What is a third party payer?

• A. A health plan that agrees to carry the risk of paying for patient services.
• B. A patient who pays out-of-pocket.
• C. A hospital's accounting department.
• D. A pharmacy benefits manager.

Answer: (B)

A third-party payer is a party other than the patient or the healthcare provider that takes on the financial responsibility for care. The classic example is a health plan or insurer that agrees to carry the risk and pays for services on behalf of the patient. The patient paying out-of-pocket is direct payment by the patient, not a third party. The hospital’s accounting department handles billing and payments but doesn’t assume the payment responsibility itself. A pharmacy benefits manager administers drug benefits for a payer and helps manage coverage, but the payer is the insurer or government program, not the PBM. So the concept centers on a health plan that assumes financial risk and pays for patient services.