Payers

Payers are entities responsible for funding the purchase of goods and services. In a market economy, the payer is the party that bears the cost or reimburses the seller or provider.

In healthcare, a payer is an organization that finances care or reimburses providers for patient services. Common payers include public programs such as government-funded health plans, private health insurers, employers that sponsor coverage, and patients paying out-of-pocket. Payers may contract with providers to create networks, determine covered services, set reimbursement rates, and manage utilization.

Payers may also be involved in underwriting risk, collecting premiums or contributions, and administering benefits. They handle claims processing, eligibility verification, benefit design, premium collection, and cost-control measures such as prior authorization and formulary management. Payer mix, the composition of payers within a health system, influences pricing, access, and financial risk.

Payment approaches vary. Fee-for-service reimburses for each service provided; capitation pays a fixed amount per enrolled member regardless of utilization; bundled payments cover a defined episode of care; value-based models tie payments to quality and outcomes. Value-based models aim to align incentives to improve efficiency and health results, with arrangements such as accountable care organizations (ACOs) and performance-based contracts.

In other sectors, payers can be consumers, sponsors, or organizations that pay for goods, services, or licenses. Across contexts, payers play a central role in financing, regulating access, and shaping the prices and terms under which services are delivered.