Definition of Third Party Medical Billing

Patients, medical providers and insurance companies are the usual players in health care transactions. When insurance companies contract an additional party to process claims and payments, they are third party medical billing companies.

Third party medical billing companies are often used to farm out specific types of claims. Large insurance companies, for example, may contract a third party with a specialty in processing mental health claims.

Third party medical billing companies are often invisible to the patient. When patients pay medical providers, the providers must understand that the insurance company and the entity handling claims may be two separate operations.

Insurance companies need to make sure that third party medical billing companies understand HIPAA and train employees with the same level of compliance. Insurance companies will be liable for any violations to patient information.

Using third party medical billing companies is often a way to save costs and process claims more efficiently. Companies who use third parties avoid the costs associated with hiring and training employees.

Proponents of single payer national health care system are encouraging third party medical work. For many of them to survive under a single payer system, insurance companies must become third party billing employees for the government.