In the Medicare program, this is a measurement of the differences across geographical areas of the cost of operating a medical practice.

Typical case that has an extraordinarily high or extremely low cost when compared with most discharges classified to the same diagnosis-related group (DRG).

Review by a professional review organization (PRO) for the necessity of a patient’s hospital admission and to determine whether all services rendered were medically necessary. Cost outlier cases are recognized only if the case is not eligible for day outlier status.

Average amount of money a company spends to acquire one new customer.

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.

Payment system in which providers receive payment based on their actual costs plus a profit. This system is usually seen in fee-for-service (FFS) plans.

Ratio of the cost (or outgo, expenditures, or disbursements) of the program on an incurred basis during a given year to the taxable payroll for the year. In this context, the outgo is defined to exclude benefit payments and administrative costs for those uninsured persons for whom payments are reimbursed from the general fund of the U.S. Treasury and for voluntary enrollees, who pay a premium to be enrolled.