CMS Responds to AMA/MSNJ’s Question about the Medicare “Fourth Option”

MSNJ recently joined with the AMA asking CMS to explain its payment policy for Medicare-covered services furnished by physicians who are not enrolled in Medicare. This question was crystallized by a Form-1490S which permits beneficiaries to seek Medicare payments for services rendered by non-enrolled physicians. In addition, CMS had taken the position that non-enrolled physicians would be subject to penalties for using this as a method to obtain payment from the Medicare program. Because this appeared to be a “fourth option” for treating Medicare patients and being reimbursed, it was necessary to formally seek a clarification from CMS on this payment policy.  (The three understood options are: participating, non-participating and opted-out).

CMS has formally responded in a letter indicating that the form may not be used by non-enrolled physicians as a method to seek reimbursement. CMS explained that the form has a limited use, for a beneficiary to seek a determination where a physician refuses to submit a claim for covered services.

According to CMS, a physician must submit a claim for covered services rendered to a Medicare patient, whether or not the physician is enrolled.  Penalties may be applied for failure to do so.

The following is a message from the AMA, explaining the CMS response:

The Centers for Medicare and Medicaid Services (CMS) has responded in writing to the request of the AMA and over 70 state and medical specialty societies regarding the policy for Medicare-covered services furnished by physicians who do not enroll in Medicare.  In the letter, CMS confirmed that physicians can enroll in Medicare as a participating (PAR) or non-participating (non-PAR) physician, or they can choose to opt-out of Medicare and furnish services to Medicare beneficiaries under private contracts.  CMS also stated that Medicare requires physicians to enroll in Medicare in order to bill for services furnished to Medicare beneficiaries, whether directly from Medicare or from the beneficiary who is, in turn, reimbursed by Medicare.  If a physician furnishes a covered service to a beneficiary, the physician is required to complete a claim form and submit it to Medicare on behalf of the beneficiary.  Penalties can apply to physicians who do not follow this requirement.  CMS also explained that CMS Form-1490S (which allows beneficiaries to seek Medicare payment) is rarely used since contractors are encouraged to educate physicians about the requirement to submit claims, but is intended to protect a beneficiary’s right to a payment determination in situations where a physician refuses to submit a claim for a covered service on behalf of the beneficiary.   CMS’ letter can be found at the following link: http://www.ama-assn.org/resources/doc/washington/cms-fourth-option-response-letter.pdf

The upshot of the CMS response is that there is no “fourth option” under the Medicare program. Additionally, except for physicians who are formally opted-out, physicians are subject to penalties if they provide and bill for covered services and do not submit a claim to the Medicare program.

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About MSNJ

Founded in 1766, the Medical Society of New Jersey is the oldest professional society in the United States. The organization and its dues-paying members are dedicated to a healthy New Jersey, working to ensure the sanctity of the physician–patient relationship. In representing all medical disciplines, MSNJ advocates for the rights of patients and physicians alike, for the delivery of the highest quality medical care. This allows response to the patients’ individual, varied needs, in an ethical and compassionate environment, in order to create a healthy Garden State and healthy citizens.

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