CMS Pub. 100-05, ch. 5, § 40.7.4

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.) The refore, 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 whethe r 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 canno t 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).