When Medicare Cash Payments are Verboten

Many people hail Medicare as a savior for elderly. Private insurance companies don’t want to insure the elderly because they tend to become sick.

Often very sick.

Not the ideal insurance candidate for a profit-seeking business.

So the Federal Government has to step in to the rescue. They cover people over 65 in the United States. Sort of.

They also contract with private insurance companies for supplemental insurance. Between the Government and private sector, old people can have all their health needs met.

Sort of.

When the Federal Government (or private insurance companies) pay for your healthcare, they are able to tell you which services you can have..

..and which you cannot.

If you want some medical procedure that Medicare doesn’t cover, the solution should be simple - just pay for it yourself.

Not so fast.

Medicare doesn’t want you to go outside of the system. Many medical practitioners don’t like working with Medicare. They believe they can make more money, and have a lot less paperwork, if they just accepted cash payments.

And if other doctors saw they could make more money and have less hassle, the trend might catch on. Suddenly there would be very few providers accepting Medicare anymore.

The answer? Medicare makes it very difficult for providers to accept cash payments from Medicare recipients. Even if that provider has opted out of Medicare.

There are 5 specific instances where a Medicare patient can’t pay cash:

1. When they receive any service normally covered by Medicare, even if the provider has no relationship with Medicare

2. When a provider performs a service that usually is covered by Medicare, but may not be for a particular individual - such as when Medicare decides the procedure is not medically necessary. In this case the Medicare patient can pay cash, but only after the provider submits an Advanced Beneficiary Notice of Noncoverage (ABN), submits a claim, and then has the claim denied. In other words, they have to submit more paperwork to pay cash, than if you waited until it was medically necessary and have it covered.

3. If a procedure is covered, but the provider charges more than Medicare reimburses, you cannot pay the doctor the difference. The doctor has to suck it up. If the doctor doesn’t accept Medicare, they can charge more - but Medicare still determines the max amount - and you still have to submit a claim to Medicare and fill out an ABN.

4. Up until 2013, a lot of providers thought Medicare didn’t pay for maintenance therapy, like physical therapy. Therefore many providers collected cash for these services. A court case in 2013 changed that. Now Medicare covers maintenance therapy. And these services are the same as the first three situations above.

5. A 2013 HIPAA update, made it sound like Medicare recipients could just tell a provider they wanted to pay cash only. Many providers, however, think that the rule is misinterpreted and providers are putting themselves at risk if they allow patients to opt out. Providers should seek legal counsel to protect themselves if they try this provision.

In other words, it is very difficult in the land of the free and the home of the brave to pay cash for your services if you are a Medicare recipient.

Maybe that’s partially why medical tourism overseas is becoming such a booming business?