42 CFR § 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.