Healthcare Fraud: Auditing and Detection Guide, 2nd Edition

The Payer

The payer is an entity that processes claims on behalf of a sponsored benefit plan. It is important to understand the relationship of the payer to the sponsored plan. The roles can vary significantly. The first role is a payer that can sell insurance. In this capacity, the payer takes the risk to insure an individual or to insure the plan members of a third party. This same payer entity, as a business, may also sell third party claims administration services and function as a TPA on behalf of a self-funded plan. Examples of well-known market players may include United Health Care, BlueCross BlueShield Associations, Cigna, Aetna, and so forth. These types of businesses are very different from payer entities that do not sell any risk-based products. Their third-party claims administration services are not blended with clients who have risk-based products. As an auditor or investigator, it is important to distinguish the exact business relationship of the payer; is the patient and sponsored plan associated with a true insurance plan or with a TPA that provides claims administration services on behalf of a self-funded plan?

Payer entities that sell and provide risk-based arrangements and management services of self-funded plans tend to contemporaneously manage three to four contractual relationships, all with proprietary components. The relationships are not transparent. The first is their contractual arrangement with the employer. The second contractual arrangement is with ...