Medicare program; changes to the lesser of costs or charges provisions--HCFA. Final rule.

We are revising the regulations governing application of the lesser of costs or charges provision, which is used for computing Medicare payment for certain providers of covered health care services, to reflect certain provisions of the Deficit Reduction Act of 1984. Effective with cost reporting periods beginning on or after October 1, 1984, the aggregation method of calculating the lesser of costs or charges, which compares total reasonable cost and customary charges for services without regard to whether the services were furnished under Part A or Part B of Medicare, is eliminated. Effective with services furnished to Medicare beneficiaries on or after July 18, 1984, home health agencies are to be paid the lesser of the reasonable cost of durable medical equipment or the customary charges (less a 20 percent coinsurance), but not more than 80 percent of the reasonable cost of the equipment. Effective with cost reporting periods beginning on or after October 1, 1984, the regulations that govern payment for providers that furnish services either free of charge or at a nominal charge are revised. In addition, we are providing that, effective with cost reporting periods beginning on or after April 28, 1988, the carryover provisions, which permit a provider to accumulate and carry forward (to subsequent cost reporting periods) costs that previously went unreimbursed because the provider's charges were lower than its costs, are eliminated.