Definition of a Private Contract

40.7 - Definition of a Private Contract (Rev. 1, 10-01-03) B3-3044.7 A “private contract” is a contract between a Medicare beneficiary and a physician or other practitioner who has opted out of Medicare for two years for all covered items and services the physician/practitioner furnishes to Medicare beneficiaries. In a private contract, the Medicare beneficiary agrees to give up Medicare payment for services furnished by the physician/practitioner and to pay the physician/practitioner without regard to any limits that would otherwise apply to what the physician/practitioner could charge. Pursuant to the statute, once a physician/practitioner files an affidavit notifying the A/B MAC (B) that the he/she has opted out of Medicare, the physician/practitioner is out of Medicare for two years from the date the affidavit is signed (unless the opt-out is terminated early according to §40.35, or unless the he/she fails to maintain opt-out (See §40.11)). After those two years are over, a physician/practitioner could elect to return to Medicare or to opt out again. A beneficiary who signs a private contract with a physician/practitioner is not precluded from receiving services from other physicians and practitioners who have not opted out of Medicare. Physicians or practitioners who provide services to Medicare beneficiaries enrolled in the new Medical Savings Account (MSA) demonstration created by the BBA of 1997 are not required to enter into a private contract with those beneficiaries and to opt out of Medicare under §1802 of the Act.