Opinion ID: 450362
Heading Depth: 2
Heading Rank: 1

Heading: The Medicare Statutory Scheme

Text: 3 In 1965, Congress enacted the Medicare Act 2 (the Act), which created an extensive program of health insurance for the aged and disabled. Part A of the Act 3 entitled participating hospitals to reimbursement for the reasonable costs of medical services with such costs being limited to the cost actually incurred, excluding therefrom any part of the incurred cost found to be unnecessary in the efficient delivery of needed health services. 4 Under the statutory scheme, reimbursable costs include both direct and indirect costs of patient care. 5 Direct costs are those directly related to patient care such as nursing services and medication. Indirect costs include such items as return on equity capital and depreciation of plant and equipment. The Secretary is charged with developing regulations establishing the methods or method to be used and the items to be included in determining [reasonable] costs. 6 4 These appeals challenge the Secretary's determinations regarding certain of these indirect costs: 1) reimbursement of stock maintenance costs, 2) reimbursement of income taxes, 3) the treatment of tax liability in calculating equity capital, 4) the allowable rate of return on equity, and 5) stock acquisition costs.