C.F.R. » Title 42 » CHAPTER IV—CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES › SUBCHAPTER B—MEDICARE PROGRAM › PART 417—HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL PLANS, AND HEALTH CARE PREPAYMENT PLANS › Subpart O—Medicare Payment: Cost Basis

42 C.F.R. § 417.544

Physicians' services furnished directly by the HMO or CMP

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(a) Principles. (1) Compensation paid by an HMO or CMP to physicians is an allowable cost to the extent that it is commensurate with the compensation paid for similar services performed by similar physicians practicing in the same or a similar locality.

(2) Physician compensation may take various forms, but the aggregate compensation allowable must be reasonable in relation to the services personally furnished.

(3) If aggregate physician compensation costs exceed what is normally incurred, the excess is not a reasonable cost.

(b) Application. (1) In determining the allowability of the costs of physicians' services, the cost of personal services (for example, expenses attributable to salaries, wages, incentive payments, fringe benefits) must be distinguished from the cost of nonpersonal services (for example, expenses attributable to facilities, equipment, support personnel, supplies).

(2) To be allowable, compensation must be reasonable in relation to the personal services furnished.

[50 FR 1346, Jan. 10, 1985, as amended at 58 FR 38082, July 15, 1993; 60 FR 46230, Sept. 6, 1995]
Notes of Decisions
Cited in 2 cases, 2018–2018 · leading case: Choice Care Health Plan, Inc. v. Azar, 315 F. Supp. 3d 440 (D.C. Cir. 2018).
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Choice Care Health Plan, Inc. v. Azar, 315 F. Supp. 3d 440 (D.C. Cir. 2018). · cites it 2× “"Adequate data capable of being audited is consistent with good business concepts [and] is a reasonable expectation on the part of any agency paying for services on a cost-reimbursement basis.”
Choice Care Health Plan, Inc. v. Price (D.D.C. 2018). · cites it 2× “A provider claiming Medicare reimbursement “must provide adequate cost data,” meaning that the provider must provide accurate documentation with enough detail to support its reimbursement claim. 42 C.F.R. 413.24(a), (c).”
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