# Healthcare Reimbursements: How Payment Rates Are Set Canonical: https://www.flobotics.io/blog/reimbursements-explanation Author: Karl Mielnicki Published: 2026-05-01 Updated: 2026-09-01 --- [Home](https://www.flobotics.io/)/[Articles](https://www.flobotics.io/blog)/Healthcare Reimbursements: How Payment Rates Are Set CTO Notes [Healthcare](https://www.flobotics.io/blog?category=healthcare)[RCM](https://www.flobotics.io/blog?category=rcm) # Healthcare Reimbursements: How Payment Rates Are Set [Karl MielnickiCTO & Co-Founder of Flobotics](https://www.flobotics.io/our-editorial-team#mielnicki) Published May 01, 2026Updated September 1, 2026 On this page - [What Are Healthcare Reimbursements?](#what-are-healthcare-reimbursements) - [How Reimbursement Rates Are Determined](#how-reimbursement-rates-are-determined) Book a callWant to talk about it? 30 minutes with someone who builds automations, not a sales script. [Talk to us →](https://www.flobotics.io/contact) Share [](#)[](#) ## What Are Healthcare Reimbursements? In healthcare, reimbursements are the payments providers — physicians, hospitals, clinics, and other healthcare entities — receive from third-party payers (commercial insurers, Medicare, Medicaid, managed care organizations) or directly from patients for services delivered. They represent the revenue side of the revenue cycle: the financial return on care provided. Reimbursement amounts are determined by a complex interplay of contracted rates, government-set fee schedules, coding accuracy, and coverage determination. Understanding how each element works — and where it can fail — is foundational to maximizing revenue cycle performance. ## How Reimbursement Rates Are Determined - Commercial payers: Rates are negotiated in provider-payer contracts, typically expressed as a percentage of Medicare rates or a custom fee schedule. Contracts define allowed amounts for every CPT code and rules for adjustments, timely filing, and coordination of benefits - Medicare: Based on the Medicare Physician Fee Schedule (MPFS) for outpatient and Diagnosis-Related Groups (DRGs) for inpatient, set annually by CMS and varying by geography - Medicaid: State-administered programs with rates varying significantly by state — often the lowest payer category for the same services - Value-based contracts: Increasingly include performance-based components tied to quality metrics and cost targets under [Value-Based Care](https://www.flobotics.io/blog/value-based-care-vbc-explanation) frameworks Let’s talk! It’s a 30-minute call. Within the first 15, we’ll know if automation works for you. [Book a call →](https://tidycal.com/team/flobotics/flobotics-intro-call-w) Written byKarl Mielnicki CTO & Co-Founder of Flobotics. Talk to us ## Show us the process your team is tired of doing manually. Let Karl, our CTO, take a look. It’s 30 minutes with the person who designs the automations, not a sales script. [Book a call with Karl →](https://tidycal.com/team/flobotics/flobotics-intro-call-w)[Send us a message](https://www.flobotics.io/contact) 30-minute callKarl MielnickiCo-founder, CTO Walk me through the process your team does by hand. I’ll tell you whether it’s worth automating and how I’d approach it. Karl Keep reading ## More insight The latest industry news, interviews, technologies, and resources. [ HealthcareRCM ### What Is Payment Posting (Cash Posting) in Medical Billing? Payment posting (cash posting) reconciles payer and patient payments against claims, surfacing denials faster in 2026. Bart TeodorczukApril 10, 2026 ](https://www.flobotics.io/blog/payment-posting-cash-posting-explanation)[ Healthcare ### Contractual Adjustment (Allowance): Meaning in Medical Billing Contractual adjustment (allowance), explained: why this write-off isn't lost revenue - and how mistracking hides real underpayments. Krzysztof SzwedMarch 20, 2026 ](https://www.flobotics.io/blog/contractual-adjustment-allowance-explanation)[ HealthcareRCM ### Net Collection Rate (NCR): Formula and Benchmarks Net Collection Rate (NCR) explained: the RCM metric measuring collectible revenue actually captured. Best practice is 95-99% - below that, revenue leaks. Bart TeodorczukJune 04, 2026 ](https://www.flobotics.io/blog/net-collection-rate-ncr) [All articles →](https://www.flobotics.io/blog)