What Does Adjudicated Mean in Medical Billing?

Understanding Claim Adjudication

In medical billing, “adjudicated” refers to the process undertaken by a health insurance company, or payer, to review a medical claim submitted by a healthcare provider. This review determines the extent to which services are covered under a patient’s insurance policy.

The process ascertains the insurer’s financial responsibility for medical services. It involves examining the claim against policy benefits, medical necessity criteria, and payment rules. The insurance company assesses the claim to decide how much, if any, it will pay to the provider.

The insurance company evaluates the submitted medical claim to validate its legitimacy and align it with the patient’s health plan. This evaluation is performed by the insurance company or its delegated third-party administrators. The medical claim document details the services, diagnoses, and costs associated with a patient’s care.

The Claim Adjudication Process

A medical claim’s adjudication begins with its submission, typically by the healthcare provider, to the patient’s insurance company. This submission includes detailed information about the services, the patient’s diagnosis, and the provider’s charges.

Upon receipt, the insurance company conducts an initial review to validate the claim. This involves checking for accuracy, ensuring all required fields are populated, and verifying the patient’s active coverage and eligibility on the date of service. The payer also confirms that services fall within the policy’s effective dates and that any pre-authorization requirements were met.

Following initial validation, the claim undergoes a medical necessity and policy review. During this phase, the claim is assessed against clinical guidelines and the patient’s health plan terms to determine if services were medically necessary for the diagnosed condition. This step identifies any services excluded from coverage, such as cosmetic procedures or experimental treatments.

The next stage involves applying the patient’s financial responsibilities. This includes deducting any unmet deductible portions, applying co-payment amounts, and calculating co-insurance percentages based on the plan’s benefit structure. After these calculations, the payer makes a final determination regarding coverage and the amount it will pay for the claim.

Outcomes of Claim Adjudication

After a medical claim undergoes adjudication, one of several outcomes occurs for both the healthcare provider and the patient. One common outcome is that the claim is approved and paid. This means the insurance company has deemed the services valid, medically necessary, and covered under the patient’s policy, resulting in payment to the provider for the covered portion.

Conversely, a claim may be denied. This means the insurance company will not pay for the services. Common reasons for denial include the service not being covered by the policy, a lack of documented medical necessity, or issues with prior authorization. Other reasons include duplicate claims submitted in error or the patient receiving services from an out-of-network provider without appropriate coverage.

Another possible outcome is a partially paid claim. Here, the insurance company covers only a portion of the total amount billed. This can occur when the patient’s financial responsibilities, such as deductibles, co-pays, or co-insurance, reduce the insurer’s payout. Partial payment may also result if some components of a service are not covered or if multiple services are bundled into a single payment.

Patient Actions After Adjudication

After a medical claim has been adjudicated, the patient receives an Explanation of Benefits, or EOB. This statement details the services received, the amount charged by the provider, the amount the insurer paid, and the portion the patient is responsible for. An EOB is not a bill; it is an informational statement summarizing the claim’s adjudication outcome.

The EOB identifies any remaining amount the patient owes, which typically includes deductibles, co-payments, or co-insurance. This document reconciles the services provided against insurance benefits, showing how the insurer applied the patient’s policy. The healthcare provider will subsequently issue a separate bill for the patient’s identified responsibility.

If a claim is denied or partially paid, and the patient believes the adjudication was incorrect, they can appeal the decision. This process begins by contacting the insurance company directly to understand the specific reason for the denial. Patients may need to gather additional documentation, such as medical records or a letter from their provider, to support their appeal.

Understanding the insurer’s appeal process, including any specific forms or deadlines, aids in a successful resolution. Most insurance companies have a multi-level appeal system, beginning with an internal review and potentially progressing to an external review by an independent third party if the internal appeal is unsuccessful. Timeframes for submitting an appeal typically range from 60 to 180 days from the EOB date, though this can vary by plan.