When a clinician has opted out of Medicare and asks you to sign a private contract, you are agreeing to pay their full fee yourself: Medicare will not pay the provider, will not reimburse you, and Medigap will not fill the gap. That is the core bargain behind Medicare opt-out providers and private contracts, and federal rules require the contract itself to say so in writing before any service is furnished.1eCFR. 42 CFR 405.415 – Requirements of the Private Contract
What “Opted Out” Actually Means
An opted-out provider has no billing relationship with Medicare at all. This is different from a non-participating provider, who still works inside Medicare and can charge up to the limiting charge. The opt-out right traces to the Balanced Budget Act of 1997, which let clinicians step outside Medicare’s rate structure and bill patients directly through private contracts.
The status is all-or-nothing. Once a provider opts out, it applies to every Medicare beneficiary they treat. They cannot see some Medicare patients privately and bill Medicare for others. And opting out is only available to certain professionals: physicians (MD, DO, dental, podiatric, and optometric), plus a defined list of “practitioners” including nurse practitioners, physician assistants, clinical psychologists, clinical social workers, and a handful of others.2eCFR. 42 CFR 405.400 – Definitions Physical therapists, occupational therapists, and speech-language pathologists have no opt-out path; if one of them tries to hand you a private contract, something is off.
What the Private Contract Must Include
The contract has to be signed before any services are furnished. If you’re already in the exam room and haven’t signed, the arrangement isn’t valid for that visit. The regulations require the contract to spell out, in print large enough to read, all of the following:1eCFR. 42 CFR 405.415 – Requirements of the Private Contract
- You accept full financial responsibility for the provider’s charges.
- Medicare’s normal limits on what a provider can charge do not apply.
- Medicare will not pay for any services under the contract, and you agree not to submit a claim.
- Medigap will not cover these services, and other supplemental plans may also decline.
- You have the right to see other providers who still accept Medicare and are not required to sign private contracts with anyone else.
- The expected effective and expiration dates of the provider’s current two-year opt-out period.
- Whether the provider has been excluded from Medicare under any provision of the Social Security Act.
Both you and the provider keep a copy. Read every clause. A missing disclosure can invalidate the contract, and this is where compliance most often breaks down in practice.
What Medicare and Medigap Will Pay
For services the opted-out provider personally delivers under the private contract, the answer is nothing. If the provider slips and submits a claim, Medicare denies it. If you submit one yourself, the denial message reads: “The provider decided to drop out of Medicare. No payment can be made for this service. You are responsible for this charge.”3Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual – Transmittal R160BP
Medigap is designed to supplement Medicare payments, not replace them. When Medicare pays zero, there is nothing for Medigap to supplement, so it also pays zero. Other supplemental plans have the discretion to deny these claims as well.1eCFR. 42 CFR 405.415 – Requirements of the Private Contract
There is no ceiling on what the provider can charge. If you are used to Medicare’s negotiated rates, the number on the invoice can be jarring. Some providers opt out to spend more time per patient or to run a concierge or direct-pay practice; you are paying for a different model of care, not the same service marked up. Whether the trade is worth it depends on your finances and on what the provider offers that Medicare-participating clinicians in your area don’t.
Services Ordered by an Opted-Out Provider
A useful piece of good news: Medicare can still pay for lab tests, imaging, durable medical equipment, and home health services that an opted-out provider orders, so long as the entity actually furnishing the service is enrolled in Medicare. The opted-out provider qualifies as an ordering and certifying provider for these purposes.4Centers for Medicare & Medicaid Services. Ordering and Certifying
So if your opted-out physician orders bloodwork, the lab that draws and analyzes it can bill Medicare normally, and you owe only your usual deductible and coinsurance for the lab work. The private contract blocks Medicare payment only for services the opted-out provider personally furnishes. Seeing an opted-out specialist does not cut you off from all Medicare-covered care connected to that visit. Ask where any referral is going, and check that the receiving provider or facility participates in Medicare before the appointment.
Emergency and Urgent Care
The regulations carve out an exception for emergencies and urgent situations. If you need immediate care to prevent serious harm, an opted-out provider can treat you without a signed private contract, and Medicare can pay.5eCFR. 42 CFR 405.440 – Emergency and Urgent Care Services A physician in that situation can collect no more than the Medicare limiting charge, which is 115% of the fee schedule amount for non-participating providers.6eCFR. 42 CFR 414.48 – Limits on Actual Charges of Nonparticipating Suppliers A nurse practitioner, physician assistant, or other “practitioner” in that situation can collect only the applicable deductible and coinsurance.
One wrinkle matters. The exception only applies when you don’t already have a private contract with that provider. If you previously signed one and later come in with an urgent problem, the visit falls under the existing contract, not the exception. Medicare will not pay, and the limiting charge does not apply. Once an emergency stabilizes for a new patient, any follow-up care requires a signed private contract before it can proceed outside Medicare.
How Long the Opt-Out Lasts, and What If the Provider Breaks the Rules
An opt-out lasts two years and renews automatically unless the provider cancels. The contract you sign must show the effective and expiration dates of the current period, so you should always know where in the cycle your provider sits.
If the provider fails to follow the rules, that failure can work in your favor. When an opted-out provider furnishes non-emergency services to a Medicare beneficiary without a valid private contract in place, Medicare can pay the beneficiary for those services.3Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual – Transmittal R160BP The paperwork failure is the provider’s, and the rule is written so you are not the one who pays for it. If you were treated without ever signing a compliant contract and you’re being billed, that’s worth raising with Medicare directly.
Checks to Run Before You Sign
Verify the opt-out status. CMS publishes a public list of providers who have filed opt-out affidavits, available through Medicare Provider Enrollment data on the CMS website. If a provider says they are opted out but does not appear there, ask questions before signing anything.
Get fees in writing. Because Medicare’s fee limits do not apply, there is no standard price and no benchmark to check against. Some opted-out providers charge modestly above Medicare rates; others charge substantially more. Ask for a written estimate for the specific services you need.
Keep the rest of your Medicare coverage in view. Signing a private contract with one provider does not affect anyone else you see. You can visit an opted-out specialist one day and a Medicare-participating primary care doctor the next with no conflict. The contract binds only the provider who opted out, and only for services that provider personally delivers.