Claims Adjudication
Chapter 4: Revenue Management: Insurance Claims, Denied Claims and Appeals, and Credit and Collections
4-2c Claims Adjudication
Claims adjudication is a crucial process in the health insurance industry, where validated claims undergo a comprehensive review by a payer's claims examiner. The examination entails comparing the claim against payer edits and the patient’s health plan benefits. Key checks during this phase include:
Verification of required information necessary to process the claim.
Ensuring the claim is not a duplicate submission.
Confirming compliance with payer rules and procedures.
Assessing whether the procedures and services provided are covered benefits according to the patient's health plan.
Claims Processing Steps
Claims processing begins after a claim has been validated. During adjudication, if discrepancies or issues arise regarding the claimant’s identity or documented information:
Claims are automatically rejected if patient and subscriber names do not match the records in the payer's computerized database.
Such errors, including typographical mistakes or the use of nicknames, lead to delays or rejections, hindering timely reimbursement.
Additionally, service codes listed in a claim are cross-referenced with the insurance policy's master benefit list to ensure coverage. Any services not included on this list are deemed noncovered benefits, resulting in claim denial.
Unauthorized Services
Claims can also be denied when services provided are deemed unauthorized. Preauthorization is required for certain medical procedures, and if a provider fails to obtain this prior approval, the payer may reject the claim. Providers may bill patients for noncovered procedures but must absorb the costs of unauthorized services as a business loss.
Managed Care Claims Considerations
For managed care claims, the operational rigor includes double-checking the service procedure dates against preauthorization timelines. Payers may designate a claim as a third-party liability responsibility when it aligns with particular situations, such as accidents involving other insurance types (e.g., automobile insurance for car accident injuries).
Example Revenue Scenarios
Example 1: A patient undergoing an annual physical examination incurs a charge of $112, with the insurer covering 80%, leaving the patient to pay the remaining 20% directly to the physician.
Example 2: An office surgery on September 8 resulted in a total claim of $680, with the patient responsible for a 20% coinsurance payment at the time of service. The breakdown here showcases how insurers determine allowed charges based upon pre-established agreements that never exceed the provider's bill.
Allowed Charges and Patient Contributions
The allowed charges reflect the maximum reimbursement amount dictated by the patient's insurance policy and may vary across different policies. Policyholders have specific responsibilities such as meeting annual deductibles and copayment obligations:
Deductible: This is the total amount a policyholder must pay out-of-pocket for covered medical expenses before insurance begins to pay.
Coinsurance: A percentage share of costs post-deductible (e.g., with an 80/20 plan, the insurance pays 80%, and the patient pays 20%).
Copayment: This is a fixed fee charged to patients for healthcare services, payable at the time of service.
Claims Denial and Re-Submission
Claims can experience denials due to coding errors, administrative mistakes, or misalignments with medical necessity. A remittance advice is generated post-adjudication outlining payment details for resolved claims, and providers often appeal denied claims by correcting errors and resubmitting the documentation. Tracking systems allow providers to monitor claims status, verify insurance coverage, and ascertain expected reimbursement timelines.
Common Claim Issues
Claim tracking is essential for identifying recurrent errors, including:
Coding Errors: Incorrect codes may result in downcoding or unbundling of services, leading to claim rejection.
Technical Errors: Claims can be rejected due to transposition errors, duplications, or submissions that deviate from payer instructions.
Pending Claims: These indicate claims needing additional information or corrections that can be re-submitted for processing.
Overall, understanding and navigating the claims adjudication process requires thorough knowledge of policy stipulations and coding guidelines, evident in ongoing claim management efforts.