Chapter 14
Comprehensive Limiting Charge Compliance Program

14.1 Introduction

This section contains information explaining Medicare charge limits and the Comprehensive Limiting Charge Compliance Program (CLCCP) and how these provisions affect you as a nonparticipating Medicare provider.

The Omnibus Budget Reconciliation Act of 1989 (OBRA 89) included the rules governing charge limits on nonassigned claims of nonparticipating physicians effective January 1,1991, as part of Physician Payment Reform. These "limiting charges" protect Medicare beneficiaries from undue balance billing expenses. Effective for services on or after January 1, 1994, all individuals/entities who bill for services paid under the physician fee schedule are subject to Medicare charge limits.

The Health Care Financing Administration created the Comprehensive Limiting Charge Compliance Program to inform providers on the application of these rules so that billed charges exceeding the charge limits can be avoided.


14.2 What is the Limiting Charge and Who Does it Affect?

The limiting charge for services rendered in 1993 and after is 115% of the Medicare Nonparticipating Physician Fee Schedule allowance.

Prior to 1994, the limiting charge applied primarily to nonparticipating physicians billing nonassigned claims for services on the physician fee schedule. Suppliers such as physiological laboratories, independent laboratories, and portable x-ray suppliers were only affected if they submitted nonassigned claims for the physician component of services they provided. Mammography screening providers were also subject to charge limits but under a separate section of the law.

As a result of the changes made by the Omnibus Budget Reconciliation Act of 1993, the limiting charge is now applicable to all services/supplies paid for under the physician fee schedule, if these services/supplies have been billed on a nonassigned basis by any nonparticipating entity.

The additional providers who are now subject to the Comprehensive Limiting Charge Compliance Program include: independently practicing physical therapists, independent occupational therapists, portable x-ray suppliers, independent laboratories, and independent physiological laboratories.

Prior to January 1, 1995, most services provided by certain nonphysician practitioners, such as physician assistants and nurse practitioners, must be billed using the assignment method. However, nonphysician practitioners may provide and bill nonassigned claims for some diagnostic services on the physician fee schedule. These diagnostic services are subject to Medicare charge limits.

Effective January 1, 1995 and after, all services by such limited license practioners must be billed under the assignment method.

14.3 Drugs and Biologicals

Previously, drugs and biologicals provided "incident to the physician's service," were not considered for Limiting Charge Compliance regulations by Department of Health and Human Services regulation.

However, effective for services provided on and after January 1, 1994 these services are now subject to charge limits. In addition, procedure codes P9010-P9022 (blood products) have also been identified as "incident to" services, and therefore are subject to charge limits.

Note: The following six procedure codes are exceptions to the Limiting Charge Compliance Program since they are not considered services provided incident to physician services. As a result, they are not subject to charge limits. The six codes are J7190, J7192, J7194, J7196 (clotting factors for hemophilia), J7502 and J7503 (immunosuppressants).

The Medicare Part B approved amount for drugs and biologicals is based on the lesser of the billed amount, established actual cost, or the average wholesale price. The limiting charge on nonassigned claims for these services will be 115 percent of the nonparticipating approved amount.

All providers are sent fees and applicable limiting charges. Please refer to the November 17, 1998, Medicare Special Bulletin which includes your Fee and Limiting Charge information. Fee and limiting charge information may be requested by calling us at the provider inquiry number listed for your appropriate area (see Chapter 1).

14.4 Medicare Payment Policies and the Limiting Charge

We have included information in this chapter on situations that require extra care for correct billing to guarantee staying within the limiting charge amount. This information is provided to assist you and your billing personnel in calculating a charge that meets Medicare requirements. (Please reference section 14.10).

14.5 Unusual Situations

Modifier 22 is currently utilized if the service provided was greater than that usually required for the procedure code. Charges may be increased accordingly. Medical documentation must be submitted with the claim explaining the unusual circumstances. In those cases, our review of the claim will consider the unusual nature of the service and, if we believe a charge above the fee schedule is justified, we will approve an amount that recognizes the additional service(s). This, in effect, becomes a higher-than-usual fee schedule amount for the service. Please see Appendix B for more information on the 22 modifier.

The approved amount (or higher fee schedule amount) is the basis of the limiting charge calculation for modifier 22 services. Therefore, if your billed amount exceeds our approved amount by more than 115 percent, you must make an adjustment or a refund to the patient in order to meet the limiting charge requirement of the law. Since you would not know the exact limiting charge until the claim payment decision is made, we would not consider these billing situations as knowing or willful violations, provided you make appropriate adjustments or refunds to your patients.

14.6 Medicare Secondary Payer Provisions and the Limiting Charge

When attempting to comply with Medicare charge limits, claims for which Medicare is a secondary payer present a different kind of complication. Prior to 1995, Medicare had no authority over payments made by primary payers. However, effective January 1, 1995, current law states that no person, individual, trust, estate, partnership, corporation, association, joint-stock company, or insurance company may charge or collect or
is liable for payments billed in excess of the limiting charge. Therefore, the law now clearly states that beneficiary liability is limited to the limiting charge. In addition, the law also now clearly prohibits the billing in excess of the applicable limiting charge, regardless of whether Medicare is primary or secondary. If a beneficiary is enrolled in Medicare, a nonparticipating physician or nonparticipating supplier who does not accept assignment must bill at or below the Medicare Limiting Charge. When the Medicare payment is secondary, the charge limit of 115 percent of Medicare's fee schedule amount applies.

Collections in excess of the limiting charge require refunds or adjustments to the beneficiary accounts within 30 days of the date of notice. If there are unpaid balances after the primary insurer has paid the claim based on their payment policies, you may submit a claim to Medicare for consideration of any secondary payment that may be payable based on Medicare payment policies.

14.7 Sanctions

The Social Security Act Amendments of 1994 state that physicians, other practitioners or suppliers are liable for charges which exceed the federal limiting charge to which they apply. If a physician, other practitioner, or supplier willfully, knowingly and repeatedly exceeds the limiting charge, then they are subject to sanctions.

The Health Insurance Portability and Accountability Act of 1996 amends the civil monetary penalty provisions of Section 1128A(a) of the Social Security Act by increasing the amount of the penalty from $2,000 to $10,000 for each item or service involved. It also increases the assessment which a person may be subject from "not more than twice the amount" to "not more than three times the amount" claimed for such item or service in lieu of damages sustained by the United States or a state agency because of such a claim. In addition, the physician, other practitioner, or supplier may still be excluded from the Medicare program for up to five years. This amendment is effective for only those services rendered on or after January 1, 1997.

We encourage you to reduce the risk of civil money penalties, fines and/or exclusion from the Medicare program by bringing your charges into compliance with Medicare charge limits.

14.8 Synopsis of Medicare Payment Policies and Their Effects on the Limiting Charge

The following material highlights situations that require extra care for correct billing to guarantee staying within the limiting charge amount. Information on all these situations has been supplied previously in our bulletins so the following highlights and examples are brief. Please use the cross reference for additional information or contact us for additional or replacement copies of bulletins.

Contact us at the appropriate telephone number if you have other questions about correct application of Medicare billing rules (e.g., to obtain the postoperative percentage for a surgical procedure or to determine whether a specific code is subject to the multiple surgery rules).

 

Situation

Reference

1. Site of Service Reductions
Services primarily performed in a physician's office
have a reduced fee schedule amount when performed in
outpatient or emergency departments.
Inpatient settings are also subject to site of
service reductions. Become familiar with procedures
affected by this rule.

Chapter 13-Medicare Reimbursement, Medicare Part B
Reference Manual

Medicare Special Bulletin, January 29, 1996

Medicare Report, December 1996

2. Global Surgery
Fee schedule payment amounts include most services
furnished by the primary surgeon in connection with a
surgery. The global period is determined by the specific
procedure and may only include the day of the surgery,
a 10 day postoperative, or a 90 day postoperative
period. Services with a 90 day postoperative period
also include a one day preoperative period.

The visit/consultation that identified the need for the
surgery is not included in the global fee.

Modifiers may be used if services are required that are
clearly separate from services ordinarily furnished with
the surgical procedure.

Additional payment is allowed for complications that
require a return trip to the operating room. Payment is
based on the intraoperative portion of the global fee.
Additional payment is allowed for most diagnostic
procedures related to the surgery.

Special rules apply when the care included in the
global fee is split between the surgeon and one or
more other physicians. Modifiers are used to indicate
the split and the fee is adjusted according to standard
percentages established for the pre, intra, and
postoperative portions of the global fee.

The limiting charge for all services included in the
global fee is the limiting charge for the surgical
procedure. Become familiar with the rules that
apply to global pricing as they apply to all surgical
procedures - including minor surgeries performed
in the physician's office or in an outpatient department.

Appendix B-Modifiers, Medicare Part B Reference Manual

Chapter 22-Global Surgery & Related Issues, Medicare Part B Reference Manual

Medicare Report, June 1998

Medicare Policy S-99A; Global Surgery

3. Multiple Surgeries
Fee schedule amounts are reduced when more than
one surgical procedure is performed by the same
physician on the same day.

For multiple surgery services, the highest
valued procedure is paid at 100 percent, the second through the fifth are paid at 50 percent. Additional codes are reimburse on an individual consideration basis.

The limiting charge is 115 percent of the reduced
payment amount for each procedure.

Chapter 22, Global Surgery & Related Issues, Medicare Part B Reference Manual

PA MCS Transition News, April 1998

PA MCS Transition News, June 1998

PA MCS Transition News, December 1998

Medicare Report, December 1998

MCS Multiple Surgery Letter

4. Multiple Dermatology Procedures
Special rules apply to some multiple dermatological
procedures.

The highest valued procedure is paid at 100 percent
of the fee schedule, and the second through fifth
procedures are paid at 50%.

Additional procedures will be priced based on
individual consideration.

The limiting charge is 115 percent of the reduced
payment for each procedure.

Note: add on codes will not be subject to multiple
surgery cutbacks, e.g., 11101...each separate/additional
lesion.

Medicare Policy S-100E; Multiple Surgical Procedures

Medicare Report, September 1998

Medicare Report, March 1998

Medicare Report, June 1997

Chapter 22, Global Surgery & Related Issues, Medicare Part B Reference Manual

5. Multiple Endoscopies
Special pricing rules apply to multiple endoscopies.

Endoscopies are grouped into "families" with the
same base procedures.

If multiple related endoscopies are performed,
payment is based on 100 percent of the highest valued
endoscopy, plus the difference between the next highest
valued endoscopy and the base endoscopy.

Example: In the course of performing a fiberoptic
colonoscopy (code 45378), a physician performs a
biopsy on a lesion (45380) and removes a polyp (45385).
The value of codes 45380 and 45385 both have the value
of the diagnostic colonoscopy (45378) built in. Rather
than paying 100 percent for the highest valued procedure
(45385) and 50 percent for the next (45380), Medicare
will pay the full value of the higher valued endoscopy
(45385) plus the difference between the next highest
endoscopy (45380) and the base endoscopy (45378).
Assume the following fee schedules for these codes:
45378 - $284.17; 45380 - $317.05; 45385 - $429.52.
Medicare will approve payment for the full value of
45385 ($429.52), plus the difference between 45380
and 45378 ($32.88), for a total of $462.40.

The limiting charge is 115 percent of the approved amount.

Chapter 22, Global Surgery & Related Issues, Medicare Part B Reference Manual

Medicare Report, September 1998

Medicare Report, June 1998

1999 HCPCS Update

6. Bilateral Surgeries
Some surgical procedures are bilateral by CPT-4
definition. The bilateral modifier should not be used
with those codes, and the bilateral adjustment (payment
at 150% of the fee schedule) will not apply.

The Health Care Financing Administration has identified
those codes eligible for bilateral payment adjustment.

The limiting charge is 115% of the allowance.

Chapter 22-Global Surgery & Related Issues, Medicare Part B Reference Manual

Medicare Policy S-100E; Multiple Surgery

Medicare Special Bulletin, January 29, 1996

7. Assistant Surgeons
Some procedures do not require assistant surgeons and
these claims will be denied.

For services qualifying for an assistant surgeon, the
payment is 16 percent of the amount payable for the
surgical procedure. If the fee schedule amount is
adjusted by multiple or bilateral pricing rules, the
16 percent is calculated from the fee schedule allowance.

The limiting charge is therefore 115 percent of the
assistant surgeon's fee schedule amount.

Chapter 22-Global Surgery & Related Issues, Medicare Part B Reference Manual

Medicare Report, December 1998

Medicare Report, June 1998

Medicare Report, June 1996

8. Co-Surgeons
Procedures have been identified which may require two
surgeons from different specialties. A modifier 62 is
required on these claims. Additional documentation is
also required if the procedure is not one identified as
usually requiring co-surgeons.

Payment for each co-surgeon is based on 62.5 percent
of the fee schedule amount.

The limiting charge for each physician is 115 percent
of the adjusted fee schedule amount.

Chapter 22-Global Surgery & Related Issues, Medicare Part B Reference Manual

Appendix B-Modifiers, Medicare Part B Reference Manual

Medicare Policy S-12C; Co-Surgery and Team Surgery

Medicare Report, December 1998

Medicare Report, December 1997

9. Team Surgeons
Any surgical procedure or group of surgical procedures
by a team of surgeons is always priced individually.

Claims must show a modifier 66 and include an operative
report.

The limiting charge will be 115 percent of the fee schedule
distributive share for each of the team physicians.

Chapter 22-Global Surgery & Related Issues, Medicare Part B Reference Manual

Appendix B-Modifiers, Medicare Part B Reference Manual

Medicare Report, December 1998

Medicare Policy S-12C; Co-Surgery and Team Surgery

10. Correct Coding
Uniform pricing policies and the use of a national fee
schedule has increased the importance of submitting claims
correctly. Payment for some services is included in the
payment amount for another service. Medicare does not pay
separately for these secondary procedures. For example,
injection codes 90782-90784 are not paid for separately
when billed with a visit or other service on the same day.

The limiting charge is 115 percent of the fee schedule
amount for the major procedure.

Appenidx C-New Correct Coding Combinations, Medicare Part B Reference Manual

Medicare Report, December 1998

Medicare Report, March 1998

Medicare Report, March 1997

11. Anesthesia
Payment for the administration of anesthesia is based on the base unt value assigned to the procedure code, plus time units, multiplied by the fee schedule anesthesia conversion factor.

Payment for both the physician medical direction and the medically directed CRNA, AA, inter, or resident, is determined by the specified percentage amount of the allowance recognized for the anesthesia procedure as if it was personally performed by the physician alone. The percentage amount allowed for medically directed services is incrementally reduced each year as follows:

Year Percentage of Allowed Amount if Performed
by the Physician Alone

1995 57.5%

1996 55%

1997 52.5%

1998 and after 50%

Appendix F-Anesthesia Billing Guide, Medicare Part B Reference Manual

Medicare Policy A-8C, Payment for Anesthesia

Medicare Report, June 1998

12. Reciprocal and Locum Tenens Billing Arrangements
Payment amounts and limiting charges identified as
reciprocal services or locum tenens services will be
calculated as though the regular physician provided the services.

Chapter 13-Medicare Reimbursement, Medicare Part B Reference Manual

Medicare Report, May 1993

13. Rebundling Phase III
The Health Care Financing Administration has advised
that Phase III of the Rebundling Initiative will be
implemented with claims received on or after January 1, 1994
for all dates of service. An all inclusive listing containing
all three phases of rebundling was published in the
November 30, 1993
Medicare Special Bulletin on pages 14
through 20.

Appendix C-New Correct Coding Combinations, Medicare Part B Reference Manual

Medicare Report, September 1994

Medicare Special Bulletin, November 30, 1993

14. Separate Payment No Longer Allowed for Ventilation
Management When Billed with Evaluation & Management
Services

Ventilation management codes (94656, 94657, 94660, and
94662) will continue to be payable services under the
physician fee schedule. However, payment will no longer
be made for ventilation management when an E/M code
is billed on the same day; ventilation management is
considered bundled into the E/M services.
Medicare Special Bulletin, January 21, 1994
15. Biological Fees and Limiting Charges
The OBRA 1993 extended the five percent nonparticipating
provider reduction and the limiting charge to drugs and
biologicals. The participating and nonparticipating fees
and limiting charges for drugs were provided in the

Medicare Special Notice
dated 11/22/93 regarding
Participation Enrollment and Fee Disclosure.
Medicare Report, June 1994

Medicare Special Bulletin, January 21, 1994
18. Bundled Procedure Codes
Services that are not seperatly payable and are bundled
into payment for other services rendered on the same date
of service are subject to the limiting charge.

1999 HCPCS Update, Medicare Special Bulletin, December 1, 1998

Appendix G-1999HCPCS Update, Medicare Part B Reference Manual

Medicare Report, March 1997