Reasonable Charges as Basis for A/B MAC (B)/DME MAC Payments

80 - Reasonable Charges as Basis for A/B MAC (B)/DME MAC Payments (Rev. 1, 10-01-03) B3-5000, AB-01-118, AB-02-136, B-02-089 Effective with services furnished on or after January 1, 1992, A/B MACs (B) pay for physicians’ services based on a fee schedule. Nonphysician services are also paid based on a percentage of fee schedule amounts depending on the type of nonphysician and service rendered. Other services and supplies (e.g., DMEPOS) are paid under the fee schedule designed specifically for those services. Beginning in 1992, only the services listed below are paid under the reasonable charge methodology. Where payment continues to be made on a reasonable charge basis for items and services, other than ambulance and laboratory services, A/B MACs (B) compute customary and prevailing charge updates at the beginning of each fee screen year (the 12-month period beginning January), using available statistics on charges for services from claims processed or services rendered during the 12 month period ending June 30 immediately preceding the start of the fee screen year. For example, the customary and prevailing charge rates established for fee screen year 2003 (January 1, 2003, through December 31, 2003) are based on the charges made from July 1, 2001, through June 30, 2002. Instructions regarding payment for ambulance and for laboratory services still subject to reasonable charges are found in Medicare Claims Processing Manual, Chapter 15, “Ambulance,” and Chapter 16, “Laboratory Services from Independent Labs, Physicians, and Providers.” Additional instructions regarding payment for dialysis supplies and equipment are provided in the Medicare Claims Processing Manual, Chapter 8, “Outpatient ESRD Hospital, Independent Facility, and Physician/Supplier Claims.” See specific year Program Memorandum instructions for a list of codes that are subject to the inflation-indexed charge (IIC) each year. A/B MACs (B) compute each year’s IIC screen, by increasing the appropriate previous year’s screen by the percentage amount specified in annual Program Memorandum instructions. A/B MACs (B) must not compute IIC screens for items paid using gap-filled payment amounts in the previous year. See specific year Program Memorandum instructions for any variances to these rules and for each year’s specific increase percentage. Services paid on a reasonable charge basis continue to be paid for under the rules in this section. A/B MACs (B)/DME MACs have the primary responsibility for determining reasonable charges. The following guidelines are intended to assure overall consistency among A/B MACs (B)/DME MACs with respect to the concepts applied in making reasonable charge determinations.