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nished by the physician; and (ii) authorizes the release of any medical information needed to review claims

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submitted by the physician.

4 "(c) (1) Participating physicians shall be paid ad5 ministrative cost-savings allowances (as specified below in

6 this subsection) in addition to the reasonable charges that

7 are payable.

8 “(2) The administrative cost-savings allowance shall 9 equal $1 and shall be paid to the participating physician for 10 each claim he submits in accordance with the simplified bill

11 ing procedure referred to in subparagraph (b) and these 12 payments shall be treated as an administrative expense to the 13 medical insurance program: Provided, however, That: 14

“ (A) not more than $1 shall be payable to a phy

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sician for claims for services furnished to any par

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ticular patient within any seven-day period; and

“(B) no administrative cost-savings allowance shall be payable for services performed for a hospital inpatient or outpatient unless:

“ (i) the services are surgical services, anesthesia services, or services performed by a physician who, as an attending or consulting physician who, has personally examined the patient and whose office or regular place of practice is located outside a hospital, and

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“ (ü) the physician ordinarily bills directly (and 2

not through such hospital) for his services; 3

“(C) no administrative cost-savings allowance 4 shall be payable for services which consist solely of 5 laboratory or X-ray services which are for hospital 6 inpatients or outpatients or are performed outside the 7 office of the participating physician.”. 8 (b) The amendments made by paragraph (1) shall 9 become effective July 1, 1978.

10 CRITERIA FOR DETERMINING REASONABLE CHARGE FOR

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PHYSICIANS' SERVICES

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SEC. 11. (a) (1) So much of section 1842 (b) (3) of

13 the Social Security Act as follows the first sentence is

14 amended to read:

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“(3A) (A) In determining the reasonable charge for 16 services for purposes of paragraph (3) (including any 17 hospital-associated physicians), there shall be taken into 18 consideration the customary charges for similar services 19 generally made by the physician or other person furnishing 20 such services, as well as the prevailing charges in the locality

21 for similar services.

22 “(B) (i) Except as otherwise provided in clause (iii), 23 no charge may be determined to be reasonable in the case of 24 bills submitted or requests for payment made under this part 25 after December 31, 1970, if it exceeds the higher of (I)

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1 the prevailing charge recognized by the carrier and found 2 acceptable by the Secretary for similar services in the same 3 locality in administering this part on December 31, 1970, or 4 (II) the prevailing charge level that, on the basis of statis

5 tical data and methodology acceptable to the Secretary, 6 would cover 75 per centum of the customary charges made ī for similar services in the same locality during the last pre8 ceding calendar year elapsing prior to the start of the fiscal 9 year in which the bill is submitted or the request for pay

10 ment is made.

11 “(ii) In the case of physician services the prevailing 12 charge level determined for purposes of clause (i) (II) for 13 any fiscal year beginning after June 30, 1973, may not 14 (except as otherwise provided in clause (iii)) exceed (in 15 the aggregate) the level determined under such clause for

16 the fiscal year ending June 30, 1973, except to the extent 17 that the Secretary finds, on the basis of appropriate econom18 ics index data, that such higher level is justified by economic 19 changes. Moreover, for any fiscal year beginning after June 2030, 1978, no prevailing charge level for physicians' services 21 shall be increased to the extent that it would exceed by 22 more than one-third the statewide prevailing charge level 23 (as determined under subparagraph (E)) for that service. 24 “(iii) Notwithstanding the provisions of clauses (i) and 25 (ü) of this subparagraph, the prevailing charge level in the

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case of a physician service in a particular locality determined

2 pursuant to such clauses for the fiscal year beginning July 1,

3 1975, shall, if lower than the prevailing charge level for the 4 fiscal year ending June 30, 1975, in the case of a similar

5 physician service in the same locality by reason of the appli

6 cation of economic index data, be raised to such prevailing

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7 charge level for the fiscal year ending June 30, 1975.

“(C) In the case of medical services, supplies, and 9 equipment (including equipment servicing) that, in the judg10 ment of the Secretary, do not generally vary significantly in 11 quality from one supplier to another, the charges incurred 12 after December 31, 1972, determined to be reasonable may 13 not exceed the lowest charge levels at which such services, 14 supplies, and equipment are widely and consistently available 15 in a locality except to the extent and under circumstances 16 specified by the Secretary. 17 “(D) The requirement in paragraph (3) (B) that a bill 18 be submitted or request for payment be made by the close of 19 the following calendar year shall not apply if (i) failure to 20 submit the bill or request the payment by the close of such 21 year is due to the error or misrepresentation or an officer, 22 employee, fiscal intermediary, carrier, or agent of the De23 partment of Health, Education, and Welfare performing 24 functions under this title and acting within the scope of his

or its authority, and (ii) the bill is submitted or tlo payment

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1 is requested promptly after such error or misrepresentation

2 is eliminated or corrected.

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“(E) The Secretary shall determine separate statewide

4 prevailing charge levels for each State that, on the basis of

5 statistical data and methodology acceptable to the Secretary, 6 would cover 50 percent of the customary charges made for 7 similar services in the State during the last preceding calen8 dar year elapsing prior to the start of the fiscal year in 9 which the bill is submitted or the request for payment is

10 made.

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“ (F) Notwithstanding any other provision of this para12 graph, any charge for any particular service or procedure 13 performed by a doctor of medicine or osteopathy shall be 14 regarded as a reasonable charge if

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“(i) the service or procedure is performed in an area which the Secretary has designated as a physician

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shortage area,

“the physician has a regular practice in the physician shortage area,

“(iii) the charge does not exceed the prevailing charge level as determined under subparagraph (B),

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and

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“(iv) the charge does not exceed the physician's customary charge.”,

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