amount of payments where customary charges for services furnished are less than reasonable cost

amount of payments where customary charges for services furnished are less than reasonable cost Sec. 233. (a) Section 1814(b) of the Social Security Act is amended to read as follows: “Amount Paid to Providers “(b) The amount paid to any provider of services with respect to services for which payment may be made under this part shall, subject to the provisions of section 1813, be— “(1) the lesser of (A) the reasonable cost of such services, as determined under section 1861 (v), or (B) the customary charges with respect to such services; or “(2) if such services are. furnished by a public provider of services free of charge or at nominal charges to the public, the amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such reasonable cost which the Secretary finds will provide fair compensation to such provider for such services. “(b) Section 1833(a) (2) of such Act is amended to read as follows: “(2) in the case of services described in section 1832(a) (2)—80 percent of— “(A) the lesser of (i) the reasonable cost of such services, as determined under section 1861(v), or (ii) the customary charges with respect to such services; or “(B) if such services are furnished by a public provider of services free of charge or at nominal charges to the public, the amount determined in accordance with section 1814(b)(2).” (c) Section 1903 (i) of such Act (as added by section 224(c) and amended by section 229(c) of this Act) is further amended by striking out the period at the end of paragraph (2) and inserting in lieu thereof “: or”, and by adding after paragraph (2) the following new paragraph: “(3) with respect, to any amount expended for inpatient, hospital services furnished under the plan to the extent that such amount exceeds the hospital’s customary charges with respect to 86 Stat. 1412such services or (if such services are furnished under the plan by a public institution free of charge or at nominal charges to the public) exceeds an amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such payment which the Secretary finds will provide fair compensation to such institution for such services.” (d) Section 506(f) of such Act (as added by section 224(d) and amended by section 229(d) of this Act) is further amended by striking out the period at the end of paragraph (2) and inserting in lieu thereof “; or”, and by adding after paragraph (2) the following new paragraph: “(3) with respect to any amount expended for inpatient hospital services furnished under the plan to the extent that such amount exceeds the hospital’s customary charges with respect to such services or (if such services are furnished under the plan by a public institution free of charge or at nominal charges to the 0 exceeds an amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such payment which the Secretary finds will provide fair compensation to such institution for such services.” (e) Clause (2) of the second sentence of section 509(a) of such Act (as amended by section 221(e) (3) of this Act) is further amended by inserting “(A)” before “the reasonable cost”, and by inserting after “under the project,” the following: “or (B) if less, the customary charges with respect to such services provided under the project, or (C) if such services are furnished under the project by a public institution free of charge or at nominal charges to the public, an amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such reasonable cost which the Secretary finds will provide fair compensation to such institution for such services”. (f) The amendments made by subsections (a) and (b) shall apply to services furnished by hospitals, extended care facilities, and home health agencies in accounting periods beginning after December 31, 1972. The amendments made by subsections (c), (d), and (e) shall apply with respect to services furnished by hospitals in accounting periods beginning after December 31, 1972.