What Is Healthcare Reimbursement?

Healthcare expenses are reimbursed to the patient by the insurance company. Find out the details and see how that is done.

The whole point of healthcare insurance is to have someone else pay for your medical expenses. People buy healthcare plans to save them and their families from the financial burden that they may not be able to afford.

Many employers get a group insurance plan for their employees which covers them for their medical expenses, hospital visits and even missed wages in case they were to fall sick or get disabled during work.

And there are many individual people as well who opt for different health insurance plans which cover them for their medical bills. Paying premiums each month is the only key to keep the policy from lapsing.

If a policyholder is down with hospital visits due in a week, they get the treatment done, and the insurance company pays them after the procedure. This process is called healthcare reimbursement.

What is Reimbursement?

In the most basic definitions, reimbursement means paying back. If a person has paid on your behalf, you pay them back means you’re reimbursing the amount in full. In the world of insurance, the insurance company of a policyholder pays on behalf of them. When the policyholder goes through the entire process of medical treatment, the bills are sent to the insurance company who either pay in full or half depending on the coverage.

Healthcare Reimbursement Models

Now that we’re clear on healthcare reimbursement and how it works, let’s get into the details as to how it helps policyholders and what the models and most current plans are.

The most common types of hospital reimbursement methods are as follows:

Fee-for-service: This is one of the most prevalent healthcare reimbursement models, where the hospital provides bills to the patient that they have to pay. Since these are then later reimbursed by the insurance company, it could create redundancy and corruption in the system by ordering unnecessary tests etc. Whatever the doctor prescribes treatment or medicines are added to the bills, and this system is quantity based.

Value-based care: This healthcare billing model focuses on the quality of the service rather than the quantity. Even though not so popular today, this model is still a better way of eliminating corruption in the health system and focuses solely on the quality of healthcare services provided by the hospital.

Bundled Payments: This model is generally known as a midway between fee-for-service and value-based care system. In this model, the bundled payments are combined to one sum of healthcare and then when the bill is paid; the amount is divided into small bundles of healthcare that was provided to the patient. This reimbursement process focuses on not only accountability but also the quality that is offered to patients.

Pathways Model: This model gives patients the option of choosing one treatment plan over the other based on the price. Mostly common in the oncology area, the pathways model agrees on the notion that if two or more treatments produce the same result, the cheapest option shall be given to the patient. This model also encourages patients and healthcare providers to work together so that there is absolute transparency in all of the processes.

Health Maintenance Organizations: The HMO is a group of health insurance providers who have made an organization of their own. The most significant advantage of using HMO as a reimbursement model is to avail incentives and low-cost health plans. Mostly in this plan, the patient has to pay some amount of money on their own, and the insurance company funds the other part.


Healthcare reimbursement generally refers to having the money refunded or paid back to the patient by their health insurance company. Healthcare in the country is costly, even routine checkups and consultations can cost people a lot of money. So to stay ahead of these costs and budget constraints, a health insurance plan is their best bet.

Healthcare expenses are reimbursed to patients either in full or some amount, as per the nature of their plan and are given through one of the models discussed in the article above.

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.

Insurance Noon is the world's leading source of insurance related content on the web, focusing on industry news, buying guides, reviews, and much more.