Payer 101: Three things every healthcare market researcher should know

July 29, 2015 at 4:07 PM 2 comments

Over the years, we at MedSpan Research have developed expertise in a universally known but not well-understood sector of the healthcare industry: payers.

The term ‘payer’ is broadly defined as any entity that reimburses the use of healthcare services or products.  The term commonly refers to health insurance companies (otherwise known as health plans) as a whole, or to a key decision-maker at a health plan such as its medical director. In this post we’ll focus on the former, and we’ll go into more detail about the latter in an upcoming post.

Payers determine patient access to drugs and medical devices as part of healthcare insurance coverage, as well as how much provider organizations are reimbursed. Therefore, pharmaceutical and medical device companies looking for adoption of their product should conduct market research with payers in order to understand likely coverage and reimbursement.

In this post, we’ll discuss three basic aspects of U.S. health plan payers: type, geography, and size. Understanding these aspects will help you design a study sample that is representative of your market.


Over 500 health plans provide health insurance for the majority of the U.S. population. The infographic below provides an overview of health plans in the U.S:

Types of Health Plans

Health plans may specialize in one type of coverage, or have multiple lines of business. Most private payers have a commercial line of business as well as other lines of business, while a smaller number of payers only have Medicare Advantage (the supplementary Medicare coverage most commonly offered by private payers) or managed Medicaid. Even fewer have both Medicare Advantage and managed Medicaid, but not commercial, lines of business. Unless a drug or product focuses on a specific population, a payer market research study should explore the differences, if any, in coverage and reimbursement by line of business.

The infographic below shows the most common types of health plans by line of business, as well as the number of plans in each category.


Click on the image to enlarge.

Coverage by Geography

Health plans in the U.S. vary in geographic coverage, which refers to the number of states in which a health plan offers insurance products. Health plans can generally be categorized as state or local plans, regional plans, and national plans. See the figure below for definitions of each.

Health Plans infographs v2

Click on the image to enlarge.

A health plan’s reimbursement model impacts how it operates geographically. Because Medicare is reimbursed by CMS, Medicare Advantage plans are managed at the national level. Conversely, Medicaid is reimbursed by individual states, and payers who manage Medicaid enrollees do so on a state-by-state basis. Privately insured (otherwise known as “commercial”) enrollees can be managed on a national, regional, state, or local level.

Most market research studies aim for a sample that represents the entire country by requiring a mix of health plans with different geographic coverages.

Size of plans by enrollment

Besides geography, we can also look at a health plan’s size by total enrollments, otherwise known as the number of lives covered. By examining the lowest, highest, and median number of total enrollments for each plan type shown below, we can get a general understanding of what could be considered small, medium, and large for each.  This is important to keep in mind when screening criteria for each type of plan in a market research study.

Health Plans infographs slide 4

*Enrollment figures are based on the number of health plans offering each type of product in 2012. Enrollments for all non-government plans in 2012 totaled to more than 242 million. Click on the image to enlarge.

The payer landscape is much more complex than what we have covered here, and it is constantly changing. However, we hope this information has given you the knowledge that you need to help design the sample and screening criteria for your next payer research study.

In the next post of this series, we’ll learn about the key decision makers at health plans and the insights that they provide.

Thanks for tuning in!



The plan type and enrollment data in this post are compiled from the AIS 2012 directory. Other sources used are cited within the text.


Entry filed under: Affordable Care Act, managed care, managed medicaid, Medicaid, Medicare, medicare advantage, payer research. Tags: , , , , , , , .

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