Payment may not be made for expenses which constitute charges by immediate relatives of the beneficiary or by members of the beneficiary's household. Payment may be made, however, for reasonable charges imposed on such individuals by a physician or supplier to recover out-of-pocket expenses the individual has incurred in furnishing covered items or supplies, e.g., expenses for covered drugs and biologicals, prosthetic devices, etc. In such cases, the charge may not exceed the physician's or supplier's actual out-of-pocket costs.)

This exclusion applies only to services reimbursed on a charge basis and does not apply to provider services and to the services of group practice pre-payment plans which are reimbursed for their costs rather than charges. Thus, reimbursement may be made for covered services furnished by a provider to an owner of the institution or to an immediate relative of an owner, or a member of an owner's household.

Since the personal services of provider-based physicians are billed on a charge basis, they are subject to this exclusion whether the bill is submitted by the physician or, with the physician's authorization, by the provider.

The following degrees of relationship are included within the definition of “immediate relative”; (1) spouse ; (2) natural parent, child, and sibling; (3) adopted child and adoptive parent; (4) stepparent, stepchild, stepbrother and stepsister; (5) spouse, , son-in-law, daughter-in-law, brother-in-law, and sister-in-law; (6) grandparent and grandchild.

NOTE: A brother-in-law or sister-in-law relationship does not exist between a physician (or supplier) and the spouse's brother or sister. Neither does a parent relationship exist between the physician spouse's stepparents .

These are persons sharing a common abode with the patient as a part of a single family unit, including those related by blood, marriage, or adoption, domestic employees and others who live together as a part of a single family unit. A roomer or boarder is not included.

This exclusion applies when such a firm is owned by a sole proprietor who bears one of the excluded relationships to the patient or, in the case of a partnership, when all of the partners are within the excluded relationships. Since a corporation is a separate legal entity, the charges it imposes are not subject to this exclusion regardless of the relationship of the patient to the corporation's owner(s).