Adjudication process
14 Sep

The Adjudication Process: At a Glance

Adjudication Process By: Amanda Campbell

We all understand the complexity behind just simply filing a claim. What about after the claim is submitted to the payer, beyond the clearinghouse?

Once a claim is accepted into the adjudication system or payer processing system there are typically five different processes in which the claim must be reviewed. For larger group health payers these are automated or electronic processes.

When taking consideration into the adjudication system I would like to mention the difference between rejections and a denial.

    Clearinghouse Rejection: the claim did not pass the initial scrub from the clearinghouse and was not submitted to the payer. Clearinghouse rejections should not be used to fight timely filing appeals as the claim did not formally enter the payers’ processing system and therefore falls on the liability of the provider to correct and refile timely.
    Payer Rejections: the claim bypassed all clearinghouse rejections and actually entered the initial adjudication process as outlined below, however; a clerical error was detected. Payer Rejections while present in the payers’ system with a claim number did not enter in an actual automatic/manual review and therefore can be corrected and simply refiled as an original type of bill.
    Denials: the claim has bypassed all rejections and has entered the automatic/manual review and encounters an issue. At which time, the claim is returned to the provider with a claim adjustment reason code and remittance advice remark code defining the denial. A corrected claim would need to be filed for the UB-04 with the proper type of bill, condition code and original claim number. A CMS-1500 claim form can be corrected and resubmitted as majority of payers do recognize a replacement claim (you should always verify with the payer their requirements). Please note any changes and/or corrections made to a claim and then resubmitted through the clearinghouse should also be made in the practice management system.

Denial

The first of these processes is referred to as the Initial Review.

The Initial Review is where claims are checked for simple clerical errors, i.e. beneficiary health insurance claim number(s), patient’s name and date of birth match the payers file, service dates within the covered from and through date.
In most cases when a claim is “discarded” in during the initial review process it is rejected.

The second process is The Automatic Review.

This review is slightly more detailed items in regards to insurance carrier’s payer’s payment guidelines; i.e. beneficiary entitlement on the specified service dates, invalid authorization, referral or pre-certification or not provided information, cross checking of diagnosis and procedure codes for accurateness, timely filing deadlines or medical necessity.

If a decision cannot be made, such as an entitlement not being confirmed due to an update or a discrepancy is found the claim is then moved to a manual review.

The third process is known as The Manual Review.

During the manual review the claim is physically reviewed by medical claim examiners, nurses and possibly even physicians to manually review the claim, this is the process in which Medical Records are typically requested in order for comparison to the services and diagnosis codes billed. This process is the most time consuming and is typically what takes payments 30 days or greater to review.

Payment Determination is the fourth process.

There are three different type(s) of payment determinations:
Paid: Reimbursement will be considered.
Denied: Payer determined no reimbursement will be made.
Reduced: Payer finds a service level billed is too high based on diagnosis and/or procedure codes.

Last but certainty not least is The Payment.

Payment is made to the medical office, practice, physician, etc. as deemed by the contractual agreement on file, physician fee schedule and beneficiary entitlement.

The adjudication system can be a very complex process that with proper training and a true understanding can potentially increase cash flow and alleviate denials and rejections. Legacy can help you navigate this process – click here for more information!

Ready to learn more about how you can improve your revenue cycle? Click here.

Donna White

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