maximum allowable actual charge

(1) (A) In the case of a physician who is not a participating physician for items and services furnished during a portion of the 30-month period beginning July 1, 1984 , the Secretary shall monitor the physician’s actual charges to individuals enrolled under this part for physicians’ services during that portion of that period. If such physician knowingly and willfully bills individuals enrolled under this part for actual charges in excess of such physician’s actual charges for the calendar quarter beginning on April 1, 1984 , the Secretary may apply sanctions against such physician in accordance with paragraph (2). (B) (i) During any period (on or after January 1, 1987 , and before the date specified in clause (ii)), during which a physician is a nonparticipating physician, the Secretary shall monitor the actual charges of each such physician for physicians’ services furnished to individuals enrolled under this part. If such physician knowingly and willfully bills on a repeated basis for such a service an actual charge in excess of the maximum allowable actual charge determined under subparagraph (C) for that service, the Secretary may apply sanctions against such physician in accordance with paragraph (2). (ii) Clause (i) shall not apply to services furnished after December 31, 1990 . (C) (i) For a particular physicians’ service furnished by a nonparticipating physician to individuals enrolled under this part during a year, for purposes of subparagraph (B), the maximum allowable actual charge is determined as follows: If the physician’s maximum allowable actual charge for that service in the previous year was— (I) less than 115 percent of the applicable percent (as defined in subsection (b)(4)(A)(iv)) of the prevailing charge for the year and service involved, the maximum allowable actual charge for the year involved is the greater of the maximum allowable actual charge described in subclause (II) or the charge described in clause (ii), or (II) equal to, or greater than, 115 percent of the applicable percent (as defined in subsection (b)(4)(A)(iv)) of the prevailing charge for the year and service involved, the maximum allowable actual charge is 101 percent of the physician’s maximum allowable actual charge for the service for the previous year. (ii) For purposes of clause (i)(I), the charge described in this clause for a particular physicians’ service furnished in a year is the maximum allowable actual charge for the service of the physician for the previous year plus the product of (I) the applicable fraction (as defined in clause (iii)) and (II) the amount by which 115 percent of the prevailing charge for the year involved for such service furnished by nonparticipating physicians, exceeds the physician’s maximum allowable actual charge for the service for the previous year. (iii) In clause (ii), the “applicable fraction” is— (I) for 1987, ¼, (II) for 1988, ⅓, (III) for 1989, ½, and (IV) for any subsequent year, 1. (iv) For purposes of determining the maximum allowable actual charge under clauses (i) and (ii) for 1987, in the case of a physicians’ service for which the physician has actual charges for the calendar quarter beginning on April 1, 1984 , the “maximum allowable actual charge” for 1986 is the physician’s actual charge for such service furnished during such quarter. (v) For purposes of determining the maximum allowable actual charge under clauses (i) and (ii) for a year after 1986, in the case of a physicians’ service for which the physician has no actual charges for the calendar quarter beginning on April 1, 1984 , and for which a maximum allowable actual charge has not been previously established under this clause, the “maximum allowable actual charge” for the previous year shall be the 50th percentile of the customary charges for the service (weighted by frequency of the service) performed by nonparticipating physicians in the locality during the 12-month period ending June 30 of that previous year. (vi) For purposes of this subparagraph, a “physician’s actual charge” for a physicians’ service furnished in a year or other period is the weighted average (or, at the option of the Secretary for a service furnished in the calendar quarter beginning April 1, 1984 , the median) of the physician’s charges for such service furnished in the year or other period. (vii) In the case of a nonparticipating physician who was a participating physician during a previous period, for the purpose of computing the physician’s maximum allowable actual charge during the physician’s period of nonparticipation, the physician shall be deemed to have had a maximum allowable actual charge during the period of participation, and such deemed maximum allowable actual charge shall be determined according to clauses (i) through (vi). (viii) Notwithstanding any other provision of this subparagraph, the maximum allowable actual charge for a particular physician’s service furnished by a nonparticipating physician to individuals enrolled under this part during the 3-month period beginning on January 1, 1988 , shall be the amount determined under this subparagraph for 1987. The maximum allowable actual charge for any such service otherwise determined under this subparagraph for 1988 shall take effect on April 1, 1988 . (ix) If there is a reduction under subsection (b)(13) in the reasonable charge for medical direction furnished by a nonparticipating physician, the maximum allowable actual charge otherwise permitted under this subsection for such services shall be reduced in the same manner and in the same percentage as the reduction in such reasonable charge. (D) (i) If an action described in clause (ii) results in a reduction in a reasonable charge for a physicians’ service or item and a nonparticipating physician furnishes the service or item to an individual entitled to benefits under this part after the effective date of such action, the physician may not charge the individual more than 125 percent of the reduced payment allowance (as defined in clause (iii)) plus (for services or items furnished during the 12-month period (or 9-month period in the case of an action described in clause (ii)(II)) beginning on the effective date of the action) ½ of the amount by which the physician’s maximum allowable actual charge for the service or item for the previous 12-month period exceeds such 125 percent level. (ii) The first sentence of clause (i) shall apply to— (I) an adjustment under subsection (b)(8)(B) (relating to inherent reasonableness), (II) a reduction under subsection (b)(10)(A) or (b)(14)(A) (relating to certain overpriced procedures), (III) a reduction under subsection (b)(11)(B) (relating to certain cataract procedures), (IV) a prevailing charge limit established under subsection (b)(11)(C)(i) or (b)(15)(A), (V) a reasonable charge limit established under subsection (b)(11)(C)(ii) of this section, and (VI) an adjustment under section 1395l(l)(3)(B) of this title (relating to physician supervision of certified registered nurse anesthetists). (iii) In clause (i), the term “reduced payment allowance” means, with respect to an action— (I) under subsection (b)(8)(B), the inherently reasonable charge established under subsection (b)(8); (II) under subsection (b)(10)(A), (b)(11)(B), (b)(11)(C)(i), (b)(14)(A), or (b)(15)(A) or under section 1395l(l)(3)(B) of this title , the prevailing charge for the service after the action; or (III) under subsection (b)(11)(C)(ii), the payment allowance established under such subsection. (iv) If a physician knowingly and willfully bills in violation of clause (i) (whether or not such charge violates subparagraph (B)), the Secretary may apply sanctions against such physician in accordance with paragraph (2). (v) Clause (i) shall not apply to items and services furnished after December 31, 1990 .

Source

42 USC § 1395u(j)(1)


Scoping language

For purposes of this subparagraph
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