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:

  1. the customary charges for similar services generally made by the physician or other person furnishing such services (see HI 00401.315); and

  2. 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.


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HI 00401.310 - Criteria for Determining a Reasonable Charge - 09/15/1989
Batch run: 01/27/2009
Rev:09/15/1989