items or elements of an institution’s costs which are reimbursable under a payment formula. Both Medicare and Medicaid reimburse hospitals on the basis of certain costs, but do not allow reimbursement for all costs. Allowable costs may exclude, for example, uncovered services, luxury accommodations, costs which are not reasonable, expenditures which are unnecessary in the efficient delivery of health services to persons covered under the program in question (it would not be allowable to reimburse costs under Medicare involved in providing services to newborn infants), or depreciation on a capital expenditure which was disapproved by a health planning agency.