What is Third-Party Payment in Healthcare?

The term “third-party payment” refers to anyone paying for medical treatment who isn’t the patient. This may be a public entity or a private one. In the United States, there are several kinds of third-party payment providers.

  • Insurance companies are the most commonly seen third-party payer. Employers and individuals buy medical insurance. This allows the patient to benefit from healthcare services and the insurance provider pays for a portion of that treatment.
  • In the case of disabled people or the elderly, the government acts as the insurer. The government use funds obtained from current workers’ taxes instead of insurance premiums to pay healthcare providers. These public healthcare programs include Medicaid for people with low incomes and Medicare for elderly people.
  • Other third-party payment suppliers include HMOs (health maintenance organizations) and employers.

A third-party payment covers some of the amount owed by the patient for his or her healthcare services. Every third-party payer has conditions of its own that the facility or clinician providing the service must meet. If those conditions are not met, the facility will not receive any payments. Usually, the healthcare provider submits its claim for the treatment a patient receives to the third party. Then, the third party sends a payment to the healthcare provider for all covered expenses on behalf of the patient.

In the past, the conditions were simpler than they are today. However, medical services are becoming more expensive. Therefore, conditions are rapidly changing so care can be more cost-effective.