The question raised by the instant case is whether, and to what extent, the compromise agreement made by D represents a payment (or potential payment) with respect to medical services, under a workmen's compensation law or plan of the United States or a State, so as to limit payment under section 1862 (b). Congress, recognizing a potential dual coverage because of the availability in certain situations of both title XVIII health insurance benefits and workmen's compensation benefits to pay for medical expenses, included section 1862 (b) supra, to avoid payment of medical expenses for which the States had already made provision under the workmen's compensation laws, regardless of whether compensation was sought by the beneficiary. It was felt that to permit health insurance payments in those instances, would constitute an encroachment upon established State programs. (See Senate Report No. 404, 89th Congress, 1st Session, p. 49; and House Report No. 213, 89th Congress, 1st Session, p. 42.) The Act unmistakably provides that the priority of workmen's compensation benefits exists only to the extent that there is or could be deemed to be payment for medical expenses under the State program. The law, moreover, does not require that the total amount of a lump-sum compensation award must be treated in all cases as an award for medical expenses alone. Such an interpretation ignores the element of earnings replacement, which is a feature of workmen's compensation equal in importance under compensation law to indemnification for medical expenses incurred by the workman as a consequence of a work-related injury or illness. An approved compromise award is generally held to constitute "compensation" within the meaning of most workmen's compensation laws and to have the same force and effect as a compensation award. However, recognition must also be granted to the essential and distinctive nature of such an award, realizing that under State law this award does not per se justify a conclusion that the claimant could have obtained all benefits payable under the work. man's compensation law if he had pursued his remedies further. Where some basis for doubt actually exists as to the industrial connection of the injury, the most that can reasonably be expected is approval by the compensation commission, or like body, of a compromise which settles the claim conclusively in the amount approved (although not the apportionment of the amount). While a compromise award is incorporated into the workmen's compensation system through a requirement of approval by the Industrial Accident Commission to insure fairness to the claimant, it grants by its very basis in the contested liability, less than full benefits in terms of both medical expenses and income replacement. By its provisions, however, an agreement will, as in the instant case, give recognition to the existence of the medical expenses incurred by the claimant, and grant release of the claim because of the payment. Therefore, in applying the directives of section 1862 (b) of the Social Security Act to a compromise award, it must be determined not only how much of the lump-sum award is attributable to medical expenses but also what percentage of those medical expenses were actually intended to be reimbursed. Under this approach, the Social Security Administration, through its intermediaries, will separate that part of a lump-sum award which reimburses the claimant for medical expenses from that part which is intended as replacement of lost income, where such separation is possible. Where it is a lumpsum compromise award, as in the instant case, the award must be examined further to determine the proportion of the medical expenses which has in fact been covered by the award.* To determine what part of the compromise award in the instant case was intended to cover medical expenses, we can make use of the following formula, similar to the one used by the court in California-Western States Life Insurance Co. v. Industrial Accident Commission, (cited in ftn*) for calculating the amount of lien to be allowed for unemployment disability benefits: First, the amount of the total workmen's compensation claim, had the claimant fully pursued his remedies successfully, is estimated. Second, the ratio of the amount awarded as a compromise to the foregoing estimate is calculated. Then the same ratio is applied to the total medical expenses incurred by the beneficiary-claimant, to arrive at the amount to be considered reimbursement for medical expenses by the compromise award. The difference between this last figure the amount estimated as medical expenses covered by the com. promise award and the total medical expenses incurred, would be reimbursable as expenses for which payment has not been nor can reasonably be expected to be made under a workmen's compensation law, within the meaning of section 1862 (b) of the Act. Thus, in the case of D, the amount awarded as a compromise ($8,000) is 20 percent of the amount of the total claim ($40,000), had D pursued his remedies successfully. Accordingly, 20 percent of the total medical expenses incurred would be considered reimbursed by the compromise award. The remaining 80 percent would be considered not covered by the compromise award, and thus reimbursable under title XVIII. Application of such a formula reflects the prevailing treatment of lumpsum compromise awards in most jurisdictions. Moreover, it is in accord with the congressional intent to avoid payment under title XVIII of expenses for which the States had already made provision under their workmen's compensation laws. Accordingly, it is held that the Social Security Administration, through its intermediary, may properly examine the compromise agreement made by D with the approval of the State's workmen's compensation commission, to determine whether and to what extent, it represents payment made, or which can reasonably be expected to be made, for medical services under a workmen's compensation law, so as to preclude payment under section 1862 (b) of the Social Security Act for some or all of such services. *See in this regard: Aetna Life Insurance Co. v. Industrial Accident Commission, 38 C. 2d 599, 241 P.2d 530 (1952); West's Ann. California Labor Code, § 4903 (f); Garcia v. Industrial Accident Commission, 41 Cal. 2d 257, 263 P.2d 8 (1953); California-Western States Life Insurance Co. v. Industrial Accident Commission, 59 Cal. 2d 257, 379 P.2d 328 (1963). SUPPLEMENTARY MEDICAL INSURANCE BENEFITS Page Appeal from carrier's determination denying reimbursement— Judicial review Expenses incurred for physician's services-Allergist bills in advance of rendition of services Reasonable charge basis-Acceptance of assignment by supplier of durable medical equipment Reasonable charge for prosthetic device-Prostheses not completed Provider agreement with nursing home-Effect of assumption of title by trustee in bankruptcy Notice of garnishment served on carrier-Judicial review Exclusion from Health Insurance coverage charges imposed by immediate relative Level of Care-Extended Care Facility 554 556 558 560 562 569 571 Need for skilled services initially required 30 days after admission 573 576 578 Service less than skilled excluded from coverage 580 582 Fraud and Misrepresentation Unauthorized use of "Medicare" in private business names 584 SECTIONS 1833 (d) and (e).-SUPPLEMENTARY MEDICAL INSURANCE-EXPENSES INCURRED FOR PHYSICIAN'S SERVICES-ALLERGIST BILLS IN ADVANCE OF RENDITION OF SERVICES 20 CFR 405.230 SSR 70-27 Where a physician (allergist) bills a patient on an annual basis or prorates his fee over the course of the treatment in advance of the actual rendition of services in the continuing treatment of an allergy, held, sections 1833 (d) and 1833 (e) of the Act, correlating program payment to charges for "services furnished to an individual" preclude program payment until the services for which the physician has billed in advance have been rendered. Payment may be made on a reasonable charge basis under the provisions of Part B of title XVIII of the Social Security Act to, or on behalf of, a supplementary medical insurance enrollee under this part for expenses incurred in connection with medical and other health services, including physician's services, furnished to him. Sections 1833 (d) and (e) of the Social Security Act provide in pertinent part as follows: (d) No payment may be made under this part with respect to any services furnished an individual to the extent that such individual is entitled (or would be entitled except for section 1813) to have payment made with respect to such services under Part A. (e) No payment shall be made to any provider of services or other person under this part unless there has been furnished such information as may be necessary in order to determine the amounts due such provider or other person under this part for the period with respect to which the amounts are being paid or for any prior period. (Emphasis supplied.) * Situations have occurred where an allergist (a physician specializing in the treatment of allergies) bills an enrollee-patient an annual fee, previously agreed upon, for a course of immunization treatment to be furnished prospectively over the 12-month period. Since program liability for payment attaches on the basis of services furnished, an issue has been raised as to whether the health insurance program is liable for payment of the allergist's fee in advance of the time the services covered by the fee are actually rendered. A secondary question raised is how to determine the date on which the enrollee is considered as having "incurred" the medical expense. Although an individual may pay an allergist in advance, it does not follow that the program is required to reimburse the individual in advance. Section 1833 (e) of the Act when read in conjunction with section 1833 (d) and other sections cited in footnote which specifically refer to "service furnished to an individual," appears to preclude program payment until the carrier has been furnished whatever information is necessary, including information which shows that the service has been rendered. The fact that an allergist may bill a patient in advance on the basis of a fixed annual fee does not mean that the program is obligated to pay for services not actually rendered. It is accordingly held, that the language of sections 1833 (d) and (e) of the Act, which correlate payment under the program to charges for health and medical services "furnished to an individual," precludes such payment for physicians' services prior to their actual rendition, notwithstanding the physician has billed the beneficiary therefor in advance. With respect to the question remaining to be resolved, that is, when the enrollee "incurs" medical expenses for purposes of section 1833 of the Act, it is generally considered that an expense for any medically required item or service is incurred on the date when the item is furnished or the service is rendered. When a receipted bill is submitted showing payment by the beneficiary in advance of the rendition of services, payment will not be made until evidence is available that the services have been rendered. Such evidence may take the form of itemized statements from the physician showing the dates, charges and type of services rendered. Program liability is limited to the reasonable charge for the services already rendered, in the event of an unfinished course of treatment. See also section 1842 (b) (3) (B) (ii), the Part B statute of limitations, which refers to "** the year in which the service is furnished * * *" and section 1842 (b) (3) (C), the Part B fair hearing provisions, which refers to this part with respect to services furnished to him * * requests for payment under SECTIONS 1842 (b) (3) (B) (ii) and 1862 (a).-REASONABLE CHARGE BASIS ACCEPTANCE OF ASSIGNMENT BY SUPPLIER OF DURABLE MEDICAL EQUIPMENT SSR 69-9 Where a supplementary medical insurance enrollee has incurred expenses for a medically necessary appliance, ordering not the standard model but a more expensive one, and the supplier accepts assignment for payment pursuant to section 1842(b) (3) (B) (ii) of the Act, held acceptance of such assignment binds the supplier to the amount determined by the carrier to be the "reasonable charge" for equipment adequate to meet the enrollee's needs and he may not bill the enrollee for difference between that amount and the customary charge for the deluxe model sold. Payment may be made on a reasonable charge basis under the provisions of Part B of title XVIII of the Social Security Act to, or on behalf of, a supplementary medical insurance enrollee under this part, for medically necessary durable medical equipment, including iron lungs, oxygen tents, hospital beds and wheelchairs used in the patient's home, (including an institution used as his home, other than a hospital or nursing home) whether furnished on a rental basis or purchased. Payment may not, however, be made under the program for any expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, nor for items or services which constitute personal comfort items or services. (Section 1862 (a) (1) and (6)) Determinations as to the rates and amounts payable to suppliers of durable medical equipment are made by carriers under contract to the Secretary of the Department of Health, Education, and Welfare pursuant to the provisions of section 1842 of the Act. Subsection (b) thereof provides in pertinent part: (3) Each such contract shall provide that the carrier (B) will take such action as may be necessary to assure that, where payment under this part for a service is on a charge basis, such charge will be reasonable and not higher than the charge applicable, for a comparable service and under comparable circumstances, to the policyholders and subscribers of the carrier, and such payment will *** be made (i) on the basis of an itemized bill; or (ii) on the basis of an assignment under the terms of which the reasonable charge is the full charge for the service; In effect, the SMI benefits (equal to 80 percent of the reasonable charge after the annual $50 deductible has been met) are paid either to the enrollee who claims payment on the basis of an itemized bill, or to the supplier who has accepted an assignment under the terms of which he agrees that the reasonable charge will be his full charge. The supplier who accepts an assignment from the enrollee can legally claim and collect from the enrollee no more than the difference between the SMI benefit paid and the reasonable charge amount. Situations have occurred where an enrollee, needing an item of durable medical equipment, has been furnished the necessary item by a supplier who |