Medicare Opt-Out for Therapists: A Step-by-Step Guide
Many therapists are surprised to learn that Medicare has specific rules regarding private-pay services. A common assumption is, “I don’t take Medicare, so if a Medicare beneficiary wants to pay privately, we can just proceed as self-pay.” This is one of those areas where things can feel unclear pretty quickly, especially because Medicare does not function in the same way as many commercial insurance plans.
If you are treating a Medicare beneficiary, the question is whether you are legally permitted to see that client privately and what needs to be completed before treatment begins. So what I want to do here is walk through how Medicare opt-out works, where therapists tend to get confused, and how to think about the process in a way that supports clear documentation and informed consent.
When you are deciding how to work with Medicare beneficiaries in private practice, the next step usually depends on where you are in the process:
• If you are unsure whether Medicare beneficiaries can pay privately → the next step is understanding when Medicare requires a formal opt-out process.
• If you know you want to work privately with Medicare beneficiaries → the next step is determining whether your license type is eligible to opt out.
• If you have already decided to opt out → the next step is understanding the affidavit and Private Contract requirements.
• If you provide telehealth services → the next step is making sure your informed consent and documentation procedures also address telehealth-specific issues.
Why Therapists Get Confused About Medicare and Private Pay
A lot of the confusion comes from applying commercial insurance logic to Medicare. With many commercial insurance plans, a client may decide that they do not want to use their benefits and would rather pay privately. Therapists may be used to that process, so it can seem reasonable to assume the same approach applies when a client has Medicare.
Medicare has its own rules. If your client is a Medicare beneficiary, there are federal requirements that may apply before you can provide private-pay services. In my telehealth laws and ethics training, this is one of the areas where I often pause because it is so easy for clinicians to misunderstand. A lot of people think, “Well, I don’t take Medicare,” and assume that resolves the issue. But if you are seeing someone who is a Medicare beneficiary, you need to understand whether you are enrolled, opted out, or otherwise subject to Medicare participation rules.
This is where the key question becomes: Are you legally set up to see this Medicare beneficiary privately, and have you completed the documentation required for that financial arrangement?
Determining Whether the Medicare Opt-Out Process Applies to You
The next step often depends on your credential. Medicare allows certain practitioners to enroll in Medicare or formally opt out. For mental health clinicians, this may include clinical psychologists, clinical social workers, psychiatrists, marriage and family therapists, and mental health counselors.
This changed in an important way for MFTs and mental health counselors beginning in 2024, because Medicare began recognizing them under Part B. That also means these clinicians may now need to think about Medicare participation and opt-out rules in a way that may not have applied to them previously.
If you are uncertain whether your specific license type qualifies, the safest place to begin is usually your Medicare Administrative Contractor, or MAC. Each state or region is served by a MAC, and that contractor handles provider enrollment and opt-out processing. I would not rely only on something you saw in a social media post or a random summary online. You want to confirm the current process with the MAC that applies to your location and credential.
Medicare Opt-Out and Informed Consent
When therapists think about Medicare opt-out, the conversation often focuses on forms, affidavits, and compliance requirements. Those pieces are important, but they are only part of the picture. The financial arrangement is also something clients need to understand before treatment begins. Clients should know whether Medicare reimbursement is available, what they are agreeing to pay, whether they can submit claims, and whether they have the option to work with a Medicare-enrolled provider instead.
This is one reason I think of Medicare opt-out as an informed consent issue as much as a compliance issue. Clients are making decisions about their healthcare and their finances at the same time. Clear conversations about fees, reimbursement, and available options help clients make informed choices and reduce the likelihood of misunderstandings later. They also give therapists a stronger foundation for documentation if questions arise about payment or coverage.
What Does the Medicare Opt-Out Process Actually Require?
This is where many therapists start to feel overwhelmed, but the core structure is fairly straightforward. There are two main pieces to understand: the opt-out affidavit and the Private Contract.
The opt-out affidavit is the document you submit to your Medicare Administrative Contractor to indicate that you are choosing to opt out of Medicare participation. Each MAC may have its own form or process, so you need to identify the correct MAC for your state or region and follow that contractor’s instructions. In my own teaching, I recommend using certified mail or signature confirmation because these documents are still typically mailed, and having proof of delivery can save you a lot of stress later.
After the opt-out process is completed, you also need a Private Contract with each Medicare beneficiary you see privately. This contract documents that the client understands Medicare will not reimburse for those services, that the client is accepting responsibility for payment, and that neither you nor the client will submit a claim to Medicare for those covered services.
The affidavit and Private Contract serve different functions. The affidavit addresses your opt-out status with Medicare. The Private Contract documents the specific financial agreement between you and the Medicare beneficiary. You need both pieces in place before treating a Medicare beneficiary privately.
Common Medicare Opt-Out Mistakes
Most of the problems I see in this area seem to happen because clinicians are trying to do the right thing with incomplete information. Medicare rules can feel bureaucratic, and it is understandable that people want the simplest possible answer. The problem is that “the client wants to self-pay” is not enough by itself.
One common mistake is assuming that self-pay means Medicare rules no longer apply. A therapist may think that if they are not submitting a claim, then Medicare is no longer involved. The issue is that Medicare still has rules about private contracting with Medicare beneficiaries, even when the client does not want to use their Medicare benefits.
Another mistake is completing the opt-out process but forgetting the Private Contract. The Private Contract needs to be signed before services begin, and it has specific language requirements. You do not want to paraphrase the required sections or create a casual version that leaves out important federal language.
A third area of confusion involves Medicare Advantage. A client may say they are using Medicare Advantage for other medical care and ask whether they can submit your superbill themselves. This is where the therapist needs to be careful. If you have opted out, the Private Contract should make clear that neither party will submit claims to Medicare. That includes helping the client understand that self-submitting may create a problem, even if they are the one trying to do it.
At this point, most therapists understand the general requirements but want to make sure they're completing the process correctly. If you're ready to move from understanding Medicare opt-out to implementing it in practice, the Medicare Opt-Out & Private Contract Compliance Toolkit walks through the process step-by-step. It covers how to verify your opt-out status, identify the correct Medicare Administrative Contractor (MAC), complete the affidavit process, understand Private Contract requirements, and communicate these requirements clearly to clients. The toolkit also includes practical compliance reminders and documentation guidance that can help you stay organized and aligned with current Medicare requirements.
→ Medicare Opt-Out & Private Contract Compliance Toolkit
What About Telehealth Clients?
Once therapists start reviewing Medicare compliance, another question often comes up: What else should be documented when the client is being seen by telehealth?
This is where informed consent becomes especially important. In telehealth, clients need to understand the risks and benefits of receiving care through technology, how confidentiality is protected, what happens if the connection fails, how emergencies will be handled, and why their physical location matters during each session. These are not small details. They are part of making sure the client understands the structure and limits of the service being provided.
For example, if the client is in another state during a telehealth session, you may need to consider whether you are legally permitted to provide services in that jurisdiction. If the client is in crisis, you need to know where they are physically located so you can respond appropriately. If the technology fails, you need a backup plan. These are the kinds of practical details that are easy to overlook until something goes wrong.
From there, once the Medicare opt-out process is addressed, the next step is reviewing whether your telehealth informed consent process is complete. The Telehealth Informed Consent Checklist helps you review the major documentation areas that should be considered when providing telehealth services.
→ Telehealth Informed Consent Checklist
Understanding the Bigger Compliance Picture
Medicare opt-out is one part of a larger compliance framework for private practice. Many of the questions therapists ask in this area involve overlapping systems: federal Medicare rules, state licensing requirements, telehealth regulations, fee agreements, and informed consent obligations. That is why the answer is often more complicated than clinicians expect when they first ask the question.
A therapist may be thinking about the financial arrangement, while Medicare is also raising questions about opt-out status and private contracting. A therapist may be focused on telehealth access, while state law is also asking where the client is physically located. These systems can overlap in ways that are not always intuitive.
Many of these questions don't exist in isolation. Medicare requirements often intersect with telehealth regulations, informed consent, documentation, jurisdictional practice, and ethical decision-making. If you'd like a more comprehensive discussion of those issues, the Telehealth: Efficacy, Laws & Ethics CE course covers them in greater depth. The course is self-paced and eligible for continuing education credit, so you can complete it at a pace that works for your schedule.
→ Telehealth: Efficacy, Laws & Ethics CE Course
Conclusion
Medicare opt-out is ultimately about making sure the financial and legal structure of care is clear before treatment begins. When a Medicare beneficiary wants to pay privately, the therapist needs to understand whether opt-out is required, whether a Private Contract is in place, and whether the client understands the limits of Medicare reimbursement.
Handled well, this process supports clearer informed consent and reduces confusion about payment. It also helps therapists avoid relying on informal assumptions about Medicare that may not match the actual requirements. If you are planning to see Medicare beneficiaries privately, it is worth slowing down at the beginning so the opt-out status, Private Contract, and documentation process are all handled correctly.
Research References
Centers for Medicare & Medicaid Services. (2020, March 30). Medicare telemedicine health care
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https://www.cms.gov/newsroom/fact-sheets/medicare-telemedicine-health-care-provider-factsheet
Code of Federal Regulations. (2025). 42 C.F.R. § 405 – Subpart D Private Contracts; § 410.78
Telehealth Services. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-
U.S. Department of Health and Human Services. (2024, September 18). Obtaining informed
consent for telebehavioral health. Telehealth.HHS.gov.
https://telehealth.hhs.gov/providers/best-practice-guides/telehealth-for-behavioralhealth/
preparing-patients-for-telebehavioral-health/informed-consent-for-telebehavioralhealth
American Psychological Association. (2017). Ethical principles of psychologists and code of
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American Psychological Association. (2024). Proposed revision of guidelines for the practice of
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