The general rule is that Medicare law places limitations on how much non-participating physicians / suppliers can charge as fees for their services / supplies. Medicare refers to these limits as "limiting charges".

42 Code of Federal Regulations (CFR), Section 414.48, addresses the nature of the limiting charges succinctly as follows:

42 CFR, Section 414.48 (emphasis added)

Two observations should be made regarding Section 414.48 above. First, it should be noted Section 414.48 applies to "suppliers as defined in Section 400.202." 42 CFR, Section 400.202 defines "supplier" as follows:

42 CFR, Section 400.202

Second, Section 414.48 suggests that the allowable charges for participating providers are to be "calculated [according to Section] 414.20(b)." In Section 3 of this Advisory, we briefly review a practical, online tool which providers can use to perform calculations based on this CFR section.

We know of 4 states that have passed "balance billing" statutes – statutes which also potentially restrict what Medicare non-participating providers can charge as fees for their services / supplies.

The four states and statutes in question include: (1) Ohio (Ohio Rev.Code Ann., Sections 4769.01 & 4769.02); (2) Pennsylvania (Pa.Stat.Ann. tit. 35, Section 449.31-449.36); New York (N.Y.McKinney's Public Health Law, Section 19); and Massachusettes (Mass.Gen.Laws ch. 112, Section 2).

Research revealed no other states which have passed similar "balance billing" statutes. Moreover, one case actually suggests that these may be the only four states which have actually done so (see Valley Hospital v. Kroll, 368 N.J.Super. 601, at 625, 847 A.2d 636, at 651 (N.J.Super., 2003)).

We say that the state statutes referenced above "potentially" restrict what nonparticipating providers can charge for at least two reasons. First, the limiting charge rule, 42 CFR, Section 414.48, became effective several years after the 4 state statutes were passed. It is possible that the new federal rule overrides these statutes. Second, we have not actually examined the precise language of the state statutes in question. It is possible that, by their very wording, such statutes actually allow Medicare non-participating providers to charge patients up to the limiting charges imposed by Medicare. We recommend that providers in these states speak with their insurance departments, Medicare carriers, CMS, and legal counsel on this issue.

Interestingly, one state, Vermont, addressed the same issue in a slightly different fashion. 33 Vt.Stat. Ann., Section 6502 mandates that providers, as a condition of their state licensure, participate in the Medicare program if they wish to treat Medicare beneficiaries.

Given the above information, Medicare providers (participating and nonparticipating) can determine how much they can charge for their services by performing some simple steps:

Step 1: Use Medicare's online tool for determining the Medicare fee schedule allowed amount based on a particular location.

If you do not know the exact fee schedule for Medicare in your geographical area you can determine it by clicking on the link below and following the instructions:

http://www.cms.hhs.gov/physicians/mpfsapp/step1.asp

1. Enter in the current year
2. Select a Single Code, Range of Codes or List of Codes
3. Select "Pricing Information"
4. Select "Specific Locality"
5. Select "Default Fields"
6. Enter the CPT/HCPC code(s) desired
7. Select "All Modifiers" from the drop down list
8. Select your practice's Locality from the drop down list based on geographic location
9. Click submit
   A chart will appear listing the Medicare "fee schedule amount" for your geographical area.
10. According to CMS's web site, providers should select the fee schedule amount for the code(s) searched from the column labeled "Facility Price," if they are performing services under the following circumstances:
    • inpatient or outpatient hospital settings
    • emergency rooms
    • skilled nursing facilities
    • ambulatory surgical centers (ASCs)
    • inpatient psych facilities
    • comp inpatient rehabilitation facilities
    • community mental health centers
    • military treatment facilities
    • ambulance (land)
    • ambulance (air or water)
    • psychiatric facility partial hospital
    • psychiatric resort treatment centers
11. In all other settings, select the fee schedule amount for the code(s) searched from the column labeled "Non-Facility Price"
    Important Note – Most small physician practices fall under the "Non-Facility Price" category.

Step 2: If you are a nonparticipating provider, multiply the fee schedule amount by the limiting charge factors listed in Section 1 of this Advisory.

End of Document