Reasonable cost

Actual dollar amount of providing medical services or hospital services including direct and indirect costs to Medicare patients. Fiscal intermediaries and insurance carriers use the Centers for Medicare and Medicaid Services (CMS) guidelines to determine reasonable costs incurred by individual providers in furnishing covered services to enrollees.

Reasonable cost basis

Calculation to determine the reasonable cost incurred by individual providers when furnishing covered services to beneficiaries. Reasonable cost is based on the actual cost of providing such services including direct and indirect costs of providers, excluding any costs that are unnecessary in the efficient delivery of services covered by a health insurance program.

Reasonable cost methodology

System used by Medicare fiscal intermediaries under established guidelines from the Centers for Medicare and Medicaid Services (CMS) to find the reasonable cost incurred by the provider when rendering services to a Medicare patient. These guidelines try to exclude unnecessary medical costs.

Reasonable fee

Amount on which payment is based for participating physicians in the Medicare program; a charge is considered reasonable if it is deemed acceptable after peer review even though it does not meet the customary or prevailing criteria. This would include unusual circumstances or complications requiring additional time, skill, or experience in connection with a particular service or procedure.