Claims adjudication is the process by which insurance companies review, evaluate, and make a determination on healthcare claims submitted by healthcare providers. It involves the examination of the claim for accuracy, completeness, medical necessity, and compliance with the insurance policy’s terms and conditions. The goal of claims adjudication is to determine the appropriate payment or denial of the claim based on the policy’s coverage and guidelines.
Here are the key steps involved in claims adjudication:
Claim Submission: The healthcare provider submits a claim to the insurance company, including all the necessary information such as patient demographics, diagnosis codes, procedure codes, and supporting documentation.
Initial Review: The insurance company performs an initial review of the claim to ensure it meets the basic requirements for processing. This includes verifying that the claim is complete, the patient is eligible for coverage, and the services rendered are covered under the policy.
Coding and Documentation Review: The insurance company examines the codes used on the claim, such as diagnosis codes and procedure codes, to ensure they are accurate, appropriate, and supported by the documentation provided. Any discrepancies or coding errors may be flagged for further investigation or clarification.
Medical Necessity Review: The insurance company evaluates the medical necessity of the services billed. This involves determining whether the services were necessary and appropriate for the patient’s condition based on established medical guidelines and the insurance policy’s coverage criteria.
Fee Schedule Review: The insurance company compares the billed charges to its fee schedule or contracted rates to determine the allowable amount for each service. The fee schedule specifies the maximum amount the insurance company will pay for each service based on its negotiated rates with healthcare providers.
Adjudication Decision: Based on the review and analysis, the insurance company makes an adjudication decision. This decision can result in various outcomes, such as payment of the claim in full, partial payment, denial of the claim, or a request for additional information or documentation.
Explanation of Benefits (EOB): The insurance company generates an Explanation of Benefits (EOB) document that outlines the outcome of the claims adjudication process. The EOB is sent to the healthcare provider and the policyholder, detailing the amounts billed, allowed amounts, patient responsibility, and any denied or adjusted services.
Payment or Denial: If the claim is approved, the insurance company initiates the payment process, either by sending payment directly to the healthcare provider or reimbursing the policyholder. In the case of a denied claim, the EOB will provide reasons for the denial, and the healthcare provider or patient may have the option to appeal the decision.
Claims adjudication is a complex process that requires expertise in medical coding, billing regulations, and insurance policies. The process aims to ensure that claims are processed accurately, claims fraud is minimized, and healthcare providers are reimbursed appropriately for the services rendered.