Payers and providers are the two sides of healthcare in America. The payer is the organisation that pays for the care, such as a health insurance company or a government health plan. The provider is the one that gives the care, such as a doctor, clinic, hospital or lab. The patient is a third party. Because the payer covers the patient, the payer calls the patient a member.
These words matter in India because a large share of the software that American payers and providers use is built in India. Much of their billing and coding work is also done here, in Chennai, Hyderabad, Bengaluru and Delhi.
Here is how it works in general. A member visits a provider. The provider treats the member and records what was done. The provider then sends a bill, called a claim, to the payer. The payer checks the claim against two things: the member's plan, which says what is covered, and its contract with the provider, which fixes the price for each service. The payer then pays the provider. The member pays the rest, such as a co-payment, a fixed amount for each visit. Providers that have a contract with a payer are called in-network. In America, the main payers are private health plans, Medicare, the federal plan for people over 65, and Medicaid, which each state runs for people on low incomes.
Take, for example, a hospital's billing team. It runs revenue cycle management software, which checks each patient's cover before the visit and follows up every claim until the payer pays it.
Consider a payer that receives millions of claims a month. Its health plan administration system holds the members, the plans and the provider contracts, and decides how much to pay on each claim.
For instance, a small clinic cannot connect to hundreds of insurers one by one. It sends all its claims to a healthcare clearinghouse, which forwards each claim to the right payer.
How is this different from India? In India, many patients still pay the hospital themselves. When insurance pays, the payer is an insurance company. Often a third-party administrator (TPA), a company licensed by IRDAI, handles the claim on the insurer's behalf. Under the government's PM-JAY scheme, state health agencies pay the hospitals. Indian hospitals and insurers now exchange cashless claims through the National Health Claims Exchange. In both countries, the codes on a claim come from medical coding.
Appears in
- Ambulatory EHR↗ Healthcare ITA clinic EHR records the visit for the provider, and produces the bill that the payer, an insurer, receives.
- Revenue cycle management (RCM)↗ Medical billing and claimsRCM software lets a provider check what the payer covers, send the claim and follow up on each payment.
- Healthcare clearinghouse↗ Medical billing and claimsA US healthcare clearinghouse passes claims from providers to hundreds of payers, converting each claim to the insurer's format.
- Health plan administration system↗ Medical billing and claimsA US health plan administration system is the payer's own system: it checks each provider's claim against the contract and pays it.
- Medicaid management information system (MMIS)↗ Medical billing and claimsAn American state's MMIS acts as the payer for low-income members, receiving claims from providers and paying them.
- National Health Claims Exchange (NHCX)↗ Medical billing and claimsNHCX carries cashless claims from Indian hospitals, the providers, to insurers, the payers, in one standard format.