B. Calculating the customary charge

To the extent possible, when customary charges are calculated for a fiscal year, the actual charges physicians or suppliers have made for services rendered during the calendar year immediately preceding the start of the fiscal year (i.e., derived from either claims processed, or from claims for services rendered during the preceding calendar year) are used.

In calculating the customary charge for a given service, each charge the physician or other person has made for a service is arrayed in ascending order. The lowest actual charge which is high enough to include the median of the arrayed charge data is selected as the physician’s or supplier’s customary charge for the service. However, where the charges generally made by a physician or supplier to other patients are lower than those made to Medicare beneficiaries, the lower charges are used as the basis for establishing the Medicare reasonable charge screen.

When a carrier does not have adequate statistics on charges for all of a calendar year, e.g., for suppliers of medical equipment, prothestics, ambulance services, or for new services, the fees charged and the price lists in effect as of June 30 of that calendar year only may be used. The intent is to use a price list which can reasonably be assumed not to exceed the median of the prices charged by the supplier for items and services during that calendar year.

Where a carrier has permitted an increase in a customary charge under the unusual circumstances provision (see subsection C.), the increased amount is recognized as the customary charge for the next fiscal year if it exceeds the median of the charges made by the physician or supplier for the service during the calendar year immediately preceding the start of that fiscal year.