Effect of Medicare Limiting Charge on Medicare Secondary

40.7.4 - Effect of Medicare Limiting Charge on Medicare Secondary Payments (Rev. 11550; Issued: 08-12-22; Effective: 10-13-22; Implementation:10-13-22) Under §1848(g)(1)(A) of the Social Security Act (the Act,) a nonparticipating physician/supplier who does not take assignment on a claim may not charge more than the Medicare limiting charge and no person is liable for payment of any amounts in excess of the limiting charge. Effective January 1, 1993, the limiting charge is 115 percent of the fee schedule amount for nonparticipating physicians (See the Medicare Claims Processing Manual, Chapter 1, "General Billing Requirements," for further explanation of limiting charge.) Therefore, a nonparticipating physician/ supplier who does not take assignment must reduce their actual charge to the GHP, or to the beneficiary, to reflect the Medicare limiting charge. The rules above for calculating Medicare secondary benefits apply whether or not the limiting charge applies. However, when the limiting charge is less than the actual charge, the limiting charge will be considered to be the actual charge as well as the plan's allowable charge in applying those rules. This is because CMS cannot recognize an illegal charge as a basis for calculating Medicare benefits. EXAMPLE: A physician erroneously billed $200 for a procedure. The GHP allowed $175 and paid $150 (which was more than it was obligated to pay under the Medicare limited charge law). The Medicare allowed amount for the nonparticipating physician is $125 (95 percent of the fee schedule amount for participating physicians in accordance with the Medicare Claims Processing Manual, Chapter 1, "General Billing Requirements," §30.3.12.3). The limiting charge is $143.75 (115 percent of $125). The secondary payment should be determined as follows: A. The actual charge by the physician (the limiting charge) minus the GHP's payment: $143.75 - $150 = 0. B. The Medicare payment is determined in the usual manner: .80 x $125 = $100. C. Employer plan allowable charge (the limiting charge) minus the third party payments: $143.75 - $150 = $0 Medicare pays $0 (lowest of the amounts in A, B, or C).