1. Health insurance funding in which the insurance carrier does not assume an underwriting risk. The group that is insured pays the costs of benefits (incurred claims), pays administrative costs, and contributes to the insurance carrier’s contingency reserve fund. 2. System of payment for inpatient hospitalization in which total operating costs and certain allowable capital costs are used in determining the per diem (per day) rate. When the amount of payment from a payer becomes insufficient or when uncompensated services are given, providers go to cost shifting and charge extra to the payers who do not exercise strict cost controls. This system is a typical means for providing uncompensated care to the uninsured.