Opting Out of the Third Party System Will Save The Patient-Doctor Relationship


by Richard Amerling, MD

Now that the Senate version of ObamaCare is moments from becoming the law of the land, we need strategies to safeguard the doctor-patient relationship from government intrusion.   The most effective approach is for both patients and physicians to opt out of the third party payment system.

From the patients’ perspective, opting out makes sense.  Insurance companies will not be allowed to deny care for pre-existing conditions.  Thus, even if the individual mandate is not thrown out on constitutional grounds, it will be smarter to pay the penalty, not buy insurance, and put as much money as possible into a health savings account.   Prompt excellent medical care can readily be found in the burgeoning free market.   Prices should be transparent to facilitate comparison shopping.

Physicians have an ethical obligation to use their skills and training for the betterment of our patients, and to pass this art to the next generation.  For those who choose to remain in practice, opting out of third party payment will be an increasingly attractive option.

Accepting payment directly from the insurer is a relatively recent aberration in the long history of the profession.   There was never a crisis in access to doctors’ services in the pre-Medicare/Medicaid era.   Physician fees were usual, customary, and reasonable.  Doctors charged well-heeled patients a bit more and those less well off a bit less.   Pro bono care was a part of every practice.  There was, and still is, competition between physicians for patients, and this restrained charges.  Patients valued the doctors’ time and vice verse.  Doctors worked exclusively for the patient and were their strong advocates.  There was a high degree of trust and medical care was used selectively.  Direct third party physician payment changed all of this for the worse.

Initially, doctors “accepted assignment” as a courtesy.   Medicare eventually required participating physicians to agree to this.  Over the years, it became the norm.  This was, in some ways, convenient to patient and physician. But by insulating both from the true costs of care, it led to overutilization and massive increases in health care spending.  Payers responded with price controls and attempts to micromanage medical decision-making such as managed care, and its new version, pay-for-performance.   Price controls on physicians drove volume increases that resulted in overall spending escalation.  Higher volume inevitably impacts quality of care.   No “quality improvement” measures can adequately compensate for this.   

Widespread opting out of the third party payment system will lead to lower utilization with huge cost savings.   There is no more efficient model than direct pay since it eliminates the middleman for the majority of charges.   Office costs are dramatically reduced when third party billing is abandoned.  By setting their own rates, doctors will be in control of their time and patient volume would decrease.  Quality of care would improve, again saving money.  The doctor-patient relationship, arguably the essential ingredient to cure and comfort, would be strengthened. 

The immediate objection to opting out is that not everyone can afford to pay at time of service.  The same argument could be made for dental and legal care (Note the absence of crises in the delivery of cosmetic surgery, dental, veterinary, and legal care—all outside third party systems).   We have simply become accustomed to having “someone else” pay (see “A Right to Healthcare? Wrong!” http://www.aapsonline.org/newsoftheday/00941). 

Another frequent objection is that some patients will not go for needed care if they must lay out money.   This is easy to assert and impossible to disprove, but should bureaucrats make these decisions?  This, plus unsustainable overuse of the system, are the inevitable alternatives.

Universal coverage will complete the move toward centrally-controlled care.    Practice will be directed (i.e. rationed) by federal committees using practice guidelines, “pay-for-performance,” and the electronic health record.  Individualized care and medical confidentiality will slowly disappear.  Importantly for the administration and Congress, more citizens will become dependant on government largesse.  Doctors and other providers will become government employees, and be subject to its whims.  

It is now left to individual physicians and patients to act in their own interests, and to defend the medical profession and doctor-patient relationship from government intrusion, and ultimately, destruction.  

It is time to opt out. 

Doctors, sign the Physicians’ Declaration of Independence: http://www.aapsonline.org/medicare/doi.htm.


  1. I have a technical question about opting out. If one is a pathologist or a radiologist and depends totally on referals, how does one opt out? Does anyone out there have experience with this kind of situation?

  2. Dr. Hurt,
    I would think that you would need to be in a region where there are referring doctors who have opted out, at least in our current environment. I am a family practitioner, and I would love to be able to send skin biopsies to an opted out pathologist in order to get lower fees for my patients. If the government takeover really comes to pass, as Congress is trying to enact, then there will be a great demand for as many opted out physicians as possible, including pathologists and radiologists. Free market doctors will spring up everywhere, and they will need doctors like you to whom we would refer. There will become a great need for surgical centers that are outside of the system, with surgeons, pathologists, etc. People are already willing to go to India to escape our semi-socialism. With full scale socialism in place, I would think that enough people would be willing to go to Salt Lake or Denver to make a private hospital there profitable. With a large-scale opting out of doctors, the U.S. could develop a “two tier system” like in the U.K.
    Jim Brook, Idaho Falls ID

  3. We should be careful with the term “opt-out,” because it is not a simple synonym for “resign from all managed care contracts.”

    The physician who opts out of Medicare still has a contract with CMS. That physician must maintain written and signed contracts (in 14 pt type) with each Medicare patient and provide a copy to CMS on demand. He/She must re-opt-out every two years. Sending a single non-emergency claim to CMS cancels the Opt-out. Patients are not reimbursed by Medicare (proof of the “Medicare as insurance” lie).

    A physician who totally resigns (dis-enrolls) from Medicare (which can be done on the CMS website), no longer has a contract with Medicare. What I am trying at this moment to ascertain is whether a dis-enrolled physician must still follow the law that requires a claim be submitted to Medicare for each patient encounter (unless the physician is Opted-out).

    Reason would say if no contract, no such requirement would exist. But my Texas Medical Association representative believes the law would still apply. Can some legal beagle who reads this please enlighten us.

    Corollary question. If no claim is filed by the MD, does the patient then send in CMS-1490S “Patient request for Medical Payment” to request their “insurance” reimbursement? My TMA representative states that such a submission would trigger an CMS investigation of the physician for failure to file the claim.

    Enlightenment is needed.

  4. I would love to opt out of managed care contracts, but in this market it is an economic impossibility for a smaller stand-alone primary care practice like mine. At the very least, I would stay with TriCare, since I believe it to be my patriotic duty to care for families of members of our armed services. I believe, however, that it should be up to the physician, and only the physician, to decided with which payers he will do business. Continuity of patient care can thus be preserved.

  5. Great analysis. I think physicians need to do whatever they can to “get off the grid” so to speak, with regard to government medicine. I also want to comment on Dr. Amerling’s previous post regarding health care as a right, which everyone should read. I think it is critical for those who value free exchange and a limited role of government in our lives to educate themselves about just what is a right and what is not. It is discouraging to hear so-called “conservatives” with otherwise good ideas shoot themselves in the foot by admitting they support health care as a right. They obviously don’t have a very deep knowledge of the founding of our country, free markets, or the dangers of collectivism. They will lose arguments and support so long as they cannot articulate why the moral highground is a system that does NOT consider health care as a right.

  6. A dermatologist, I opted out of Medicare last October, the last quarter in the year in which I could do so. As a non-Medicare physician, I still see Medicare patients, but on a cash-only, contractural basis. Neither the patient nor I can file a claim for services, and in fact, it is a violation of law to do so. My peace of mind had increased significantly until Obamacare passed yesterday. Now I see the handwriting on the wall even more clearly. The government’s plan is to bankrupt private insurers and bring about a total takeover of healthcare. This has always been a pillar of totalitarian regimes. This may be an environment in which cash-only practices thrive, unless capitalism is completely outlawed. If one wants to experience a profound sense of deja vu, read Shirer’s “Rise and Fall of the Third Reich.”

  7. What I meant by “opting out” was indeed resigning from all managed care contracts. It is best done all or nothing. That way, there will be no “dual fee schedule.” No CPT coding at all. I charge by time, and I do no coding. Dr. Tsambassis, I do run a small stand alone family practice. I do not need many patients to meet my low overhead. The direct payment model works very well in such a practice. There are enough uninsured to support such a practice in most places. If Obamacare becomes a reality, then the demand will be from people who need to escape the shortages and waiting lines. Fees can be kept low enough that people would gladly pay to avoid waiting for months.

  8. I’m glad to see Dr. Amerling’s discussion. It shares my sentiment and evaluation of the system almost to the letter. Unfortunately, is an argument that as much sense as it makes, it has the effect of making my Florida colleagues think I’m lunatic. That is how dependant the medical profession and patients has become to a third party payer system.
    To make matters worse this new “reform” only consolidates the power of the insurance industry by forcing everybody to have insurance. The effect will be that those physicians who do not and will not accept them will be force out of business. Opting out is now a no-option.
    On your point about paying the penalty and open an HSA; one major caviat. The law as is written ONLY allows HSAs with a high deductible insurance. So you see, even there the insurance industry found a way to grab our will.
    In their anti-goverment rhetoric, the AAPS has been focusing their guns at the wrong player. It is easy to blame the goverment for everything. Howver, the rule of thumb in DC is that nothing gets done without $pon$or$ willing to $pend to change public opinion polls. This health “care” reform has only been about insurance. Did you think that was not on purpose?
    The real enemy in health care is “big insurance”. Why didn’t we see the fierce media campaign they promise except to defeat the “public option” by advertising that the problem is everybody else but them (Really; I saw a commercial with a pie chart using data from CMS, showing that over 90% of what is “spend” in health care is on doctors and hospitals implying that there lies the problem !!!). They have enjoyed exclusive protection against anti-trust laws, protection against lawsuits for their medical decisions and now with the stroke of a pen (and several million$) they have virtually eliminated the competition: self-pay individuals. They are the true power behind the wheel. They will go to bed with any politician of any affiliation to stay in control. This country is too self reliant, and even selfish, to ever support universal healthcare. By taking advantage of this anti-goverment scare tactics, the insurance industry has engrained in people’s brains that without them health care is impossible.
    This is the real evil that the AAPS must unmask!!