Providers often ask whether they can bypass Medicare rules and charge patients cash instead of billing Medicare. While the idea may sound straightforward, the reality is heavily regulated. Understanding the differences between participating, non-participating, opted-out status, and statutory exclusions is essential to staying compliant.

Medicare Enrollment Follows the Provider

Medicare enrollment is tied to the provider’s individual NPI (Type 1), not to the organization’s tax ID. Once enrolled, the provider’s obligation to bill Medicare for covered services follows them across all practice settings — whether they work in a hospital, group practice, or private clinic.

• CMS-855I is used to enroll a provider under their individual NPI.
• CMS-855R is used to reassign benefits to multiple organizations (each with different tax IDs).

Key: Enrollment attaches to the individual, not the organization. You can’t bill Medicare at one organization while collecting cash at another for covered services.

Participating vs. Non-Participating Providers

Participating providers must accept assignment on all Medicare claims. They agree to accept Medicare’s approved amount as payment in full and may only bill patients for deductibles and coinsurance.

Non-participating providers may accept assignment on a claim-by-claim basis. However, they must still submit all claims to Medicare. If they do not accept assignment, they may bill the patient directly. They cannot exceed the limiting charge (115% of Medicare’s approved amount).

When Cash Billing Is Allowed

There are three situations where cash billing is permitted.

Statutorily excluded services are items and services that Medicare never covers under any circumstance. Examples include routine dental care, routine vision exams and eyeglasses (except post-cataract), hearing aids, cosmetic surgery (unless reconstructive/functional), and routine foot care.

References:

• Social Security Act §1862 (42 U.S.C. §1395y) – exclusions
• CMS Medicare Benefit Policy Manual, Ch. 16, §10 – general exclusions
• CMS Claims Processing Manual, Ch. 30, §50.5.2 – ABNs not required for excluded services

Because these services are never covered, providers may always accept cash directly without filing a claim or issuing an ABN.

Services Medicare may deny for lack of medical necessity (for example, frequency limitations) may be billed to the patient. This can only occur if the provider issues an Advance Beneficiary Notice (ABN) in advance.

Providers who opt out of Medicare under 42 CFR §405.420 may accept cash for all services. This requires filing an affidavit with Medicare. Providers must also use private contracts with every Medicare beneficiary treated. Additionally, they need to maintain the opt-out for a two-year period. Opt-out status applies universally, across all practice settings.

Risks of Non-Compliance

Improperly accepting cash for covered services without meeting the above conditions can lead to:

• Overpayment recovery by Medicare
• Civil monetary penalties
• Possible exclusion from the Medicare program
• Whistleblower complaints and compliance investigations

Key Takeaways

• Enrollment is tied to the provider’s NPI, not an organization’s tax ID.
• Participating providers must always bill Medicare and accept assignment.
• Non-participating providers must still bill Medicare and cannot exceed the 115% limiting charge.
• Cash billing is only permitted for statutorily excluded services. It is also allowed for services denied for medical necessity with a valid ABN. Lastly, it can occur when the provider has formally opted out.

Compliance Reference Handout

For a quick training and compliance reference, including a flowchart and key citations, download the PDF handout here: