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Why is the Process of Medical Claims Adjudication So Complex

Claims Adjudication is an industry term that refers to the process of assigning financial
responsibility from a medical bill to the insurer after the patient’s benefits are used towards a
medical claim. This process is complicated and involves multiple stages. Here we’ll explain what
goes on during the medical claims adjudication process and what makes it so complex.

Initial Processing Review
This is the first step in a medical claims adjudication. This step is relatively straightforward, as it
involves searching for basic, common errors in things like spelling and dates. In the initial
processing review the health insurance company checks the claim for misspellings of the
patient’s name, an incorrect plan number, the wrong date or service or wrong location of
service, or the wrong gender relative to the service provided. Claims rejected for these reasons
can be resubmitted after corrections are made.

Payment Policy Review / Automatic Review
After the initial processing review, the insurance payer checks the claim against the detailed
rules and guidelines specific to their payment policies. At this time, the insurance payer could
find that the claim was not pre-certified or was not authorized ahead of time as it should have
been. They will look to see whether the policy was in effect at the time the claim was made, or
whether the coverage was not active at that time. They will also look to see that the diagnosis or
procedure code is valid. Any issues here would be reason to reject the claim.

Manual Review
In many cases, claims are sent to experienced medical claims examiners such as those at
Netmark so that they may perform a manual review. These professionals are equipped to
understand the many ins and outs of what makes a claim valid. Not only will medical examiners
check the basics of a claim, but they will frequently take the extra step of collecting patient
medical records in order to compare medical history with the current claim. This allows for a
complete review of the claim’s accuracy and necessity. Medical examiners perform the manual
review with the utmost attention to detail, all while respecting the importance of timeliness and
accuracy to the policy’s guidelines.

Payment Determination
There are three possible payment outcomes—paid, denied, or reduced. If an insurance payer
determines that a claim can be reimbursed, they will consider it paid. If the payer does not think
that a claim can be reimbursed, it will be denied. If the payer determines that the billed service
level was above what it should be for the diagnosis, a claims examiner must step in in order to
downcode the procedure to a lower level, at which it would then be paid.

The final step is payment. Once a claim has been adjudicated, the insurance payer submits the
information to the medical office. This is called the remittance advice or explanation of payment.
This form explains to the provider details about the payer payment, the patient’s financial
responsibility, including copay and deductible amounts, the allowed amount, the discount
amount, the covered amount, the approved amount, and the date of adjudication. This summary
explains in brief the process of the claim adjudication, and why the insurance payer and the
claims examiners made their decisions.