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Can Medicare Patients Self-Pay?

According to CNBC, 10,000 Baby Boomers are entering retirement every single day. As you can imagine, that has a serious impact on healthcare. In fact, by 2020, Baby Boomers will more than double the cost of Medicaid and Medicare. These statistics have doctors offices, therapists, pharmacies, and other healthcare offices worried about the future of their industry with this huge influx of Medicare-covered patients.

This shift in the healthcare industry poses this common question among healthcare professionals, “Can Medicare patients self-pay?” The true answer depends on your relationship with Medicare as a healthcare provider.

3 Different Healthcare Provider Relationships with Medicare

There are a few different types of relationships medical entities can have with Medicare…

Participating Provider with Medicare

Participating providers with Medicare is the most common relationship with Medicare.

To become a participating provider with Medicare, healthcare entities must sign a legal agreement with the Centers for Medicaid Services (CMS). This signed agreement states that the provider accepts assignment for all services covered by Medicare meaning that you’ve agreed to accept Medicare amounts as full payments.

Non-participating Provider with Medicare

If you’re a non-participating provider, you still have a contractual obligation with CMS but the difference is that you’ve not signed the legal accept assignment agreement for services covered by Medicare.

Non-participating providers can, however, choose to accept assignment for services on an individual basis. When this occurs, they can charge up to 15% more than the Medicare-approved amount for that service.

Non-Enrolled Provider

As a non-enrolled provider, you have no relationship with Medicare or Centers for Medicaid Services. However, this is not to be confused with “opting out” of Medicare.

Legalities and Self-Pay Compliance

the Social Security Act

The Social Security Act (Section 1848(g)(4)(A)) outlines everything regarding mandatory claim submissions and their exceptions.

For services furnished on or after September 1, 1990, within 1 year after the date of providing a service for which payment is made under this part on a reasonable charge or fee schedule basis, a physician, supplier, or other person (or an employer or facility in the cases described in section 1842(b)(6)(A))— (i) shall complete and submit a claim for such service on a standard claim form specified by the Secretary to the carrier on behalf of a beneficiary, and (ii) may not impose any charge relating to completing and submitting such a form.- via SSA.gov

Essentially, this means that if you, as the provider, perform a service on a Medicare patient that is covered by Medicare, it is required that you submit a claim to Medicare for that performed service.

Medicare Benefit Policy Manual

This following excerpt is sourced from Section 40 of Chapter 15 of the Medicare Benefit Policy Manual. It lays out an exception to mandatory claims submission…

The only situation in which non-opt-out physicians or practitioners, or other suppliers, are not required to submit claims to Medicare for covered services is where a beneficiary or the beneficiary’s legal representative refuses, of his/her own free will, to authorize the submission of a bill to Medicare. - via cms.gov

This particular excerpt in the Medicare Benefit Policy manual is interesting as it actually opens up a potential to have Medicare patients pay with cash.

HIPAA Omnibus Rule

The HIPAA Omnibus Rule of 2013 expanded specifically upon self-paying patients and Medicare beneficiary requests, especially with regard to Personal Health Information (PHI)…

Self-Paying Patient

The final rule requires that a covered health care provider agree in most cases to an individual’s request to restrict disclosure to a health plan of the individual’s protected health information that pertains to a health care service for which the individual has paid the health care provider in full out of pocket. - via HHS.gov

Self-Paying Medicare Beneficiary

Thus, if a Medicare beneficiary requests a restriction on the disclosure of protected health information to Medicare for a covered service and pays out of pocket for the service (i.e., refuses to authorize the submission of a bill to Medicare for the service), the provider must restrict the disclosure of protected health information regarding the service to Medicare in accordance with § 164.522(a)(1)(vi). - via HHS.gov

Can Medicare Patient Self-Pay?

So can you provide services to Medicare self-pay patients? We’ve laid the-out the differences based on the relationship you have, as a provider, with Medicare.

Participating Provider with Medicare

If you are performing a Medicare-covered service, it is impossible to accept self-payment from that Medicare patient. All Medicare-covered service must be billed to Medicare.

Non-participating provider with Medicare

As a non-participating provider with Medicare, you can accept self-payment in full from the patient at the time of service but you are still required to send claims to Medicare for covered services. From there, Medicare sends applicable reimbursement to that patient.

No relationship with Medicare

Because of the mandatory claims submission rule, if you provided a service covered by Medicare, you will have to send a claim for it to Medicare. But since you, as the provider, do not have a relationship with Medicare, however, you won’t be able to send claims their way. This means that in instances where the patient or their lawyer requests that no claims or protected health information (PHI) be sent to Medicare, you cannot provide covered services to Medicare beneficiaries, due to the HIPAA Omnibus Rule.