Par vs Non-Par Provider - Essential Resource Guide For Inform Decision Making

Is Medicare participation costing you more than it's worth? Many healthcare providers face a dilemma: staying "in-network" with Medicare (PAR) or opting out as a Non-Participating Provider (Non-PAR). This decision can have a significant impact on your practice's bottom line. 

 

Making the wrong call on Medicare participation can significantly reduce your reimbursements, potentially even leading to zero payouts. This essential resource guide equips you with the knowledge and tools to avoid that dead end. 

 

We'll provide expert insights to help you make an informed decision that maximizes your Medicare revenue and secures your practice's financial future.

What is a Medicare Par Provider in Medical Billing?

A Medicare Participating Provider (PAR) is a healthcare professional or facility that has signed a participation agreement with Medicare. This agreement means the provider accepts Medicare insurance and agrees to specific terms regarding reimbursement and patient care.

 

Accepts Medicare: PAR providers agree to accept Medicare patients and bill Medicare for covered services.

Accepts Assignment: They agree to "accept assignment" on all Medicare claims. This means they accept the amount that Medicare approves for a service as full payment. The patient is responsible for any deductibles and coinsurance, but the provider cannot bill them directly for the difference.

Medicare-Approved Rates: Medicare reimburses PAR providers based on pre-determined rates. These rates are not negotiable, and the provider cannot charge patients more than the Medicare-approved amount.

 

Medicare uses a fee schedule system to determine reimbursement rates for covered services. When a PAR provider treats a patient with Medicare and secondary insurance, Medicare pays up to 80% of allowable fees first, and the remaining 20% is covered by secondary insurance.

PAR providers are generally prohibited from "balance billing" patients for the difference between Medicare's approved amount and their usual charges. However, there are some exceptions, such as for non-covered services or if the patient didn't provide accurate insurance information.

What is a Non-Par Provider in Medical Billing?

A Non-Participating Provider (non-PAR) is a healthcare professional or facility that has chosen not to sign a participation agreement with Medicare. This means the provider has more flexibility in handling billing and reimbursement, but it also has some potential downsides for both the provider and the patient.

Here's a breakdown of what being a Non-PAR provider entails:

• Doesn't Accept Assignment: Non-PAR providers are not obligated to accept Medicare's approved amount for a service as full payment. They can choose to bill patients for their full charges, which may be higher than what Medicare allows.

• Sets Own Rates: Non-PAR providers set their own fees and can negotiate with patients or their private insurance companies for payment.

• Out-of-Pocket Costs: Patients of Non-PAR providers are likely to face higher out-of-pocket costs because they are responsible for the difference between the provider's charges and what Medicare reimburses. This can include deductibles, coinsurance, and potentially balance billing.

Par Vs Non-Par Providers

 

Feature	Participating Provider	Non-Participating Provider
Agreement	Enters into an agreement to provide all covered services for all Medicare Part B beneficiaries on an assigned basis	Does not enter into an agreement to accept assignment on all Medicare claims
Payment	Accepts Medicare-approved amount as payment in full	May collect more than applicable deductible and coinsurance for covered services from patient
Limiting Charge	Charges are not subject to limiting charge	Cannot bill the patient more than the limiting charge on non-assigned claims
Claims Submission	Mandatory claims submission applies	Mandatory claims submission applies
MEDPARD Directory Listing	Placement in Medicare Participating Physicians and Suppliers Directory (MEDPARD)	Not listed in MEDPARD directory
Reimbursement	Reimbursement is 5 percent higher than the non-participating amount	Reimbursement is 5 percent less than the participating amount
Medigap Transfer	Medigap information is transferred	Medigap information is not transferred
Notification of Financial Responsibility	If the provider performs elective surgery costing more than $500, the beneficiary must be notified in writing of the expected financial responsibility.	N/A
Billing for Non-Assigned Claims	PA providers cannot bill the patient more than the Medicare-approved amount on non-assigned claims. Beneficiary receives payment on non-assigned claims.	Cannot bill the patient more than the limiting charge on non-assigned claims. Beneficiary receives payment on non-assigned claims.
Mandatory Assignment Services	Must be billed as assigned	Must be billed as assigned

Understanding the Cost for Par and Non-Par Providers

Understanding the financial implications of being a Participating and Non-Participating Provider (Non-PAR) in Medicare can be confusing. Let's break it down with a clear example to illustrate how costs work.

 

Imagine you're a Non-PAR provider providing a service with the code 90792. Here's a breakdown of the relevant costs

 

1. Participating Fee Schedule: This is the benchmark amount Medicare pays to Participating Providers (PAR) for the service. In our example, it's set at $168.00.

2. Non-Par Fee Schedule: This represents the maximum amount Medicare will reimburse a Non-PAR provider for the same service. It's typically 95% of the participating fee schedule, translating to $159.60 in this case.

3. Limiting Charge: This is the maximum amount a Non-PAR provider can legally bill the patient for the service. It's usually slightly higher than the Non-Par Fee Schedule and is set at $183.54 for our example.

4. Participating Provider: Medicare reimburses 80% of the participating fee schedule. For service code 90792, this translates to $134.40.

5. Non-Participating Provider: Here, Medicare reimburses the patient directly, not the provider. The patient receives 80% of the Non-Par Fee Schedule, which is $127.68 for service code 90792.

 

The patient is responsible for the remaining 20% (co-insurance) of the participating fee schedule, which comes to $33.60. The Non-PAR provider can bill the patient for the limiting charge ($183.54). However, the patient first receives a reimbursement from Medicare for 80% of the Non-Par Fee Schedule ($127.68). This means the patient's remaining out-of-pocket cost is the difference between the limiting charge and the Medicare reimbursement, which is $55.86 in this example.

 

Which Option is Right For Your Practice?

There's no one-size-fits-all answer. The ideal choice depends on several factors specific to your practice, patient population, and financial goals. Here's a breakdown to help you navigate this decision:

Factors Favoring PAR Providers

• Predictable Revenue: PAR providers receive consistent, pre-determined rates from Medicare, leading to more predictable revenue streams.

• Reduced Billing Hassle: Medicare handles most billing and paperwork for PAR providers, streamlining administrative processes.

• Attracting Patients with Lower Out-of-Pocket Costs: Patients of PAR providers generally face lower out-of-pocket expenses, potentially making your practice more attractive.

• Network Participation: PAR providers often participate in specific Medicare Advantage plans, potentially increasing your patient pool.

Factors Favoring Non-PAR Providers

• Potential for Higher Reimbursement: Non-PAR providers can set their own rates and may receive slightly higher reimbursement from Medicare compared to PAR providers (as seen in the example scenario).

• Greater Control Over Fees and Services: Non-PAR providers have more flexibility to negotiate fees with patients and potentially offer services not covered by traditional Medicare.

• Catering to Specific Patients: Non-PAR providers might attract patients seeking personalized care or specialized services not widely available within the Medicare network.

Wrapping Up

The decision between becoming a Participating (PAR) or Non-Participating (Non-PAR) provider in Medicare is a critical one. By carefully considering the factors outlined in this guide, you can make an informed choice that aligns with your practice's unique goals and financial objectives.Remember, there's no single "correct" answer. 

The ideal path depends on your specific circumstances. However, by taking the time to analyze your patient demographics, research reimbursement rates, and weigh the administrative burdens of each option, you'll be well-equipped to make a strategic decision that optimizes your revenue stream and ensures the long-term success of your practice.