A practical cost-based approach to determining reimbursement rates: a necessary component of effective payment reform

Figures & data

Table 1 Calculation of reported procedure costs and profit margins using Revenue Based Cost Assignment

Procedure	Reimbursements (USD)	Cost per dollar revenue	Reported cost	Profit	Profit margin
A	$200	0.40	$80	$120	60%
B	$300	0.40	$120	$180	60%
C	$500	0.40	$200	$300	60%
Total	$1,000		$400	$600	60%

Table 2 Health delivery systems and facilities

Delivery systems	Organizations/facilities
Non-integrated delivery systems Integrated delivery systems Accountable care organizations Patient-centered medical homes	Academic medical centers Community hospitals Safety net hospitals Specialty hospitals Free-standing private clinics/offices Community health centers Extended care/skilled nursing facilities