May 21, 2013

OK, Who Pays?

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Recently a coworker and I were debating the correct spelling of the word “payer/payor.” He said “payor;” I said “payer” (he probably would say “to-mah-to” to my “to-may-to,” too.) Then, just this week I used “payer” in a design specification and was corrected by several people who said our “standard” was “payor.” Since we all are players in the healthcare provider/purchaser (usually called “revenue cycle”) relationship, let’s take a few minutes to consider the spelling of the word meaning “one who pays.”

Technically Correct

Almost every dictionary I consulted indicated that “payer” and “payor” both are correct, but that “payer” is preferred. However, the Oxford University Press lists “payer” as a derivative of “pay,” but “payor” isn’t listed. The first known use of “payer” was in the 14th century, and it meant “to pacify” (presumably, as in, pacifying a creditor). Even so, “payor” seems to be preferred by banks and attorneys as the logical corollary to “payee” (one who is paid). Think of the parallels:

  • Lessor/Lessee
  • Grantor/Grantee
  • Assessor/Assesse

But then, consider some parallels to “payer/payee:”

  • Employer/Employee
  • Attacker/Attackee
  • Driver/Wedge (or iron, or putter)

Perhaps one or two of those are a stretch, but you see the issue.

Regrettably, the determination of whether “payer” or “payor” is correct depends largely on one’s personal point of view (a euphemism for “baseless opinion”). Perhaps we should search the Web for the spelling preferred by selected stakeholders, since technically, both are correct.

The Search for Enlightenment

Let’s take a look at entities that pay medical bills. (You see how I avoided typing “payer” – though rats, I just did…)

  • Government Insurance:
    • The Centers for Medicare & Medicaid Services (CMS) uses “payer” 4,800 times and “payor” 847 times.
    • The Texas Health and Human Services Commission uses “payer” 754 times and “payor” 110 times.
    • Thus, for Medicare and at least one Medicaid entity, “payer” is the clear preference.
  • Non-government Insurance: 
    • The Health Insurance Association of America uses “payer” 39 times and “payor” just six times.
    • The Blue Cross Blue Shield Association uses “payer” 25 times and “payor” only three times.

It appears safe to say that actual payers favor “payer”.

But what about healthcare providers? Surely they use “payor!” Let’s see…

  • The American Hospital Association uses “payer” 1,190 times and “payor” 101 times.
  • The Federation of American Hospitals uses “payer” 18 times and “payor” just twice.
  • The American Medical Association prefers “payer” to “payor” by 1,992 to 291.

Emulating those who pay the claims, it seems provider groups aren’t particularly enamored with “payor” either.

Perhaps healthcare is not in the mainstream either? Let’s see what business and banking entities say:

  • The United States Chamber of Commerce prefers “payer” to “payor” by a score of 27-0, while the American Bankers Association expresses almost a dead heat:  42 hits for “payer” and 45 for “payor.” This is hardly an overwhelming margin for either side.

And after that total bust, let’s consider attorneys, like my friend at work:

  • The American Health Lawyers Association users “payer” 219 times, but “payor” is the clear victor at 256 uses.
  • Taking the opposite position is the American Bar Association, which favors “payer” 2,090 times and uses “payor” only 1,390 times. Maybe the AHLA is favoring “payor” because they think WE favor “payor!”

 


 

But enough of the special-interest groups: perhaps the definitive metric of the preferred spelling should come from we, the people. To see what the universe of users prefers, I went to both Bing and Google, and found the following:

  • On Google, “payer” had 87,600,000 results while “payor” had only 1,780,000 results.
  • Bing was similar, although much less dramatic, with 19,700,000 results for “payer” and 1,660,000 results for “payor”.

Conclusions

By almost every test in this article, “payer” wins, although “payor” won once and a couple of others were close. But we keep coming back to the fact that both spellings are correct, although “payer” is preferred by most dictionaries as well as most websites.

Proposed Resolution

I won’t argue either way based on these searches, but I am going to conclude with a proposed distinction. How about this (or something similar):

  • Payer: Anyone who accepts part or all of the responsibility for purchasing a good or service.
  • Payor: One who executes a debt instrument and holds legal responsibility to repay it.

By these definitions, I’m a “payer” at the grocery store, or on line, or as an employer, but I’m a “payor” on my car loan and my home mortgage. Or, think of it this way:

A “payer” is a “buyer” who makes payment to a “seller,” while a “payor” is a “debtor” who makes payment to a “lender.” In the first case, I’m buying goods or services; in the second, I’m “renting” cash.  In other words, a “payor” borrows money with which to become a “payer” buying goods or services. Using these definitions, “payer” and “payor” are not different spellings of the same word; they are different words (homonyms).

Three last thoughts, before you get back to work:

  1. This line is the only reference to ICD-10 in this article. Think of this as respite from ICD-10.
  2. It seems unlikely that a “responsible party” form signed during the hospital admission process constitutes a “debt instrument,” since:
    1. The signer is not borrowing money. At best, they are opening a “no-limit” credit line.
    2. It typically lacks repayment terms, such as interest rate, date of first payment, number of payments, late payment penalties, consequences of non-payment, and so forth.
    3. While there is an “offer and acceptance,” there is no exchange of value at the time the document is executed.
    4. The provider usually makes the responsible party sign a “note” after third-party payments are exhausted. If the admission form were a “note,” why execute a second one?
    5. And last, but certainly not least, a managed care contract with a provider isn’t a debt instrument by any definition. In the real world, it simply defines a business relationship.

Until next time…

About the Author

Billy K. Richburg, M.S., FHFMA is HFMA-Certified in Accounting and Finance, Patient Accounting and Managed Care. Bill graduated from the U. of Alaska, Anchorage and earned his M.S. in Health Care Administration from Trinity University, San Antonio, TX. Over a career spanning more than 40 years, Bill has held positions including CEO, COO, CFO, and CIO in hospitals ranging from 75 beds to over 300 beds, and in home health agencies, DME stores, and a home infusion company. Bill is a Board Member of the Lone Star Chapter, HFMA, and is Director of Government Programs for the Revenue Cycle Technologies business segment of MedAssets, Inc. His office is in Plano, Texas.

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Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Billy Richburg, M.S., FHFMA

Billy K. Richburg, MS, FHFMA is HFMA-Certified in Accounting and Finance, Patient Accounting and Managed Care. Bill graduated from the University of Alaska, Anchorage and earned his MS in Health Care Administration from Trinity University, San Antonio, Tex. Over a career spanning more than 40 years, Bill has held positions including CEO, COO, CFO, and CIO in hospitals ranging from 75 beds to over 300 beds, and in home health agencies, DME stores, and a home infusion company. Bill is a Board Member of the Lone Star Chapter, HFMA, and is Senior Director of Government Programs for the Revenue Cycle Technologies business segment of MedAssets, Inc. His office is in Plano, Texas.