---
kind: "section"
citation: "42 C.F.R. § 415.160"
title: "42"
number: "415.160"
heading: "Election of reasonable cost payment for direct medical and surgical services of physicians in teaching hospitals: General provisions."
url: "https://uscodex.org/cfr/42/415.160"
---

# §415.160. Election of reasonable cost payment for direct medical and surgical services of physicians in teaching hospitals: General provisions.

- (a) **Scope.** A teaching hospital may elect to receive payment on a reasonable cost basis for the direct medical and surgical services of its physicians in lieu of fee schedule payments that might otherwise be made for these services.
- (b) **Conditions.** A teaching hospital may elect to receive these payments only if—
  - (1) The hospital notifies its intermediary in writing of the election and meets the conditions of either [paragraph (b)(2)](#b-2) or [paragraph (b)(3)](#b-3) of this section;
  - (2) All physicians who furnish services to Medicare beneficiaries in the hospital agree not to bill charges for these services; or
  - (3) All physicians who furnish services to Medicare beneficiaries in the hospital are employees of the hospital and, as a condition of employment, are precluded from billing for these services.
- (c) **Effect of election.** If a teaching hospital elects to receive reasonable cost payment for physician direct medical and surgical services furnished to beneficiaries—
  - (1) Those services and the supervision of interns and residents furnishing care to individual beneficiaries are covered as hospital services, and
  - (2) The intermediary pays the hospital for those services on a reasonable cost basis under the rules in [§ 415.162](/cfr/42/415.162.md). (Payment for other physician compensation costs related to approved GME programs is made as described in [§ 413.78](/cfr/42/413.78.md) of this chapter.)
- (d) **Election declined.** If the teaching hospital does not make this election, payment is made—
  - (1) For physician services furnished to beneficiaries on a fee schedule basis as described in [part 414](/cfr/42/part414.md) subject to the rules in this subpart, and
  - (2) For the supervision of interns and residents as described in [§§ 413.75 through 413.83](/cfr/42/413.75..413.83.md).

## Notes

### Amendments

[60 FR 63178, Dec. 8, 1995, as amended at 70 FR 47490, Aug. 12, 2005]

### Authority

Authority: 42 U.S.C. 1302 and 1395hh.

### Source

Source: 60 FR 63178, Dec. 8, 1995, unless otherwise noted.

### Amendments

[60 FR 63178, Dec. 8, 1995, as amended at 70 FR 47490, Aug. 12, 2005]