December 3, 2007

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AMA Highlights Medicare Participation Options for Physicians

In a final rule released November 1, 2007, the Centers for Medicare & Medicaid Services (CMS) confirmed that effective January 1, 2008, the Medicare physician payment schedule conversion factor will be cut by 10.1% to $34.0682.  Facing such a steep reduction in payments, many physicians may wish to review their Medicare participation options.

Physicians who wish to change their current Medicare participation or non-participation status for 2008 must do so between November 15 and December 31, 2007.  Prior to that time, carriers are expected to provide each physician in their area with a CD-ROM containing information about the 2008 participation sign-up and a "Medicare Participating Physician/Supplier Agreement."  Actual payment rates may or may not be included this year so physicians will need to check the carrier web site or request that the carrier mail payment rates to them at no charge.  CMS also publishes Medicare Learning Network articles for physicians outlining changes that will be in effect for the following year.

To help ensure that physicians are making informed decisions about their contractual relationships with the Medicare program, the AMA has developed the following brief overview of the current situation with respect to the Medicare payment update for 2008 and the various participation options that are available to physicians.

 The AMA, the MMA, and others in organized medicine continue an aggressive campaign to pass legislation that would prevent the cut and provide a positive update in 2008.  While we will continue to press for congressional action, there is no guarantee that Congress will act before January 1, 2008.

Once finalized, Medicare participation and non-participation decisions are binding for the entire year.  If the rates change because of congressional action during the participation decision period, however, the deadline may be extended further as was the case in 2006 and 2007.

Physicians who currently are participating ("par") and who want to remain par for 2008 do not need to do anything to maintain their current status.  Likewise, physicians who currently are non-participating ("non-par") and who want to remain non-par for 2008 do not need to do anything to maintain their current status.  To switch from being par to non-par, physicians will need to notify their Medicare carrier in writing before January 1, 2008. 

The 3 options 

There are 3 Medicare contractual options for physicians.  Physicians may sign a par agreement and accept Medicare's allowed charge as payment in full for all of their Medicare patients.  They may elect to be a non-par physician, which permits them to make assignment decisions on a case-by-case basis and to bill patients for more than the Medicare allowance for unassigned claims.  Lastly, they may become a private contracting physician, agreeing to bill patients directly and forego any payments from Medicare to their patients or themselves.

Physicians who wish to change their status from par to non-par or vice versa will need to do so before January 1, 2008.  Once made, the decision will be binding throughout calendar year 2008 except where the physician's practice situation has changed significantly, such as relocation to a different geographic area or a different group practice.  To become a private contractor, physicians must give 30 days notice before the first day of the quarter the contract takes effect.

Those considering a change in status should first determine that they are not bound by any contractual arrangements with hospitals, health plans, or other entities that require them to be par physicians. 


Par physicians agree to take assignment on all Medicare claims, which means that they must accept Medicare's approved amount (which is the 80% that Medicare pays plus the 20% patient copayment) as payment in full for all covered services for the duration of the calendar year.  The patient or the patient's secondary insurer still is responsible for the 20% copayment but the physician cannot bill the patient for amounts in excess of the Medicare allowance.  While par physicians must accept assignment on all Medicare claims, Medicare participation agreements do not require physician practices to accept every Medicare patient who seeks treatment from them. 

Medicare provides several incentives for physicians to participate:

  • The Medicare approved amount for par physicians is 5% higher than the Medicare approved amount for non-par physicians;
  • Directories of par physicians are provided to senior citizen groups and individuals who request them;
  • Carriers provide toll-free claims processing lines to par physicians and process their claims more quickly.

Medicare approved amounts for services provided by non-par physicians (including the 80% from Medicare plus the 20% copayment) are set at 95% of Medicare approved amounts for par physicians, but non-par physicians can charge more than the Medicare approved amount.

Limiting charges for non-par physicians are set at 115% of the Medicare approved amount for non-par physicians.  However, because Medicare approved amounts for non-par physicians are 95% of the rates for par physicians, the 15% limiting charge is effectively only 9.25% above the par-approved amounts for the services.

With a 10% cut about to be imposed, many physicians may consider balance billing an extra 9% as one means of helping close the gap between 2007 and 2008 payment amounts.  When considering whether to be non-par, however, physicians should consider whether their total revenues from Medicare, including amounts the program pays, patient copays, and balance billing, would exceed their total revenues as par physicians, particularly in light of collection costs, bad debts, and claims for which they do not accept assignment.  The 95% payment rate is not based on whether physicians accept assignment on the claim, but whether they are par physicians.  When non-par physicians accept assignment for their low-income or other patients, their Medicare approved amounts still are 95% of the approved amounts paid to par physicians for the same service.

Non-par physicians would need to collect the full limiting charge amount roughly 35% of the time they provide a given service in order for the revenues from the service to equal those of par physicians for the same service.  If they collect the full limiting charge for more than 35% of the services they provide, their Medicare revenues will exceed those of par physicians.

Assignment acceptance, for either par or non-par physicians, also means that the Medicare carrier pays the physician the 80% Medicare payment.  For unassigned claims, even though the physician is required to submit the claim to Medicare, the program pays the patient, and the physician must then collect the entire amount for the service from the patient.

Private contracting

Provisions in the Balanced Budget Act of 1997 give physicians and their Medicare patients the freedom to privately contract to provide health care services outside the Medicare system.  However, private contracting decisions may not be made on a case-by-case or patient-by-patient basis.  Once physicians have opted out of Medicare, they cannot submit claims to Medicare for any of their patients for a 2-year period.

Private contracts must meet specific requirements:

  • The physician must sign and file an affidavit agreeing to forego receiving any payment from Medicare for items or services provided to any Medicare beneficiary for the following 2-year period (either directly, on a capitated basis, or from an organization that received Medicare reimbursement directly or on a capitated basis);
  • Medicare does not pay for the services provided or contracted for;
  • The contract must be in writing and must be signed by the beneficiary before any item or service is provided;
  • The contract cannot be entered into at a time when the beneficiary is facing an emergency or an urgent health situation.
In addition, the contract must state unambiguously that by signing the private contract, the beneficiary:
  • gives up all Medicare payment for services furnished by the "opt out" physician;
  • agrees not to bill Medicare or ask the physician to bill Medicare;
  • is liable for all of the physician's charges, without any Medicare balance billing limits;
  • acknowledges that Medigap or any other supplemental insurance will not pay toward the services; and
  • acknowledges that he or she has the right to receive services from physicians for whom Medicare coverage and payment would be available.
To opt out, a physician must file an affidavit that meets the above criteria and is received by the carrier at least 30 days before the first day of the next calendar quarter.  There is a 90-day period after the effective date of the first opt-out affidavit during which physicians may revoke the opt-out and return to Medicare as if they had never opted out.

This article is based upon the AMA's Medicare RBRVS:  The Physicians' Guide 2007.  The complete guide is available from the AMA Press by calling toll free 1-800-621-8335.

Monthly MMA Educational Programs Begin Jan. 4 with "Marketing Your Practice"

MMA begins its third year of the popular "First Fridays" educational programs with an innovative program offered January 4, 2008 at the MMA offices in Manchester entitled, How to Market Your Medical Practice & Collateral:  Production & Printing.  The program will be presented by Healthcare Marketing, a Portland marketing and public relations firm.  Since 1989, Healthcare Marketing has helped clients throughout New England promote their products and services with outstanding creative design, planning, production, and media placement expertise. 

The market for health care services is rapidly expanding and your practice can benefit significantly from the knowledge of experienced marketing professionals.

Begin your new year by learning to execute a superior marketing campaign.  Health care today is not immune from the forces of the marketplace.  Whether you need a new patient brochure, a new website, or a promotional video, this three hour program will be your best investment.

A $60 fee covers all materials and breakfast.  The program runs from 9:00 am to noon and you may register on-line at or by calling 622-3374 (press O for assistance).


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Maine CDC Confirms First Case of Influenza

The Maine Center for Disease Control and Prevention announced November 30, 2007 that the first case of influenza this season was confirmed by laboratory tests this week.

The confirmed case was in Penobscot County, but Dr. Dora Anne Mills noted that it is possible that there are other cases that have not yet been confirmed.  There has been a significant increase in respiratory illnesses and flu-like symptoms reported in the last few days.

The arrival of the flu is a month earlier than last year.  It usually peaks betwen December and April. [return to top]

Resources on Cultural Competency Available

With concerns about cultural competency in health care gaining national attention, the physician community has proactively developed and incorporated cultural competency training in medical educational programs.  As a result, a growing number of training courses and educational materials are now available online, including:

AMA activities to eliminate health disparities:


Association of American Medical Colleges:


University of Michigan Program for Multicultural Health:


Additionally, the U.S. Department of Health and Human Services has launched a Web site,, offering the latest resources and tools on the topic.  The site offers free online courses that are accredited for continuing education credit, and access to a free Web-based interactive tool to assist with language access services.

The very successful conference last month in Freeport on health literacy and cultural competence is further indication of the interest in this topic in Maine and beyond.  Go to for more information. [return to top]

Consider MMA LogoWear for your Holiday Gifts

A full-line of men's, women's, and children's apparel with the MMA logo is available for purchase through the MMA on-line store at  These items would make a nice gift over the holidays to a family member or friend who has a relationship with MMA while also providing the MMA a financial benefit!  MMA non-dues income now exceeds dues income as the Association continues to offer an array of products and services of interest to physicians and their organizations.

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Resource Can Help Doctors Overcome Language Barriers with Patients

The AMA’s second edition of its Office guide to communicating with limited English proficient patients offers detailed information and resources that physicians and other health care professionals can use to provide better care to patients with limited English proficiency (LEP).  The booklet explains how LEP can affect patient care and offers strategies to address the language needs of patients in a culturally, linguistically, and an ethically appropriate manner.  It includes commonly asked questions surrounding the issue of LEP, tips for working effectively with interpreters, and a chart to explain when to use varying levels of interpretation resources.

Visit to download a free copy. [return to top]

AMA Practice Tip: Connecting with Your Patients

Online medical consultations, also known as e-visits, present opportunities for growth and increased efficiency in the physician practice.  To learn more about this new patient convenience and if it is right for your practice, visit the AMA's Practice Management Center Web site at to find the educational resource, Online medical consultations:  connecting physicians with patients.  This is on the "members only" portion of the AMA web site.

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MMA Website Scheduled Downtime Next Weekend

The MMA's webhost, MMIC Media, will be changing their Internet Service Provider (ISP) on December 7, 2007. 

This will cause an interruption in web hosting as the Internet recognizes the new address.  We do not expect the disruption to exceed 24 hours, but it may take as long as 48 hours. 

The switch will take place late on Friday to minimize the impact. [return to top]

Senate Considering Long-Term SCHIP Extension

SCHIP funding expired on September 30, 2007 and the program has continued under 2 temporary measures, the second of which expires December 14, 2007.  Talks on a reauthorization bill have not yet produced a proposal that can pass the House by a veto-proof margin, so the focus of the discussion in Washington now has turned to a 1-year extension known as a "Continuing Resolution."  A simple 1-year extension of the program, $5 billion, would not be enough to cover projected spending in 21 states, including Maine, Massachusetts, and Rhode Island in New England.  It is likely that the 3 New England states will run out of money in March 2008.  The funding shortfall in this extension is $1.6 million.

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Primary Care Study Commission Schedules Final Meeting

The Commission to Study Primary Care Medical Practice, established by the 123rd Legislature in S.P. 732, has scheduled its 4th and final meeting for Friday, December 7, 2007 in Room 209 of the Cross State Office Building (the HHS Committee room).  The schedule for the meeting is:

10:00 am:  Opening Remarks

10:05 am:  Information Overview/Follow-up Information

10:30 am:  Work Session

Noon:  Lunch

1:00 pm:  Work Session

4:00 pm:  Adjourn

The members will be developing their recommendations to the Legislature which are due for consideration during the Second Regular Session beginning in January 2008.  The physician members of the Commission are Kevin Flanigan, M.D., John Irwin, D.O., and Jeffrey Aalberg, M.D.

You can listen to the deliberations online:
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Federal Agency Releases FY 2009 Medicaid Matching Rates

The U.S. Department of Health & Human Services has released the federal share of spending in the Medicaid and SCHIP programs for the period October 1, 2008 to September 30, 2009.  The Federal Medical Assistance Percentages (FMAP) determine the federal share in the Medicaid program while Enhanced Federal Medical Assistance Percentages (enhanced FMAP) determine the federal share in the SCHIP program and certain aspects of Medicaid.  The FMAP ranges from 50% to 83% and the enhanced FMAP ranges from 50% to 85%, depending on a state's socioeconomic status.  Maine's FMAP rate will be 64.41% and its enhanced FMAP rate will be 75.09%.

You can view the state list online at:
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Government Advisory Group Recommends Mandated Electronic Prescribing

On November 14, 2007, America's Health Information Community (AHIC), an advisory group to DHHS, unanimously recommended that physicians be compelled to use electronic prescribing technology.  The recommendation is based upon an AHIC working group's suggestion that HHS Secretary Leavitt seek Congressional authority to mandate e-prescribing in Medicare Part B.  The draft AHIC recommendation is available on the web at:

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