Calculating Customary Charge

80.3.1 - Calculating Customary Charge (Rev. 1, 10-01-03) B3-5010.1, B3-5213 A/B MACs (B) and DME MACs use to the extent possible, the actual charges for services rendered during the year ending June 30 immediately preceding the start of the fee screen year. Use data either from claims processed or from claims for services rendered during that 12-month period. The A/B MAC (B) or DME MAC arrays each charge the physician, supplier, or another entity made for a service in ascending order. The lowest actual charge which is high enough to include the median of the arrayed charge data is then selected as the physician’s or other person’s customary charge for the service. Include charges made to a class of patients (such as members of a Preferred Provider Organization) in the array of charges used to compute the customary charge. Customary charges may be established using price lists when there is inadequate charge data. In this case, use only the fees charged and the price lists in effect as of December 31 of the data base year. The intent is to use a price list which reasonably replicates the median of the prices charged by the supplier for his items and services during the data base year. Where the MAC permitted an increase in a customary charge under the equity provision (see §80.3.1.1 below), the increased amount is recognized as the customary charge for the next fee screen year if it exceeds the median of charges made by the physician or other person for the service during the 12 months ending June 30 immediately preceding the start of that fee screen year. The increased amount is the correct customary charge for use in the appropriate prevailing charge calculation(s). A. Inclusion of Sales Taxes in Reasonable Charges Sales taxes where appropriate were included in the calculation of reasonable charges computed. They were also accounted for in the calculation of the base fee schedules for DME and orthotic/prosthetic devices. The Consumer Price Index used to update fee schedules also accounts for sales tax. Therefore, MACs do not make any additional payment for sales taxes and do not make adjustments in fees to reflect local changes in tax rates.