The Role of Payers
The payer to a health care provider is the organization that negotiates or sets rates for provider services, collects revenue through premium payments or tax dollars, processes provider claims for service, and pays provider claims using collected premium or tax revenues.
Examples include commercial health insurance plans, third-party health insurance plan administrators, and government programs such as Medicare and Medicaid.
Government programs such as Medicare and Medicaid set amounts they will pay to health care providers. These are typically much less than the billed charge. Hospitals have no ability to negotiate the reimbursement rates for government-paid services.
Commercial insurers and third-party insurance plan administrators typically negotiate discounts with hospitals on behalf of the patients they represent.
In-Network vs. Out-of-Network Costs
If a provider is out-of-network, the patient may face a higher coinsurance payment or be responsible for the out-of-network provider’s entire bill, depending on the patient’s benefit design. This issue can arise in a variety of situations.
- Intentional: a patient seeks care from an out-of-network provider.
- Inadvertent: a patient may schedule a procedure at an in-network provider but receive services as part of that procedure from an out-of-network provider. A typical example is a patient who chooses an in-network hospital or ambulatory surgical center for the procedure but receives services from an out-of-network provider (such as a pathologist, radiologist, or anesthesiologist).
- Emergency: a patient needs emergency medical care and is taken to the nearest emergency department. The patient will have no advance opportunity to identify the network status of any providers involved in his or her emergency care.
Learn more about out-of-network costs by reading the Healthcare Financial Management Association's (HFMA) Avoiding Surprises in Your Medical Bills guide and using the Planning for a Medical Procedure worksheet.