Claim Adjudication in Health Insurance

Claim adjudication in health insurance is the process done by an insurer to evaluate your medical claim. They determine whether your claim is valid or not, and upon determination, the correct amount gets paid. 

It is a complex process that undergoes multiple steps. Therefore, when you are buying your health insurance, it is essential to know how your insurance claim is approved, partially paid or denied.

Keep reading this comprehensive guide and gain a clear understanding of the claim adjudication process in health insurance. 

What is the Meaning of Claim Adjudication in Health Insurance?

Claim adjudication meaning in health insurance, refers to the process that your insurer takes to determine whether to approve or deny your medical claims.

Let’s understand this with an example.

Suppose you have been admitted due to a health hazard and your hospital bill crosses ₹1 lakh and your coverage limit is ₹4 lakh. You have filed a medical claim with your insurance company. To file a claim, you will have to submit your original medical bills. 

Once you have submitted your bills, the payer or insurer will review and assess your bills to determine whether the claim reason is legitimate or not. 

Thus, this is how claim adjudication in health insurance works. It reviews, assesses and determines whether to approve your medical claim or not. 

With rising healthcare and hospital bills, a ₹4 lakh sum insured does not necessarily cover most medical treatments. Choose Bajaj General Insurance to purchase or renew your health insurance in India and get the maximum sum insured.

Why is Claim Adjudication Important in Medical Billing?

Claim adjudication in medical billing is important for various reasons. The reasons include:

1. Careful review of the claim helps insurers to identify errors and prevents them from overpaying or underpaying.
2. The process validates treatments and checks whether the medical treatment was necessary, considering the situation.
3. Careful examinations of claims help insurers identify and prevent any fraudulent activities.
4. It determines the payment as to how much your insurance company shall pay.

What is the Claim Adjudication Process?

Initial Review

This is the first step in the claim adjudication process. Here, your insurer quickly reviews the claim, checks the primary details and identifies any errors you may have made.

The details checked in this step include:

1. Patient name
2. Name of the hospital
3. Date of receiving the medical care
4. Insurance ID
5. Medical procedures and diagnostic costs

Automated Review or Mass Adjudication

When the claim passes the initial review, the next step is automated review or mass adjudication. The insurer checks the policy details and the legitimacy of the claim in their system. The factors that are checked in automated review include:

1. Whether the service is covered under your plan
2. If the treatment aligns with the diagnosis
3. Whether the claim was submitted within the required time frame

Manual Review

If any error is found during mass adjudication or automated review, then the insurer opts for manual review. In this step, the claim is mainly scrutinised by a trained insurance official. The reviewer checks for mistakes and ensures everything is accurate by:

1. Verifying if the treatment aligns with the best medical practices
2. Assessing whether the service was medically urgent and necessary
3. Requesting additional information from the care provider, if needed

Payout Determination

After assessing and reviewing the claim, the payer determines the payment that needs to be made. This decision is based on 3 possible outcomes:

Full Payment of the Claim

When it is seen that all the submitted documents are correct, the insurance company then pays the full amount directly to the hospital. For example, if your bill is ₹1 lakh and everything is accurate, the full medical bill will be settled by the insurer.

Partial Payment of the Claim

In partial payment, the insurer only pays for a portion and rejects the remaining part of the claim. Suppose you are diagnosed with liver-related issues and some medical treatments include a test not included in your health insurance plan. That portion gets rejected. 

Denial of the Claim

If the documents provided by you for the claim do not match, are incorrect or the insurance company is not simply satisfied with the documents, your claim is most likely to be rejected. Thus, to get the payment, you must provide accurate information. 

Tips on How to Avoid Mistakes in the Claim Adjudication Process

You may wonder why your claim is getting delayed.

It is mainly because of factors including incomplete claim forms, misinformation, manual review or policy disputes. Thus, to avoid this delay, you need to ensure that you are not repeating the mistakes outlined below:

1. Not verifying basic details: Even if you know the information, double-checking can prevent errors.
2. Skipping the pre-authorisation step: Always complete this step if your policy requires it.
3. Not submitting claims online: Using the insurer’s official online portal ensures faster processing.
4. Not keeping necessary documents handy: Retain all supporting documents for any queries or verification requests.

Final Thoughts

Knowing the steps in the claim adjudication process helps you avoid errors and ensures your claims are settled faster. However, this is just one part of the journey.

Beyond the claim adjudication process, having a health insurance policy is essential. With rising healthcare costs, a health plan acts as a financial safety net that works best when backed by a trusted insurer, like Bajaj General Insurance.

Thus, use our health insurance calculator today to compare plans and choose the best option in order to stay protected against unexpected medical expenses.

Frequently Asked Questions       

How many people are involved in the claim adjudication process?

In the claim adjudication process, three people are mainly involved. The healthcare provider who submits all the necessary documents, the patient or the policyholder who is receiving the care and lastly, the insurer, who validates the claim and determines the payment. 

What is pending claim adjudication?

Pending claim adjudication in health insurance refers to the part where the claim is received by the insurance company, but is kept on hold. It is pending because of misinformation, an unfinished claim form or the discovery of any error.

What is the purpose of claim adjudication?

The purpose of claim adjudication is simple. The purpose is to evaluate, review and assess whether the claim you have made is valid or not. If it is valid and is aligned with the health insurance plan, you can get the payment.

Are claim adjudication and claim settlement the same?

These two terms seem to be related to each other; however, they are not the same. Claim adjudication is the process by which the insurer reviews the claim filed by the policyholder. Claim settlement is the final payment after the adjudication.