OBJECTIVES: This study of hospitalized Medicare beneficiaries with acute bacterial skin and skin structure infections (ABSSSI) diagnoses describes inpatient hospital cost and resource use by patients with primary ABSSSI infections. METHODS: The study used Medicare Provider Analysis and Review (MedPAR) Files from 2011—2012 containing claims for 313,646 patients in 2011 and 317,527 patients in 2012 with a primary ABSSSI diagnosis with Age ≥ 18 from a 100% sample of hospitalized Medicare beneficiaries during 2011-2012. Reimbursements were derived from 2012 MedPAR data and costs were derived from 2010 Premier data, inflated (4.7%) to 2012 using the October 2013 hospital producer price index (PPI) generated by the Bureau of Labor Statistics. Net reimbursement was analyzed by MS-DRG and LOS. The analysis used regression modeling to determine factors correlated with LOS. RESULTS: Median Charlson Comorbidity Index (CCI) was 3; patients tended to have more cellulitis on the trunk, foot, and toe. The median LOS was three days.  Sixteen percent of patients used the ICU/CCU.  For MS-DRG 603 (Cellulitis without MCC), the most common MS-DRG comprising 61% of admissions, net reimbursement was positive when LOS ≤ 3 days, but 52% of admissions were projected to result in financial losses to the hospital. Age, non-minority status, Northeast census region, CCI, cellulitis on the leg and traumatic wound infection were correlated with longer LOS; diagnoses of erysipelas, diabetes without complications and drug abuse were correlated with shorter LOS. Median costs were $5,612. CONCLUSIONS: The median length of stay for Medicare patients is shorter than the indicated length of antibiotic drug treatment for ABSSSI (7-10 days), implying that most patients complete treatment in ambulatory settings. Hospitalization cost is projected to be less than reimbursement for many of the most common type of ABSSSI patients.