To the extent possible, when customary charges are calculated for a fiscal year, the
actual charges physicians or suppliers have made for services rendered during the
calendar year immediately preceding the start of the fiscal year (i.e., derived from
either claims processed, or from claims for services rendered during the preceding calendar year) are used.
In calculating the customary charge for a given service, each charge the physician
or other person has made for a service is arrayed in ascending order. The lowest actual
charge which is high enough to include the median of the arrayed charge data is selected
as the physician’s or supplier’s customary charge for the service. However, where
the charges generally made by a physician or supplier to other patients are lower
than those made to Medicare beneficiaries, the lower charges are used as the basis
for establishing the Medicare reasonable charge screen.
When a carrier does not have adequate statistics on charges for all of a calendar year, e.g., for suppliers of medical equipment, prothestics, ambulance services, or for
new services, the fees charged and the price lists in effect as of June 30 of that
calendar year only may be used. The intent is to use a price list which can reasonably
be assumed not to exceed the median of the prices charged by the supplier for his
items and services during that calendar year.
Where a carrier has permitted an increase in a customary charge under the unusual
circumstances provision (see C. below), the increased amount is recognized as the
customary charge for the next fiscal year if it exceeds the median of the charges
made by the physician or supplier for the service during the calendar year immediately
preceding the start of that fiscal year.