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Medicare PAR vs Non-PAR: Reduce Hassle and Boost Cashflow

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Medicare PAR vs Non-PAR: Reduce Hassle and Boost Cashflow

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Medicare Participating Provider

Choosing the wrong Medicare participation status for your provider can have significant financial consequences for your practice. Your choices are a Medicare Participating Provider (PAR) or a Medicare Non-Participating Provider (non-PAR). If you make the wrong choice, your allowable reimbursement can be limited, or you can end up unable to get paid by Medicare at all.

Setting up your participation status typically happens during Medicare enrollment, but should also be revisited during the revalidation process. By understanding the similarities and differences between Medicare PAR and non-PAR provider statuses you can reduce your hassle to get paid – and keep more of the money you receive.

There are a variety of reasons one participation may work better for you than another. The information below will help you make the right decision for your practice – starting with what each status means.

What is a Medicare Participating Provider?

Enrolling as a Medicare participating provider means that you are in-network with the plan. You may also see this listed as a PAR provider. PAR stands for participating, and as such, your practice has a contract with Medicare.

As part of your PAR provider contract, your practice agrees to take assignment on all Medicare claims. This means you must accept the amount that Medicare assigns for payment for the services you provide. Typically, Medicare-participating providers are reimbursed 80% of the Agency’s allowable fee (if the patient has met their annual deductible). The remaining 20% can either be billed directly to the patient or to their secondary insurance (if they have it).

If you bill the remaining 20% to the patient’s secondary insurance, as a Medicare participating provider that accepts assignment, you should get directly reimbursed. However, if you bill the patient, it can be more complicated. Accordingly, it is important to know whether your Medicare patients have secondary insurance so that you can collect the amount they’ll be responsible for upfront – to avoid the hassle of chasing the money later.

Importantly, as a PAR provider, you cannot bill patients for any amount over the set Medicare allowable fee. Doing so is considered “balanced billing,” and could get your practice into considerable trouble both legally and financially.

What is a Non-Participating Provider?

Selecting a non-PAR designation means that you’ll be considered an out-of-network, non-participating provider. Non-PAR stands for non-participating. You are enrolled in Medicare but are not under contract with the Agency, so you must agree to receive payment for the services you provide to Medicare patients differently than a Medicare participating provider.

Not being constrained by a Medicare contract allows you to choose whether to accept assignment. This means choosing whether you’ll be paid by Medicare or the patient. You can choose your assignment designation on a claim-by-claim basis or for each of the Medicare claims you submit. Only non-PAR providers have this option.

  1. Non-PAR Accepting Medicare Assignment: Choosing to accept assignment means that you agree to be reimbursed directly from Medicare. Hence, you are governed by the same rules as a PAR provider and can only bill according to the allowable amounts on the Medicare Fee Schedule. However, there are some differences. As a non-PAR provider accepting assignment, you are paid 5% less than a Medicare participating provider. Also, to collect the 20% that Medicare doesn’t cover, you must go directly to the patient versus being able to bill their secondary insurance. In many instances, the patient’s secondary payer will reimburse them for the covered amount.
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    Note: Although you can bill the patient for the 20% of your claim that Medicare does not typically cover, you are NOT allowed to bill the patient for the 5% that Medicare reduces your claim by.
  1. Non-PAR NOT Accepting Medicare Assignment: If you don’t want to accept assignment, this means that you’ll bill and get paid by the patient. For those providers that choose not to accept assignment, the federal government has a “limiting charge” amount set for the services you provide to its beneficiaries. This is the highest amount you are allowed to charge. Your fees can be calculated at no more than 115% of the total Medicare Fee Schedule allowable amount for non-PAR providers.

PAR vs. Non-Par: Which is Right for You?

When deciding which Medicare participation designation is right for your practice, it is essential that you break down how and what you’ll be paid by each option. Items you should consider include:

  • Total Medicare potential reimbursement
  • Total secondary potential reimbursement
  • Patient co-payments and payment responsibilities
  • Collection costs
  • Bad debt
  • Percentage of assignment and non-assignment claims

Typically, non-PAR providers that do not accept assignment must collect the full limiting charge amount approximately 35% of the time for their revenues to equal those of a Medicare participating provider for the same services. The key is understanding the allowable payment amounts for each designation, and how you’ll receive your reimbursement.

There are certainly similarities between each type of Medicare participation status. For example, PAR and non-PAR accepting assignment means the Medicare Administrative Coordinator (MAC) pays your practice directly for the 80% covered amount.

However, there are significant differences between the two designations that are important to note as well. Besides giving PAR providers a 5% higher pay rate than non-PARs, CMS provides these additional incentives to PAR providers that can help them gain more patients and receive their cash more quickly:

  • Senior citizen groups receive directories of PAR providers and individual patients may request them
  • Claims are processed more quickly because MACs provide toll-free claims processing lines

Use the below chart to help you break down each Medicare participation status and decide which one is right for you:


Note: When a patient pays for services directly, in many cases they can receive reimbursement for an allowable amount from Medicare and their secondary payers.

Changing Your Providers’ Statuses

You can change a provider’s Medicare PAR or non-PAR status at any time. However, participation decisions go into effect on January 1st of the next year and must be made by December 31st of the current year. They are binding for one year between January and December.

Medicare participation can be confusing if you’re not aware of the specifics surrounding PAR and Non-PAR designations and what each can mean to your practice’s cash flow. In addition to enrollment, the revalidation process – which occurs every five years in Medicare’s Provider Enrollment, Chain and Ownership System (PECOS) – also requires you to choose your participation status. Failure to revalidate can lead to deactivation from Medicare and the loss of reimbursement funds.

Healthcare Training Leader has a wide selection of online trainings on enrollment and credentialing that will help you easily enroll your providers in Medicare and other programs, get them successfully credentialed and revalidate them when necessary.

Note: Your providers can also opt out of Medicare entirely. You can learn more about this option in Medicare’s Providers Enrollment Guide.

Source: https://www.aafp.org/family-physician/practice-and-career/getting-paid/medicare-options.html