HI 00401.310 Criteria for Determining a Reasonable Charge
The two criteria set out in the Medicare law (Section 1842 of title XVIII) which must
be considered in determining the reasonable charge for a service are:
the customary charges for similar services generally made by the physician or other
person furnishing such services (see HI 00401.315); and
the prevailing charges in the locality for similar services. (See HI 00401.320.)
Therefore, the reasonable charge for a specific covered service in the absence of
unusual medical complications or circumstances may not exceed the lowest of: the physician's
or supplier's customary charge for that service; the prevailing charge made for similar
services in the locality (however, see HI 00401.320C.); or the actual charge of the physician or supplier rendering the service).
The law also provides that the reasonable charge for a service may not exceed the
charge applicable for a comparable service and under comparable circumstances to the
policyholders or subscribers of the carrier.
Other factors that are necessary and appropriate with respect to a specific item or
service are taken into account.
The income of the individual patient may not be considered in determining the amount
of the reasonable charge.