Third-party reimbursements can be used in any business, but are most common in the health care industry. The patient is the first party, the health care or service provider is the second party and the third party is an insurance company. Instead of requiring the patient to pay at the time the facility provides a service, an insurance company receives the bill.
In a third party reimbursement, the patient provides proof of insurance before receiving services, usually by showing the receptionist an insurance card that includes the name of the insurance company and an insurance identification number. After receiving the bill, the third party will either pay the entire bill, send a partial payment to cover only certain services or expenses, or refuse the bill if the services are not part of the patient’s insurance coverage. If this happens, the service provider will then bill the patient for the outstanding balance.