# 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. [Book a 30-minute call →](https://www.flobotics.io/book) 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 30-minute call →](https://www.flobotics.io/book) 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, or Bart, our Head of AI, take a look. It’s 30 minutes with someone who designs the automations, not a sales script. [Book a 30-minute call →](https://www.flobotics.io/book)[Send a message](https://www.flobotics.io/contact#contact-form) 30-minute callKarl or BartOur CTO, or our Head of AI Walk us through the process your team does by hand. We’ll tell you whether it’s worth automating and how we’d approach it. Karl & Bart 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)