OIG Abandons Study on Physicians Opting Out of Medicare Due to Lack of Data

No centralized data regarding physicians opting out of the Medicare program exist and the data the Office of Inspector General (OIG) received from Medicare Administrative Contractors (MACs) and legacy carriers (Medicare claims payment contractors that remain in jurisdictions not yet awarded to MACs) were insufficient or not provided at all, according to an OIG memorandum report issued by Stuart Wright, Deputy Inspector General for Evaluation and Inspections. Therefore, OIG was unable to answer the issue questions in its proposed study titled “Impact of Physicians Opting Out of Medicare.”

In April 2011, OIG began the evaluation of physicians who opt out of Medicare to determine the extent to which and reasons why physicians opt out of the Medicare program and the effects of physician opt out on Medicare beneficiaries. From the data collected, however, OIG was unable to determine:

  • (1) the characteristics (such as specialty, location, practice type, and gender) of physicians who opt out of Medicare;
  • (2) whether the number of opted-out physicians is increasing or decreasing; and
  • (3) why physicians choose to opt out of Medicare.

The OIG concluded that the quality of the data and lack of procedures for MACs’ handling of opted-out physicians impedes CMS’s oversight of this aspect of the Medicare program.

Physician opt out requirements. Under Social Security Act §1802(b), physicians are allowed to opt out of the Medicare program for two year intervals. Physicians who have never enrolled in the Medicare program must opt out if they plan to treat Medicare beneficiaries through private contracts. Prior to the passage of the Balanced Budget Act of 1997 (P.L. 105-33), physicians were unable to opt out of the Medicare program to contract privately with Medicare beneficiaries.

Private contracts with beneficiaries must be in writing, signed by the parties, and state that:

  • (1) the physician has chosen to opt out of the Medicare program,
  • (2) the beneficiary or the beneficiary’s legal representative accepts full responsibility for payment of the physician’s charges,
  • (3) the beneficiary has the right to receive services from physicians who have not opted out and are willing to accept Medicare payments,
  • (4) the beneficiary or the beneficiary’s legal representative must agree not to submit a claim to Medicare or ask the physician to submit a claim to Medicare on his or her behalf, and
  • (5) the physician must sign a new contract with each beneficiary at the beginning of each two year period for which they have chosen to opt out (see 42 C.F.R. §§405.410 and 405.415.).

In addition, physicians who elect to opt out must sign written affidavits with the MAC that has jurisdiction over the claims the physician would otherwise have filed that states that they will comply with federal requirements for opting out, including that they will not submit claims to Medicare for any service provided during the two year period and will not receive direct or indirect payments for services furnished to Medicare beneficiaries with whom they have privately contracted (see 42 C.F.R. §405.420).

MAC requirements and CMS guidance. MACs are required to maintain information about opted-out physicians, including the name of the physician, the physician’s National Provider Identifier (NPI), the effective date of the opt-out affidavit, and the end date of the opt-out period. MACs may maintain additional data elements at their discretion. MACs must provide CMS with quarterly counts of newly opted out physicians by specialty but are not required to identify the physicians by name or NPI in their reports (see CMS Medicare Benefit Policy Manual, Pub. 100-02, Ch. 15,  §§40.20 – 40.40).

In September 2011, CMS issued guidance to MACs and legacy carriers about entering data into PECOS effective immediately and further guidance in November 2011, effective April 1, 2012, requiring MACs to capture opt-out affidavit information from affidavits received on or after January 1, 2009. Although OIG acknowledged that the CMS guidance issued in 2011 addresses the procedures that MACs and legacy carriers must have in place for maintaining data on physicians who opted out on or after January 1, 2009, OIG noted that further direction is necessary to account for data on physicians who opted out between 1998 and 2008.

The results of OIG’s data collection efforts. OIG sought to obtain data on opted-out physicians from CMS and individual MACs and legacy carriers but discovered that CMS currently does not maintain such data and MACs and legacy carriers are not maintaining all the required data elements for physicians who opt out of Medicare.

A CMS official provided OIG with a list of approximately 7,900 opted-out providers during the period from 1998 to March 2011, which he created using the lists of opted-out providers posted on MAC and legacy carrier websites. The official stated that MACs and legacy carriers would have the best available data on opted-out physicians.

In July 2011, OIG requested information regarding opted-out physicians for the period January 2009 through June 2011 from all 10 MACs and six legacy carriers that pay Part B Medicare claims. OIG asked for demographic and specialty information for each opted out physician, the effective date of the opt out, and, if applicable, the Medicare program reinstatement date. Seven MACs and four legacy carriers responded, but the data provided were often incomplete. Only one MAC and one legacy carrier provided all the data elements CMS requires.

Preliminary observations. Based on the data obtained, OIG noted that the number of opted-out physicians appears to have increased each year from 2006 through 2010. OIG also predicted that more physicians may opt out in the near future given the potential for legislated decreases in Medicare reimbursement for physician services.

OIG plans to conduct a full evaluation when a complete data source of opted-out physicians is available.