Claims Adjudication

The process by which a payer receives, reviews, and determines payment for a healthcare claim, including verification of eligibility, coverage, coding accuracy, and contractual terms.

Claims adjudication is what happens after you submit a claim and before you get paid. The payer's system processes your claim through a series of automated checks and rules to determine whether to pay it, how much to pay, and what the patient owes. The adjudication process follows a standard sequence. First, the payer verifies that the member was eligible on the date of service and that their benefits were active. Second, they check that you are an enrolled, participating provider with an active contract. Third, they verify that the services billed are covered under the member's plan. Fourth, they apply coding edits including NCCI bundling rules, modifier requirements, and diagnosis-procedure code matching. Fifth, they calculate the allowed amount based on your fee schedule and determine the payer's payment and the patient's cost sharing. Most claims are adjudicated automatically by the payer's claims processing system. Clean claims that pass all automated checks are auto-adjudicated in seconds. Claims that fail one or more checks are routed to a manual review queue, which adds days or weeks to the processing time. The Explanation of Benefits or Electronic Remittance Advice shows you the result of adjudication for each claim. It breaks down the billed amount, the allowed amount, the payer's payment, and the patient's responsibility with specific reason codes explaining any adjustments or denials. Understanding how adjudication works helps you submit better claims. If you know that the payer checks NCCI edits during adjudication, you can run those same edits before submission. If you know they verify eligibility, you can check eligibility before the patient's visit. If you know they require prior authorization numbers on certain claims, you can make sure those numbers are included. Most payer contracts require adjudication within 30 days for electronic claims and 45 days for paper claims. If the payer misses these deadlines, many state prompt payment laws allow you to charge interest on late payments.