Hospitals that are excluded from the Medicare acute care PPS (such as children's hospitals) are paid based on

a. reasonable costs
b. fee schedules
c. global payments
d. bundled payments

To determine the answer to this question, we need to understand how hospitals that are excluded from the Medicare acute care Prospective Payment System (PPS) are paid.

The Medicare acute care PPS is a payment method used by Medicare to reimburse hospitals for treating Medicare beneficiaries. It is designed to provide a fixed payment for each specific service or diagnosis.

However, certain hospitals, such as children's hospitals, are excluded from this payment system. Instead, these hospitals are typically paid based on reasonable costs. This means that the hospital submits their actual costs for providing services to Medicare patients, and Medicare reimburses them for those costs up to a predetermined limit.

Therefore, the correct answer to the question would be:

a. reasonable costs