What is Cost-Based Reimbursement?

Cost-based reimbursement is a payment method where healthcare providers are reimbursed based on their actual costs of providing services plus an additional margin or percentage. This traditional payment model, still used for some critical access hospitals and certain Medicare services, covers allowable expenses including staff salaries, supplies, overhead, and equipment depreciation rather than paying fixed rates per service.

Why cost-based reimbursement matters

• Supports rural hospitals: Helps critical access facilities remain financially viable
• Covers actual expenses: Ensures providers are reimbursed for legitimate costs
• Reduces efficiency incentives: May not encourage cost containment like fixed payment systems

How Solace can help

A Solace advocate can help you understand how cost-based reimbursement affects your bills at certain facilities, identify which providers use this payment model, and navigate any billing differences from standard fee-for-service arrangements.