Third-Party Payers In Healthcare Reimbursement

Third-party payers play an important role in providing the foundation for healthcare organizations’ financial stability, the overall healthcare system, and the population’s well-being. Third-party payers’ activity in reimbursement of healthcare services focuses on payment of medical claims on behalf of the person receiving the services. Thus, the most common third-party payers in the United States are insurance companies and government agencies. Third-party payers significantly contribute to the healthcare system’s overall stability. Payments from third-party organizations and governmental insurance programs provide financial resources the healthcare organizations use to ensure effective functioning and support the workforce. Furthermore, third-party payers significantly impact the overall population by making health services more affordable for people with low incomes. This essay will explore the vital role of third-party payers in the reimbursement of healthcare services using examples of two governmental insurance plans, employer-sponsored and individual health insurance plans.

Firstly, in order to create a comprehensive understanding of the role of third-party payers in the reimbursement of healthcare services, it is necessary to explore the role of financial resources in the United States healthcare system. The core difference between health care in the US is that individuals must pay for the cost of health services themselves, while in other countries with universal healthcare, one national insurance plan covers the medical costs. Furthermore, insurance companies tend to slowly resolve issues about the quality of services provided to the client in order to reduce costs. Thus, health organizations are forced to increase healthcare services costs to cover the losses. While the profit-oriented insurance model has positive outcomes, such as improved quality of services with more funding resources, citizens without insurance who have undergone a sudden illness can find themselves in a difficult financial situation.

Next, a closer examination of insurance plans’ functioning can provide valuable information about third-party payers’ contributions to the healthcare system. Medicare is a national health insurance program that primarily focuses on providing insurance services for the elderly population. The Medicare program was initially designed to address the growing disproportion of individuals without insurance in the older age group. In 1950, more than half of older Americans had less than $1,000 in annual income, and only one in every eight individuals had health insurance (US National Archives and Records Administration, n.d.). However, now Medicare can also cover payments for younger people with disabilities.

Insurance costs get progressively higher for individuals as they grow older because elderly people generally need more medical care. The insurance cost for adults older than 65 can be three times higher than for young adults (U.S. Centers for Medicare & Medicaid Services, n.d.). Considering that low insurance coverage in the elderly population can result in a higher mortality rate, the government created the Medicare program to increase the population’s life expectancy. Furthermore, older people are subjected to more health risks due to low levels of physical activity, and poor nutrition among older adults makes their immune systems more vulnerable. In addition, older persons unable to work often struggle with financial difficulties. Thus, the Medicare health insurance program attempts to make healthcare services more affordable for the elderly.

Furthermore, the Medicare program’s functioning differentiates three payment levels and three different types of health care services. Clients are free to choose between two ways in which they can get coverage for healthcare services. Firstly, the hospital insurance part covers the costs of the individual’s hospital stays and care in hospice. Hospital insurance is based on the Medicare taxes the individual pays during the years of work. Thus, hospital insurance is generally free and is commonly referred to as the premium-free Part A of Medicare.

Next, the medical services provided by doctors, outpatient care, and medical supplies present the next type of service, also known as medical insurance. This part, also referred to as Part B, the medical insurance, requires a monthly premium payment. The last part of the insurance plan focuses on prescription drug coverage, which is calculated individually. Thus, the Medicare insurance plan has several advantages in providing coverage for a significant portion of the population at a relatively low cost and increasing demand for prescription drug companies. Furthermore, as all insurance programs ultimately provide financial resources for the development of healthcare organizations, Medicare contributed to the improving standards of healthcare services.

On the contrary, the extensive coverage of the Medicare program requires significant funding from the federal budget. According to information provided by the Center for Medicare and Medicaid Services (CMS, 2022), Medicare spending exceeded $829.5 billion in 2020 and continues to grow each year. Furthermore, as the population’s life expectancy and medical services costs continue to grow, Medicare funding will present a major problem for the federal government in the future. In addition, Medicare is partially funded by taxpayers meaning that further increases in the program’s cost may adversely affect the overall distribution of taxes. Furthermore, many people on Medicare experience unnecessary hospitalizations and re-hospitalizations if their health condition worsen at home, which puts an additional workload on hospitals. The increased burden can cause negative effects on hospital staff and result in poor performance and quality of care, leading to more cases of readmissions. Thus, even though the Medicare program has significant advantages in addressing the population’s needs, further use of the program presents a substantial financial burden to the government.

While Medicare primarily focuses on improving health outcomes in the elderly population, Medicaid represents a joint federal and state program offering health insurance for low-income populations. The program offers an extensive list of groups eligible for the problem, which includes pregnant women, children, senior citizens, and individuals with disabilities. Medicaid presents the largest source of health coverage across the United States, with more than 76 million Americans participating in the program (Bednarek & Barnidge, 2022). While states may define specific eligibility conditions, an individual’s eligibility is generally confirmed using the Modifies Adjusted Gross Income (MAGI) index. However, the use of MAGI methodology is not required for individuals with a disability and elderly population over 65 years. In addition, the program allows medical coverage for medically needy individuals whose income exceeds MAGI index limitations.

Compared to Medicare which focuses on medication, medical services, and hospital coverage, Medicaid offers a broader range of benefits, and states can introduce additional benefits to recipients’ insurance. Furthermore, the program targets low-income populations and offers access to healthcare services at an affordable cost. Lastly, a significant portion of the population is eligible for simultaneous use of Medicare and Medicaid, meaning that Medicaid can provide assistance to recipients of Medicare.

On the contrary, due to the high coverage of the program, Medicaid plans have many exclusions. Therefore, the program’s limitations force the patient to either stop the treatment or cover the costs out of pocket. Furthermore, because the reimbursement in Medicaid can take a long time, significantly fewer healthcare providers accept patients with Medicaid coverage. After switching from private insurance providers to Medicaid, patients can also experience discrimination in denial of services due to insurance type. In addition, small healthcare service provider organizations relying on reimbursements from Medicaid may experience financial problems, which potentially can negatively influence the quality of healthcare services. Therefore, while Medicaid allows coverage of base-level healthcare services, it does not fully address the problems with the lack of access to healthcare services in poor populations.

Next, considering non-governmental health insurance companies, there are two major private providers in the United States: Aetna and Blue Cross Blue Shield. Aetna presents one of the nation’s most popular health insurance providers, offering coverage for a wide range of healthcare services, including dental and vision insurance, in all 50 states. Furthermore, Aetna is owned by CVS, allowing the insurance company to provide more accessible and convenient services through integrated CVS Pharmacies and Health HUB locations system (Aetna, 2021). While the company primarily focuses on providing health insurance services to employees and their employees, it also offers family plans. Aetna is acknowledged as one of the nation’s most trustful health insurance companies, with a relatively small number of complaints for its extensive client base.

The claim processing is predominantly based on an individual’s health plan, and the decision of payment for each service used by the patient is decided individually on a case-by-case basis. Aetna favors that clients file an appeal in cases when the health insurance company’s decision does not satisfy the client’s needs, proving that the company prioritizes customers’ interests. In addition, communication with the health insurance provider can be established conveniently through a mobile application.

One of the significant downsides of Aetna is that the company currently does not offer individual insurance plans. Thus, Aetna’s customer base is mainly represented by employees and students with group health insurance. According to Herro (2022), the company’s decision to leave the market of individual health insurance was caused by the company’s financial losses in 2018. Thus, even though the company offers accessible and affordable services, there is no opportunity for individual customers to buy insurance plans from the company besides Medicare and Medicaid plans. However, if an individual already qualifies for Medicaid or Medicare, Aetna can be purchased during an open individual enrollment period. Thus, while Aetna health insurance operates an innovative system with higher technological capabilities and stable financial resources, it is more focused on corporate clients. Nevertheless, the health insurance company plays a significant role in providing stable financial support for the health system in ensuring corporate contribution to employee care and reimbursement of healthcare services through group health insurance.

Furthermore, like Aetna, Blue Cross Blue Shield is a well-trusted health insurance company with a good reputation and stable financial resources. However, compared to Aetna, which represents a single company operating through the CVS network, Blue Cross Blue Shield system includes 35 separate companies in different states. The organizational structure of Blue Cross Blue Shield favors the development of an extensive network of healthcare providers. According to Rivelli (2022), Blue Cross Blue Shield insurance provides access to the largest network of providers in the United States (1.7 million). Furthermore, according to Gordon (2021), Blue Cross Blue Shield covers health care costs for every one in three Americans. The company offers a full range of insurance plan options, including family insurance and individual plans, and even within the organization, plans may vary across different subsidiaries. In addition to insurance, Blue Cross Blue Shield clients get access to a 24/7 nurse line and fitness program, which sets the company apart from competitors. Moreover, Blue Cross Blue Shield clients also get membership in the Blue365 program, which provides discount offers for wellness services and products.

Blue Cross Blue Shield uses the functionality of mobile applications to ease the claim processing experience for clients. Furthermore, healthcare providers can check patients’ eligibility through access to the company’s unified network. Patients can use the mobile application to track claim status, check available services, and consult with the company representative in case of questions on billing and claims. However, even though healthcare providers can access the company’s information base to check patients’ eligibility status, patients cannot contact the company directly because of the organizational structure. Thus, any important issues will be resolved through the representative company, which can add confusion to the claim’s proceedings.

Therefore, while Blue Cross Blue Shield uses a structure with many subsidiaries to create favorable conditions for clients in different regions, it puts clients in a state of uncertainty. Differences in insurance plan conditions and varying costs in company subsidiaries can lead to significant misunderstandings in relationships with clients. However, the organizational structure also favors the development of the network of healthcare service providers, which is ultimately crucial for customers.

In conclusion, the information obtained from comparing governmental and non-governmental insurance plans defined that all third-party payers have important roles in the reimbursement of healthcare services. Firstly, the Medicare program successfully deals with the task of increasing the level of life expectancy in the country. Even though Medicare presents a significant financial burden for the federal government, it fulfills an important mission of maintaining the viability of the elderly population unable to work and take care of themselves. Next, the Medicaid insurance plan also fulfills an important mission in providing healthcare opportunities for disadvantaged segments of the population. However, the question of barriers to access to health care remains open, as Medicaid insurance is accepted in a small number of organizations with poor quality of services.

Furthermore, employer-sponsored health insurance plans in Aetna present a significant source of support for the healthcare system with a stable financial flow. Health providers are often forced to increase the cost of services to cover expenses from delayed payments. Insurance companies like Aetna support the functioning of the healthcare system and the high quality of health services with fast payment processing times. On the other hand, individual private insurance plans also vastly contribute to the healthcare system with the large share of population coverage and the possibility of providing individual plans.

Thus, comparing different governmental and non-governmental plans provided significant insight into the role of third-party payers in the reimbursement of healthcare services. The paper defined that Medicare and Medicaid health insurance plans target the protection of disadvantaged segments of the population, substantially contributing to the health status of the overall population in the country. On the other hand, non-governmental insurance plans allow the health care system to function effectively and maintain a high level of quality of services.


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