What is Adjudication process?

About 30% claims are denied on their first submission due to different factors. Claim adjudication in Medical billing involves the process in which insurance companies check healthcare claims and decide whether they will pay the claim in full, pay in partial amount or deny the claim altogether.
This means when the claim is submitted electronically, or sent via post to the insurance company, the claim is automatically updated in the insurance clearing house (in case of paper claim, it is scanned and then uploaded into the clearing house) and if it passes the clearing house, it is accepted, which means once they said yes we take your claim, it contains the basic information that we need in order to even review your claim. They accept that claim into their system for this step we call adjudication.

Adjudication and Partial payments

In case of partial payment made once the claim is adjudicated, this can happen on smaller mistakes such as if for example, modifier is missing or one wrong CPT code added, then partial payment can be made.
If there are too many mistakes in the claim then all the claim can be denied. The claim can also be denied due to eligibility, date of Birth, or could be due to any mistake during data entry. There are really 5 steps into this adjudication process also known as Adjudication workflow.

Adjudication Workflow

This means when your insurance company receive the claim they are looking into 5 different areas or looking for 5 pieces of information to review the claim.

1)- Claim Is Not Duplicate

First, they want to make sure that they did not receive this claim before or did not make this claim payment before.

2)- Detailed Information Check

The claim then moves onto the detailed information check to see whether all the details required to process that claim is present. Here insurance review the claim for it’s true completeness. The acceptance process is little different to this adjudication because they are really in that area there is basic review taking place. Are the right characters present on the claim, For example Date of birth, ID etc?
However, in adjudication they are really more detailed about that review process, they are looking at the procedures codes, the diagnosis codes, really checking and validating them for example looking at the ID and matching the ID to the date of birth matching them with their internal record to ensure that they have this patient in their system as an active subscriber.

3) - Are You Participating?

Which means do you have information on your claim that follows the rule according to your participation. Simply stated, if you are surgeon and often you are going to need some sort of referring information or some referring provider authorization from the PCP. In that case, basically, they are looking to confirm that you have the referring details present and they may not necessary check to validate that but just to check whether it active and present there.
In nutshell, they are basically looking for that you are covered, you are a participating provider, you have these rules that you need to do x, y and z, and have you even included that on our claim? If all is correct, they will move on.

4) - Determine If Service Is Covered in Benefits!

Then they look for benefits and see what is covered and the services you rendered! Authorization, if required was valid! Then they are looking at the diagnosis, is that really diagnosis truly covered by the patient outline in benefits plan so they put all this together in this step 4.

5) - Final Decision

Finally a decision is made on the claim whether to pay, pending (if Insurance require certain information then claim go in pending state), pay in Partial or denied. Final decision is sent on EOB/ERA to the provider.
If insurance decides to pay the claim, then they can send the claim in the form of ERA (if they have the electronic setup in place) or if they do not have any Electronic setup in then the claim is sent in the form of EOB to the provider facility or Doctor or a letter can also be sent. Once a final decisions sent, then this whole process complete the adjudication workflow.

What Happens after Claim is denied after Adjudication?

After the claim has been adjudicated by the insurance company and has been denied, Then we look into denial reasons. The claim could have been denied because some of the information is not included on the claim, which is required, patient not having services that are covered in insurance, or was not authorized or referred properly among others.
When claim is denied then you receive the confirmation by way of EOB or ERA (electronic remittance advise). On EOB/ERA there will be a breakdown of denial reason codes in the form of ANSI codes which give us some feedback as to what potentially is wrong with the claim or what need to be fixed for that claim to be paid.

Understanding the adjudication workflow or process help avoid claim denials. If you are facing a lot of denials and want the claims to pass the adjudication process in first go, please contact us at info@mtservices.pro