[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR405.507]

[Page 97]
 
                         TITLE 42--PUBLIC HEALTH
 
                    CHAPTER IV--CENTERS FOR MEDICARE
                          & MEDICAID SERVICES,
                        DEPARTMENT OF HEALTH AND
                             HUMAN SERVICES
 
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED--Table of Contents
 
         Subpart E--Criteria for Determining Reasonable Charges
 
Sec. 405.507  Illustrations of the application of the criteria for determining reasonable charges.

    The following examples illustrate how the general criteria on 
customary charges and prevailing charges might be applied in determining 
reasonable charges under the supplementary medical insurance program. 
Basically, these examples demonstrate that, except where the actual 
charge is less, reasonable charges will reflect current customary 
charges of the particular physician or other person within the ranges of 
the current prevailing charges in the locality for that type and level 
of service:

    The prevailing charge for a specific medical procedure ranges from 
$80 to $100 in a certain locality.
    Doctor A's bill is for $75 although he customarily charges $80 for 
the procedure.
    Doctor B's bill is his customary charge of $85
    Doctor C's bill is his customary charge of $125
    Doctor D's bill is for $100, although he customarily charges $80, 
and there are no special circumstances in the case.
    The reasonable charge for Doctor A would be limited to $75 since 
under the law the reasonable charge cannot exceed the actual charge, 
even if it is lower than his customary charge and below the prevailing 
charges for the locality.
    The reasonable charge for Doctor B would be $85, because it is his 
customary charge and it falls within the range of prevailing charges for 
that locality.
    The reasonable charge for Doctor C could not be more than $100, the 
top of the range of prevailing charges.
    The reasonable charge for Doctor D would be $80, because that is his 
customary charge. Even though his actual charge of $100 falls within the 
range of prevailing charges, the reasonable charge cannot exceed his 
customary charge in the absence of special circumstances.