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All Payor Billing

A payor is the entity responsible for paying for services rendered by a healthcare provider. The term can encompass various entities, including commercial insurance companies, government programs, employers, or patients. Here are some common examples of payors:

  1. ERISA Self-Funded Employee Benefit Plan/Union Trust: These are employer-sponsored health benefit plans in which the employer, rather than an insurer, bears the financial responsibility for overall care costs.  ERISA plans are usually exempt from state insurance laws, such as prompt pay laws.
  2. Third-Party Administrator (TPA): TPAs contract with ERISA plans to administer health plans. Their responsibilities include claims adjudication, payment processing, utilization management, and physician contracting.
    TPAs play a crucial role in planning operations.
  3. Fee-for-Service Government Programs: Examples include Medicare, Medicaid, Workers’ Compensation, and the Veterans’ Administration.
    The terms of these plans are typically set by the government entity, leaving little room for negotiation by physicians or practices.
  4. Health Maintenance Organization (HMO):  HMOs contract with a network of healthcare providers who agree to the HMO’s reduced payment structure or fee schedule.  Care provided under an HMO is typically covered only if a member sees physicians within the HMO’s network.
  5. Preferred Provider Organization (PPO):  PPOs create a network of “preferred” providers (hospitals, doctors) who agree to the PPO’s payment structure.  PPOs also offer coverage for services provided by non-preferred (non-contracted) physicians.
  6. Exclusive Provider Organization (EPO): Like PPOs, EPOs require members to receive services only from participating physicians.
    EPOs typically have a narrower network than PPOs.

Understanding payor relationships is crucial for healthcare providers when negotiating contracts and navigating the complexities of payment models and insurance products. Physicians should consult their healthcare counsel or advisors to evaluate specific payment agreements.