a huge loss initially.
For providers thinking of opting out and starting their own practice, he suggests not hiring an employee until they achieve a certain patient base— roughly two hundred people. You also need to set up a medication dispensing system, a website to advertise. “DPC practices need an Electronic Health Record,” Jung explains, that has the “capabilities to monitor medication dispensing (inventory management)” and is closely integrated with (and preferably provides the means to develop) a practice website which allows potential patients to register or sign-up for the practice online.
In the end, Jung sees himself as a “simple doctor trying to do what’s best for his patients.” Perseverance, he believes, is key.
While Dr. Jung is a great example of a provider who persevered to deliver the vision of access he wanted to his patients, his path may not be for everyone. The acknowledged costs— financial, access to Medicare patients, and relationships with certain hospitals— may be prohibitively expensive for some doctors. Others, such as Qliance, are able to avoid many of the frustrations that plague a smaller provider by using a blended approach and serving a client base that includes many large corporations. Due to the nature of their hybrid business model, they’ve been fortunate to offer members quality care outside the Medicare system; yet, even such a large provider as Qliance have stumbled upon hiccups.
When researching whether or not to opt out, keep in mind that it’s not just a simple question, that there are many other steps— registering with PECOS, deciding if you’ll partner with Medicare Advantage— that need to be addressed as well. This is why a provider may prefer a blended approach, or simply find working with Medicare patients, no matter the red tape, is preferable to the alternative.