What is Direct Pay? - Insurance Navy. In insurance, direct pay refers to a direct payment method where the insurance company, such as healthcare insurance, pays directly the healthcare providers for medical services received by the policyholder. This is typically done after the policyholder has received the medical service and the medical provider has filed an insurance claim. In a direct pay model, the policyholder does not need to pay for the medical services upfront and then file an insurance claim for reimbursement with their health insurance. Instead, the company makes a direct payment to the healthcare provider, simplifying the payment process for the policyholder. This direct pay model is often used in health insurance and medical care. However, it can still be found in other types of insurance—the specifics of how Direct Pay works can vary depending on the terms of the insurance policy.
It’s important to note that Direct Pay is different from Direct Billing.