What does "first payer" mean?

The first or primary payer is the one that pays up to the limits of coverage.

The first payer may not be the one that literally pays first, but it is the one responsible for all or most of the bill. 

Medicare is generally the first payer for beneficiaries who have:

• No coverage other than Medicare
• COBRA
• Individual insurance
• Retiree coverage through a union or employer, or
• An employer group health plan sponsored by a company of fewer than 20 employees.

The other payer, such as a retiree plan, is called the second or secondary payer.  

Medicare, Part B, is the primary payer for physician visits for beneficiaries with Original Medicare. Part B covers 80% of the approved amount, leaving 20% for the secondary payer. The beneficiary’s Medicare supplement insurance, also known as a Medigap policy, will cover that coinsurance.