What is Medical Adjudication?
The adjudication process in medical billing lies on the paying insurance’s end wherein it will determine the responsibility of paying to the provider. It is like an “obstacle” that every claim will encounter and with help from a skilled and experienced medical coder, it can go through it smoothly and easily. With a lot of medical fraud and abuse going on in the health industry, this process will prevent loss of income from the insurance company. They have the authority to reduce the payment that was handed over to them if ever they decided that the amount is not appropriate for the diagnosis or the procedure done. In worse-case scenarios a claim may be rejected or even denied if their judgment tells them that a claim is suspicious and invalid.
Accurate billing and coding are the keys to getting through the adjudication process and these include inputting the correct details of the entire encounter. Even a misspelled name, wrong biological sex, wrong age, etc., can cause a claim to be rejected or denied. This will now cause a delay in the payment process while waiting for the corrections in the process to be made. Before, each claim is manually checked and a tremendous amount of attention to detail is needed. However, it’s a good thing right now that medical billing software can reduce these mistakes and can increase the turnover of payments to the providers. Around 85% of the claims undergo Auto Adjudication, which as the name implies, is automatic and is handled by this software and not by people. This method is actually more financially favorable to business owners since it would cost more if an actual human being handled manually the adjudication process considering the hundreds of thousands of medical claims filed in a year but this itself has its own downsides. Some health insurance companies, however, outsource third-party companies to handle the claims adjudication alone.
Physicians trust us in My RCM group in handling this process and with our experienced medical billers and coders, along with Kareo, the software we mostly use, we can avoid claim rejections and denials by intricately looking at the details prior to their submissions.
The Process of Medical Adjudication
There are several steps in the adjudication process per health insurance company which can vary from one another. One may have a longer adjudication process compared to another but the goal is still the same – to prevent fraud, waste, and abuse. The Office of the Inspector General USAID defines these three as:
Fraud is defined as the wrongful or criminal deception intended to result in financial or personal gain. Fraud includes a false representation of fact, making false statements, or concealment of information.
Waste is defined as the thoughtless or careless expenditure, mismanagement, or abuse of resources to the detriment (or potential detriment) of the U.S. government. Waste also includes incurring unnecessary costs resulting from inefficient or ineffective practices, systems, or controls.
Abuse is defined as excessive or improper use of a thing, or using something in a manner contrary to the natural or legal rules for its use. Abuse can occur in financial or non-financial settings.
Mass Adjudication
Once a claim has been submitted it will now undergo a process called Mass Adjudication wherein it will be checked against contracts, benefits, prior authorization requirements, fee schedules, reference files, service groups, copayments, etc. Here, a claim can either be a Pass or a Fail. If it has passed, it will now then again be checked for correct coding, downcoding, or unbundling. If it does not pass, a manual review will be made by a claim specialist.
Manual Review
This is made if a claim did not pass and these claims are tagged for “edits” and will be pended for a manual review. Common pend reasons are:
- Is the patient an eligible member?
- What is the bill type?
- Do the codes match the contract?
- How to pay and at what rate?
- What are the benefits covered
- Is there prior authentication required?
- Is it a duplicate claim?
Edits
These are logic within the claims processing system that evaluates information on the claims and depending on the evaluation, takes action on the claims, such as pay in full, pay in part, or pend for manual review
Post Adjudication Process
Just because a claim has a Pay status (Pass), the entire process doesn’t really end there. Most insurance companies have a secondary auditing system. The secondary auditing system is there to audit for the last time to assure compliance with:
- Applicable state and federal regulations
- Timely filing guidelines
- Coding combinations
- Maximum units
- Place of service
- Other editing guidelines
Some may find the secondary auditing system redundant since timely filing and place of service should be done in the first step of the adjudication process. Timely filing means there is only a specific time period wherein a claim should be filed. An encounter for the past 2 years is not eligible for claim filing.
If all has been audited, adjudicated, and double-checked properly, the provider can now receive his payments via paper check or direct to his bank account.
References: AETNA Billing and Process | What is considered fraud, waste, or abuse? | Office of Inspector General (usaid.gov) Claims process – 2022 Administrative Guide | UHCprovider.com
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