HI 00610.020 When SMI Expenses Are Incurred

A. General rule

Ordinarily Part B expenses for items or services are considered to have been incurred on the date the individual receives the particular item or service. However, in the case of artificial limbs or other items made to the patient's order, the expense is considered to be incurred on the date the item is ordered, even though the item is not delivered until later. (See E. below for exceptions where the individual was not entitled on the date he ordered a custom-made item or was out of the country when such an item was ordered.)


In September 1980, John James, an SMI beneficiary, paid a supplier $25 (determined to be reasonable) for rental of a wheelchair for 1 month; however, John did not get the wheelchair until October 10, 1980. John submitted to the carrier an SMI claim (form HCFA-1490) with his receipted bill showing payment in September and delivery on October 10, 1980. The only other Part B expense John had that year was $25 incurred in July. The charge for the wheelchair is considered to be “incurred” on October 10, 1980, the date of delivery. Accordingly, $25 will be carried over towards John's 1981 deductible.

B. Physicians' expense for surgery and childbirth

Most surgeons and obstetricians bill patients an all inclusive package charge intended to cover all services associated with the surgical procedure or delivery of the child. All expenses for surgical and obstetrical care, including preoperative/prenatal examinations and tests and postoperative/ postnatal services are considered incurred on the date of surgery or delivery, as appropriate. This policy applies whether the physician bills on a package charge basis or itemizes his bill separately for these items. See HI 00601.005.

Occasionally, a physician's bill may include charges for additional services not directly related to the surgical procedure or the delivery. Such charges are considered incurred on the date the additional services are furnished.

The above policy applies only where the charges are imposed by one physician or by a clinic on behalf of a group of physicians. Where charges are imposed by more than one physician for surgical or obstetrical services, all preoperative/prenatal and postoperative/postnatal services performed by the physician who performed the surgery or delivery will be considered incurred on the date of the surgery or delivery. Expenses for services rendered by other physicians will be considered incurred on the date they were performed.

C. Physicians' expense for allergy treatment

Allergists commonly bill separately for the intial diagnostic workup and for the treatment. When it is necessary for the physician to provide treatment over an extended period, the allergist may bill in a lump sum for all of the treatments. It is a common practice for the entire physician's charge to be divided over the period of the treatment and billed periodically; e.g., monthly or quarterly.

Expenses for allergists' services are considered incurred when the services are actually rendered. When an allergist bills periodically for a course of treatment; the carrier may in the absence of contrary information assume that the physician's periodic bill relates to services rendered prior to the billing date.

When treatment is discontinued for any reason, no payment may be made towards that portion of the fee or charge which relates to any services which were not rendered. Similarly, no payment can be made for any of the services covered by an inclusive lump-sum charge which were performed in a month before the patient's coverage had begun or after his coverage had terminated.

D. Medical supplies, equipment and other items not made to order for the beneficiary

Expenses for medical supplies, equipment, and other items not specifically made to order for the beneficiary are considered to have been incurred on the date the item was delivered. Therefore, if the order is cancelled before delivery, no reimbursement can be made. When the date of delivery is not specified on the bill, the carrier assumes, in the absence of evidence to the contrary, that the date of purchase was the date of delivery.

E. Artificial limbs, braces, and other custom made items ordered but not furnished

1. Date of incurred expense

If a custom-made item was ordered but not furnished to a beneficiary because the individual died or because the order was cancelled by the beneficiary or because his condition changed and the item was no longer medically necessary or appropriate reimbursement can be made based on the supplier's expenses. (See paragraph 2. below for determination of the amount of reasonable charge.) In such cases, the expense is considered incurred on the date t