The purpose of adjudication is to resolve disputes so that you don’t have to have an expensive and long process in court. It is a process of the examination of claims and determining the outcome of these claim benefits. When the claim is filed and received goes through a 5 stage process to determine how the claim should be paid, (1) initial processing, (2) automated review, (3) manual review, (4) determination, and (5) payment. The purpose of this flow chart is to show you the steps you must take and explain the process of each step and what the purpose is for.
5 STEPS OF THE ADJUDICATION PROCESS
PAYERS FIRST PERFORM INITIAL PROCESSING CHECKS ON CLAIMS, REJECTING THOSE WITH MISSING OR CLEARLY INCORRECT INFORMATION: This will determine if reimbursed each insurer has their own way of claim approval but the process is basically the same.
CLAIMS ARE PROCESSED THROUGH THE PAYER’S AUTOMATED MEDICAL EDITS: Once claim is received it has to go through a comprehensive review that is performed by a computer software program that is designed to find errors or discrepancies on the claim form by scanning each claim to make sure information is correct and all necessary information is present on the claim and it conforms to the insurer’s policies. This is called editing and any errors found can cause the healthcare provider not to be reimbursed by the insurer.
A MANUAL REVIEW IS DONE IF REQUIRED: This process is done only if the claim fails it can be denied or sent to an insurance examiner for review this is done manually.
THE PAYER MAKES A DETERMINATION OF WHETHER TO PAY, DENY, OR REDUCE THE CLAIM: After the completion of the adjudication process the insurance company sends a letter to the one who filed the claim detailing the outcome of their claim. This is called a remittance advice that includes the statement of whether or not the claim was denied or approved. If denied, the insurer has to send an explanation of the reason why it was denied it is a regional law for them to do so. An explanation of benefits that includes detailed information of each service that was settled that is mentioned in the claim.
PAYMENT IS SENT WITH A REMITTANCE ADVICE/EXPLANATION OF BENEFITS (RA/EOB): As a result to the adjudication, the insurance company may only pay half and by law they are required to send an explanation of the reason why they are only making a partial payment, explanation on benefits, detailed information of how each service was settled and the payments will be sent out by the insurance company to the providers or their billing service if claims are approved.
Provide a one-sentence summary describing how claims adjudication is important to the medical billing process.
The claims adjudication process is important to the medical billing process because once a claim goes through the adjudication process and it is completed the insurance company sends the remittance letter and explanation of benefits with detailed information about how each service that is mentionioned in the claim was settled and then that is when the medical billing process will know what to do whther send payments out or not and this process is called Medical Billing Advocacy.