Final answer:
NonPAR physicians under Medicare can choose to accept Medicare beneficiaries and can charge higher rates, but they receive a 5% lower reimbursement from Medicare compared to PAR physicians. They must also handle patient billing directly, which can lead to challenges like increased moral hazard or adverse selection.
Step-by-step explanation:
Under the Medicare payment guidelines, nonPAR (non-participating) physicians are subjected to several specific conditions. NonPAR physicians may accept or deny Medicare beneficiaries as patients on a case-by-case basis. When they do provide services to Medicare patients, they are allowed to charge a higher rate than what Medicare reimburses, up to a certain limit. However, their overall reimbursement from Medicare is 5% less than what participating (PAR) providers receive for performing the same services under the fee-for-service model. Additionally, when nonPAR providers bill patients, they must submit a claim to Medicare so that the patient can be reimbursed directly. Consequently, nonPAR providers face the risk of collecting payments from patients directly, which may lead to increased instances of moral hazard or adverse selection when it comes to their patient mix.