Navigating the Medicare system involves understanding a provider’s enrollment choice, which directly influences billing and patient costs. Providers must select one of three statuses: Participating, Non-Participating, or Opt-Out, each carrying distinct financial and administrative responsibilities. The Non-Participating (Non-Par) status offers a middle ground, allowing providers to treat Medicare beneficiaries while maintaining flexibility over payment terms. For many healthcare professionals, becoming a Non-Participating provider is a strategic move that affects both their practice operations and their patients’ out-of-pocket expenses.
Understanding Non-Participating Status
A Non-Participating, or Non-Par, provider is one who is officially enrolled in the Medicare program but has chosen not to sign the standard participation agreement with the Centers for Medicare & Medicaid Services (CMS). This means the provider still possesses a Provider Transaction Access Number (PTAN) and must submit claims for covered services provided to Medicare patients. Unlike Participating providers, who must accept the Medicare-approved amount as full payment for all services, Non-Par providers retain the option to decide whether to “accept assignment” on a claim-by-claim basis.
Accepting assignment means the provider agrees to accept the Medicare-approved amount as payment in full for that specific claim. If a Non-Par provider accepts assignment, they are reimbursed at a rate that is five percent lower than the rate paid to a Participating provider. The primary distinction lies in the flexibility to not accept assignment, which allows the provider to charge the patient more than the standard Medicare-approved rate, up to a legal maximum.
Steps to Elect Non-Participating Status
The process for a healthcare provider to elect Non-Participating status begins with enrollment in the Medicare program itself. Initial enrollment typically requires submitting the CMS-855 form, often done electronically through the Provider Enrollment, Chain, and Ownership System (PECOS). Newly enrolled providers are automatically assigned Non-Participating status unless they submit an agreement to participate within 90 days of their enrollment notification.
A provider can change their participation status annually during a designated period, known as the Medicare Participation Decision period. This open enrollment window typically runs from mid-November through December 31st each year. The change in status then becomes effective on January 1st of the following calendar year.
To switch from Participating to Non-Participating status, the provider must submit a formal letter of intent to their specific Medicare Administrative Contractor (MAC). This letter must be postmarked before the December 31st deadline and should include identifying information such as the Provider Transaction Access Number (PTAN) and National Provider Identifier (NPI). The MAC manages the administrative process and ensures the change is recorded accurately for the start of the new year.
Billing, Payment, and Patient Responsibilities
Operating as a Non-Participating provider introduces specific rules for billing and payment, most notably the Limiting Charge Rule. When a Non-Par provider chooses not to accept assignment, they are legally permitted to charge the Medicare beneficiary up to 115% of the Medicare-approved fee schedule amount for Non-Participating providers. This maximum allowable charge is codified in federal law under 42 U.S.C. § 1395w-4(g)(2).
The provider’s reimbursement process is fundamentally altered when assignment is not accepted, shifting the burden of payment collection to the patient. The provider must collect the entire billed amount from the patient at the time of service, including the deductible, the standard 20% coinsurance, and the balance up to the 115% limiting charge. The provider is still required to submit a claim to Medicare, but Medicare will send its payment—80% of the Non-Par approved amount—directly to the beneficiary.
Non-Par providers must inform the patient that they do not accept assignment and that the patient will be responsible for the full payment upfront. The patient then receives the reimbursement from Medicare. Exceeding the 115% limiting charge is a violation that can result in civil monetary penalties and exclusion from the Medicare program for up to five years.
Clarifying the Opt-Out Option
Non-Participating status is often confused with the Medicare Opt-Out status, yet they represent two fundamentally different relationships with the program. A Non-Participating provider remains enrolled in Medicare, must submit claims for covered services, and is subject to the Limiting Charge Rule. Their services are still covered by Medicare, and the patient receives a benefit payment.
In contrast, a provider who formally “opts out” of Medicare completely exits the program and is not enrolled for billing purposes. Opt-out providers enter into private contracts with their Medicare beneficiaries, agreeing that neither party will submit a claim to Medicare for the services provided. These providers are not subject to the Limiting Charge Rule and can set their own fees without restriction.
To opt out, an eligible provider must file an affidavit with their Medicare Administrative Contractor. This status generally locks the provider out of the Medicare system for a period of two years. This is a more restrictive choice than Non-Participating status, as the patient is fully responsible for the cost of the service with no possibility of reimbursement from Medicare.