Following the Money: Who Pays, Who Gets Paid

On 21 February 2024 attackers shut down Change Healthcare, the largest clearinghouse in American healthcare. For weeks many hospitals, physician practices and pharmacies could not check patients' insurance, submit claims or receive payments. Care went on; the money stopped. Small practices took emergency loans to meet payroll, and UnitedHealth, Change's owner since 2022, advanced about $9 billion to providers at the peak (reported). Chapter 12 tells the story of the attack. For this chapter its value is what it revealed: almost no money in American healthcare moves from the person treated to the person treating. It moves through a chain of insurers, administrators, clearinghouses, benefit managers and government contractors, each of which takes a role and often a cut.

This chapter traces that chain for a newcomer. It explains who pays, the units in which providers are paid, how one hospital bill becomes cash, why the drug dollar runs on a separate track, and where in the chain profit tends to settle. Appendix A works through four stylized examples: a Medicare Advantage plan's profit and loss, a hospital's payer mix, the flows on a single prescription, and the payback on a digital-health contract with an employer.