Claim adjudication is a very technical-sounding term in health insurance. But the concept is quite simple. This process is more important for the insurance company than the policyholder. Nonetheless, knowing the meaning and how it's done can help you file the claim correctly and avoid rejections. Let's understand what claim adjudication is in health insurance.
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Claim adjudication in health insurance is a method insurance companies use to decide the authenticity of a medical claim. Through this method, they can determine if the claim amount should be paid partially or fully. Another scenario can be to deduce if the claim is approved or rejected.
The claim adjudication process involves these broad stages:
It also involves checking any applicable deductibles.
A big and complex industry like medical insurance requires an effective gatekeeping system that streamlines the claim process. It protects insurers from fraud and unjustified claims. It also ensures that only the genuine policyholders receive the coverage benefits. Without adjudication, the claim process can witness errors, exploitation, and unjustified expenses. Thus, the claim adjudication process is very important to pay genuine health insurance claims.
The claim adjudication process in healthcare generally follows these steps.
The adjudication process starts when a healthcare provider (on behalf of the insured in case of cashless claims) submits a claim through a claims adjudication system.
At this stage, the insurer checks for missing details, wrong policy numbers/IDs, or mismatching codes.
Through a set of predefined rules, the insurer’s system automatically evaluates the claim. This typically includes checking coverage terms, the necessity of treatments, and whether pre-authorisation was taken or not.
Some claims require human intervention. It depends on the complexity of claims. In this case, a claims examiner might investigate uncommon procedures or the high cost of the treatments.
After the above checks are completed, the insurer determines whether to pay fully, partially, or deny the claim.
The insurer sends an Explanation of Benefits (EOB) to the healthcare provider or the policyholder (depending on the type of claim). The detailed EOB depicts what was covered, the payout, and what needs to be paid by the policyholder.
Every claim request results in one of these three main outcomes: ‘approved’, ‘partially approved’, or ‘denied’. In ‘approved’ claims, the insurer agrees to pay the full compensation for the expenses as per the terms and conditions of the policy. A part of the claim amount is paid for' partially approved' claims. This could be due to coverage limits or exclusions. In ‘denied’ claims, the insurer rejects the claim.
Though these two terms are related, they’re not the same. Claim adjudication is the decision-making process (evaluating, verifying, approving, or denying claims). On the other hand, claim settlement refers to paying out the claim after the decision has been made.
Though we now have modern claims adjudication systems, human and technical errors can still slow down the process. Incorrect or incomplete claim forms, missing documents, medical coding errors, no pre-authorisation, manual review, and policy disputes may delay the adjudication process.
Follow these tips to avoid any delays in the adjudication process.
Understanding the adjudication of claim meaning can help policyholders take smart steps in handling their healthcare finances. It protects the interests of insurers as well as policyholders. It ensures valid and policy-aligned claim payouts.
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Reviewed by Dr. Harshita Dahiya 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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