Opinion ID: 693465
Heading Depth: 3
Heading Rank: 1

Heading: Regulations Determining Reasonable Costs.

Text: 25 The Secretary is required to reimburse hospitals only for the reasonable cost of providing medical care to Medicare beneficiaries. 42 U.S.C. Sec. 1395x(v)(1)(A). 26 This regulation defines reasonable cost as: 27 the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of needed health services, and shall be determined in accordance with regulations establishing the method or methods to be used, and the items to be included.... (emphasis added). 28 Id. 29 The Secretary has substantial discretion to develop methods of determining costs. Good Samaritan Hosp. v. Shalala, --- U.S. ----, ----, 113 S.Ct. 2151, 2154, 124 L.Ed.2d 368 (1993); St. Mary's Hosp. Med. Ctr. v. Heckler, 753 F.2d 1362, 1367 (7th Cir.1985), cert. denied, 472 U.S. 1028, 105 S.Ct. 3502, 87 L.Ed.2d 633 (1985) However, such discretion is limited by the Secretary's mandate to prevent cross-subsidization. The regulations dictate: 30 under the methods of determining costs, the necessary costs of efficiently delivering covered services to individuals covered by the [Medicare program] will not be borne by individuals not so covered, and the costs with respect to individuals not so covered will not be borne by [the Medicare program]. 31 42 U.S.C. Sec. 1395x(v)(1)(A); see Charter Peachford Hosp., Inc. v. Bowen, 803 F.2d 1541, 1544 (11th Cir.1986). 32