Getting paid by insurance companies may sometimes be challenging. In most cases, healthcare providers get confused about why their claims are getting rejected, denied, or partially paid by the insurers. To make it easier to understand, you should know about Claim Adjudication.
Insurers thoroughly check every claim they receive from healthcare providers. The process involves several steps, each determining whether the claim will be paid fully, partially, or denied. This complete process of checking the claim is known as Claim Adjudication.
In this blog, we will discuss the claim adjudication process in detail. We will also share some insights on how to make sure your claim does not get stuck in the adjudication process. Read it thoroughly so you can avoid mistakes that result in claim rejections.
Claim adjudication is the process by which insurance companies evaluate medical claims to determine payment. When a provider submits a claim, the insurer takes a minimum of two weeks to decide its fate.
The insurer reviews the claim from various perspectives before allowing its reimbursement. This process includes checking patient eligibility, prior authorization, provider credentialing, coding accuracy, patient information, and health history.
During the adjudication process, the payor has some basic priorities:
Once the provider submits the claim, the insurer may propose three solutions after adjudication.
If the submitted claim meets the insurance company’s criteria, the company will reimburse the full cost of the services rendered. To this end, the claim must be coded accurately for the right services and include all the relevant documents and patient information.
Sometimes, the insurer discovers that the services provided have a cheaper alternative, in which case the claim is partially paid. Also, co-insurance, copays, or contractual agreements may result in partially paid claims.
The claim may be denied reimbursement when the insurer finds any red flags during the adjudication. Lack of prior authorizations, necessary documentation, or a limited insurance plan may result in claim denials.
The claim adjudication workflow might be different for different payors. However, here is a general flowchart that most insurance companies follow during the claims adjudication process.
The first step of the adjudication process is initial review, which starts as soon as the insurer receives a claim. This step involves basic checks, such as verifying patient demographics, insurance coverage, policy validity, service date, subscriber identification number, diagnostic codes, etc.
Any errors or red flags found at this step result in immediate rejection. Remember that claim rejection differs from claim denial, and we will discuss this further in this blog.
The second step is the automated review of the claim, which is a bit more detailed than the initial review. At this stage, the claims are reviewed for compliance with the payor policies mentioned in the contract.
At this stage, the payor looks for invalid codes, missing or expired prior authorizations, duplication of claims, or unnecessarily delivered medical services.
The manual review is the detailed review of the medical claim often done by a professional medical claim reviewer. Some insurers hire dedicated nurses or practitioners to manually review the claims to ensure the right service is delivered for the diagnosis.
If the medical officer suggests a less expensive alternative treatment for the diagnosis, the insurer may not reimburse the full amount for the practitioner’s services.
Once the manual review is completed, the insurer decides about the reimbursement. It might be a full payment, reduced payment, or no payment, depending on the issues in the claim identified during the first three steps of the claims adjudication process.
The insurer may also delay the reimbursement and request more documentation if the medical claim review officer requires it.
So, receiving payment from the insurer is not really called “payment” in terms of medical billing. It is either ERA (electronic remittance advice) or EOB (explanation of benefits).
The insurer sends ERA to the healthcare provider to explain how the claim was processed. It also includes an explanation for the adjustments made, denials, reductions, or any other changes in the amount paid for a claim.
Experienced medical billers know that rejected claims are different from denied claims and that both need a different approach for effective management.
The appeal process for denied claims depends on the reasons for the denial. If the denial is due to some error or mistake from the biller, it can be corrected and resubmitted along with the appeal form.
However, if the reason for the denial mentioned by the insurance company is “service not necessary,” it may be a lengthy process.
The first level of the appeal process involves calling the insurer and arguing about the claim’s eligibility. A doctor or practitioner from the practice may call the insurer, share the details of the patient’s case, and provide strong arguments about why the service provided was necessary for the patient.
If the claim remains denied, the second step is to create a detailed appeal file that clearly shows how the procedure or treatment provided was crucial for the patient. This time, a senior appeal management officer from the insurance company will review the case.
If the result remains unchanged after the second-level appeal, it is time for an external review. At this stage, a practitioner or doctor who is not working with the insurance company will review the case and suggest whether the service provided was legit.
Though there is a chance of converting denied claims into reimbursement, it requires a lot of time and effort from both the provider and the insurer. The best approach is to minimize the chances of a claim being denied.
Healthcare providers who have a large volume of patients or claim submissions may hire professional billing companies to manage their claims. Top billing companies in the US, like Medi Billing, offer virtual billers to help providers focus on patient care. Our experts will handle all your claims, ensuring timely reimbursements.
The process of getting paid by the insurance company may seem straightforward to most people. However, an experienced medical biller knows the real ins and outs of claim processing or claim adjudication at the insurance company.
In simple words, claim adjudication is the process by which the insurance company processes the claim before it is sent to the finance department for reimbursement or denied. Understanding the claims adjudication process is crucial for billers to maximize reimbursement without any delays.
Since bill/claim adjudication is the process of analyzing a claim by the insurer, bill adjudicated may refer to a claim that is processed by the insurer and is either paid or denied.
Theoretically, real-time claim adjudication seems possible. However, it hasn't been applied yet due to some inevitable reasons. Healthcare insurance companies are trying to adopt real-time claim adjudication.
The best practice is to use a clearing house before submitting claims to the insurance company. A clearing house will send the correct claims and will automatically stop the ones that have any issues with them. You can then correct the mistake and resubmit the claim for reimbursement.
Another way is to hire a professional billing company that takes responsibility for all your claims. Companies like EZ Medical Billing Solutions often charge a very small percentage of the submitted claims in return for comprehensive billing cycle management.
At Medi Billing, we provide comprehensive medical billing services that cover everything from coding and claims to payment recovery. We take the stress out of your revenue cycle across all specialties so you can dedicate your time to patient care.
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