Cite as: 529 U. S. 667 (2000)
Thomas, J., dissenting
individuals covered by the 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 program").
The "prospective payment system" adopted by Congress in 1983 to increase efficiency and reduce costs operates somewhat differently from the "reasonable cost" provisions but is also designed to reimburse hospitals for the cost of providing care to Medicare beneficiaries. 42 U. S. C. § 1395ww; 42 CFR pt. 412 (1999). Under this system, the Medicare program pays hospitals a fixed price for each case based on the patient's diagnosis related grouping (DRG), which is assigned based on the patient's diagnosis, age, and sex, among other things. 42 U. S. C. § 1395ww(e); 24 CFR § 412.60 (1999). The DRG figure represents the average cost of treating patients within the DRG. 42 U. S. C. § 1395ww(d)(2); 49 Fed. Reg. 251 (1984). Significantly, because hospitals are paid fixed amounts based on the DRG, the hospital, like any other private contractor, bears the risk of higher costs. See Kinney, Making Hard Choices under the Medicare Prospective Payment System: One Administrative Model for Allocating Medical Resources under a Government Health Insurance Program, 19 Ind. L. Rev. 1151, 1151- 1152 (1986).
Thus, the statute and regulations make clear that medical providers are entitled only to reimbursement for the actual or estimated cost of services rendered to Medicare patients and that individual elderly and disabled patients—not hospitals—are the beneficiaries of the Medicare program. Indeed, the Social Security Act explicitly says so. See 42 U. S. C. § 1395a(b)(5) (1994 ed., Supp. III) ("The term 'medi-care beneficiary' means an individual who is entitled to benefits" (emphasis added)). The Act repeatedly refers to Medicare "benefits" as assistance provided to individual participants, rather than to medical providers. See, e. g., § 1395a ("Any individual entitled to insurance benefits under this subchapter"); § 1395b-2 ("Such notice shall be mailed an-
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