The term "Payor" is broad. In the US, it involves a triad of entities managing risk and funding. Understanding who holds the risk (Fully Insured vs. Self-Insured) changes your sales target from the Insurance Carrier to the Employer.
Fully Insured: The Carrier (e.g., Aetna) takes the risk.
Self-Insured (ASO): The Employer (e.g., Amazon) takes the risk; Carrier just processes claims.
Medicare: Federal (Age 65+). Sets the price floor for the industry.
Medicaid: State/Federal (Low Income). Managed often by MCOs.
How a clinical event becomes cash. This is the operational backbone of every provider organization.
Patient schedules appointment. Provider checks EDI 270 (Eligibility Inquiry) to confirm coverage. Payor responds with EDI 271.
The encounter happens. Medical coders translate diagnoses (ICD-10) and procedures (CPT) into alphanumeric codes. ⚠ Critical Failure Point: Incorrect coding leads to denials.
The compiled claim is sent to the Clearinghouse/Payor using EDI 837 (Health Care Claim).
The Payor's system (PBM or MCO) reviews the claim against medical necessity rules. They decide to Pay, Deny, or Pend.
Payor sends EDI 835 (Electronic Remittance Advice) explaining payment details. Funds transferred via EFT.
Electronic Data Interchange (EDI) standards are the rigid protocols that allow Payors and Providers to talk. Mandated by HIPAA, these codes are the "plumbing" of the US healthcare system.