In the healthcare industry, a payor (also spelled “payer”) refers to any entity that pays for the healthcare services (such as diagnoses, treatments and other services) received by an individual. This phrase typically describes health insurance companies that offer their customers health plans, providing financial coverage and reimbursements for medical treatments and care services.
Payors can be broadly categorized various types:
Government / public payors: Government payors include state and federal programs like Medicare, Medicaid and Children’s Health Insurance Program that provide healthcare coverage to eligible individuals based on age, income, or disability.
Commercial payors: Commercial payors are usually publicly traded insurance companies that offer a variety of health insurance plans to individuals and employers. In the United States, employer-sponsored insurance covers the majority of individuals, but insurance can also be purchased directly through a marketplace.
Private payors: Private payors often refer to private insurance companies, such as Blue Cross Blue Shield, offering plans akin to commercial. Additional, the term private payors is sometimes used to encompass direct payments for healthcare services, where individuals pay cash for a service without utilizing insurance.
Payors are crucial in offering patients the health insurance coverage necessary for accessing essential healthcare services. Typically, beneficiaries contribute to an insurance plan on a monthly or yearly basis, receiving coverage for a specified range of procedures or services in return.
Whenever a healthcare provider files a medical claim with a payor for reimbursement for a particular procedure or service, it creates detailed data about that episode of care. This all-payor medical claims data can be utilized by providers, suppliers, and other key players in the healthcare sector to glean valuable insights on topics such as provider referral patterns, network affiliations, diagnoses, prescription volumes, co-morbidities, and more.
Furthermore, understanding the payor mix, or the sources of a hospital’s revenue, can assist in segmenting and targeting accounts based on their payment methods.