January 30, 2024
Navigating the Decision to Opt Out of Medicare
- by Gene Good, JD, CEO
In the realm of medical practice leadership, a recurrent topic of discussion revolves around the challenges posed by the increasing cost of living, which outpaces the growth of payor reimbursements. Amidst these discussions, practitioners often grapple with the escalating demand for financial and practice resources to comply with payor regulations. For some, the question arises: is it still worthwhile to remain in-network, and if so, why?
If the answer leans towards affirmation, the subsequent step involves delving into the contractual agreements with payors. This process, recommended every 3 to 5 years, includes a meticulous examination of the practice’s relationship with payors. However, a growing segment of medical practitioners finds themselves questioning the value of staying in-network. This narrative unfolds the story of a surgeon who confronted this predicament and details the strategic plan that ensued.
Gain Insights Before Opting Out-of-Network
Upon seeking guidance from their advisor, this surgeon embarked on a journey of evaluation. The initial recommendation was to critically assess the local perception of the practice and its competitors. Additionally, understanding the concerns of referring providers, analyzing the insurance landscape, and comprehending the process of offering out-of-network services versus opting out were identified as pivotal steps.
The insights garnered from this research were instrumental in shaping the surgeon’s decision-making process. Noteworthy findings included extended wait times for appointments with other oral surgeons in the area, a majority of patients expressing a preference for their treating doctor to bill insurance and referring dentists emphasizing the importance of quick patient access.
Furthermore, a survey of the insurance makeup in the region revealed that a majority of employer-based health plans were PPO plans with some out-of-network benefits. The decision to go out of network with Medicare added another layer of complexity, requiring a formal opt-out every two years. Crucially, once the initial six-month window lapsed, re-entry into the network was prohibited until the current opt-out expired.
After careful consideration and extensive discussions with a team of advisors including a consultant, accountant, general attorney, healthcare attorney, and others, the surgeon and the practice decided to opt out of Medicare. This decision, while unconventional, paved the way for a series of strategic adjustments that ultimately yielded surprising results.
Outcome of Opting Out of Medicare
Given the nature of oral surgery, the traditional strategies of adopting a direct primary care or concierge medicine model were not feasible. However, the aversion was not towards the fee-for-service model itself but rather the constraints imposed by price caps and administrative burdens. The practice chose to retain its fee-for-service structure but undertook a significant re-engineering, transitioning from an à la carte model to an all-inclusive one.
In a departure from the norm dictated by insurance companies, the practice retained its insurance biller and offered to handle the insurance billing on behalf of patients. Additionally, the team took on the responsibility of researching and verifying any out-of-network benefits. The fee structure was adjusted to approximately 150% of Medicare rates, providing the practice with greater flexibility and autonomy.
Fast forward several years, and the outcomes have been remarkable. The practice is poised to welcome a third oral surgeon, distinguishing itself by consistently providing patients with appointments within a day or two of being referred by dentists. In stark contrast, local competitors require patients to wait between 6 to 8 weeks for appointments or surgeries. The fee schedule, initially set at 150% of Medicare rates, has seen progressive increases and now approaches 300%.
The practice has not only maintained high patient satisfaction scores but has also managed to pay its staff more generously than its competitors, including those affiliated with hospitals. This commitment to staff welfare has translated into remarkable staff retention rates. The all-inclusive fee structure, while departing from the norm, has proven beneficial in simplifying the explanation of services, costs, and payment options to patients.
Furthermore, the practice has been able to extend its reach in charitable care, providing assistance to those in need. A significant point of pride is the practice’s commitment to fully guaranteeing its work. If a patient is dissatisfied, the work is either redone or refunded, underscoring a dedication to excellence and patient satisfaction.
While this particular case showcases the success of opting out of Medicare, it’s crucial to recognize that the factors contributing to this success may not be universally applicable. Opting out remains a relatively small percentage of medical practices, yet for those where it aligns with the unique circumstances and objectives, the benefits have proven substantial.
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In essence, whether a medical practice decides to remain in-network, venture out-of-network, or improve existing network agreements, a periodic deep dive into the business model is paramount. This introspection, ideally conducted every 3 to 5 years, allows practitioners to adapt to evolving healthcare landscapes, ensuring the sustainability and exceptionalism of their medical practices.
In conclusion, the strategic decision-making process outlined in this narrative sheds light on the complexities and considerations involved in opting out of Medicare. It serves as a valuable case study for practitioners contemplating similar paths, offering insights into the potential advantages, challenges, and transformative outcomes associated with such a decision. Contact DoctorsManagement for a medical practice assessment to better understand your business model.