Health

Hospitals that are excluded from the Medicare Acute Care PPS are paid according to the reasonable cost method. The reasonable cost method is a payment system that reimburses hospitals for their direct and indirect costs of care for Medicare beneficiaries. Under this method of payment, the Medicare intermediary (the organization responsible for reviewing and paying claims) will assess each hospital's costs and then set a payment for each service based on their findings. Hospitals are generally reimbursed for the actual costs of providing care, which includes labor expenses, supplies, and other costs associated with providing care. The reasonable cost method can also include fee schedules, global payments, and bundled payments, depending on the way that the costs are calculated.