Most insurance claims follow a similar life cycle — but the details vary by payer, policy, and service type. In an ideal world, the process should be consistent regardless of the service being billed. However, this is rarely the case.
50% of denied claims are preventable with proper coding and automation. Understanding the life cycle of a claim from start to finish helps to identify issues before they become recurring. It also enables administrators at every level to create a system where claims are processed correctly, the first time.
Why does a claim have a life cycle?
Most patients often don't think about their claims beyond the medical services they receive and their explanation of benefits. However, the life cycle of even a single claim can be longer than they might imagine. It is often not the case of simply authorizing a procedure and continuing with it; many moving parts must work in harmony together.
Whether a procedure is simple or complex, whether it is a one-off or will require a lifetime of aftercare, the insurance claim that follows it must be handled in the correct manner. A clear framework helps the claim move through each stage consistently. As it is passed from one body to the next, from the medical practice or provider to the payer and beyond, there is always the chance that information can be lost.
The life cycle is designed from end to end to minimize data loss and ensure accuracy at every level. Just as most procedures and treatments are considered a medical necessity to improve quality of life in patients, so should every care and consideration be given to billing and other factors afterward.
What does the life cycle of a claim look like?
Every insurance company will have its own picture of what a life cycle of a claim should look like. This internal standardization helps them to ensure uniformity among claims, no matter how complex, and keeps claims moving forward.
That said, there will still be some steps in the life cycle that will always be present, regardless of the insurer or system used. The following steps reflect these commonalities and what can be expected in each of them:
1. Intake & Registration
This is where the claim record begins, and important foundational data is captured, such as:
- Demographics such as patient name
- Provider details
- Dates of service
- Collection of copayment
This information will serve as the source material for the medical coding and the basis of the healthcare claim.
2. Eligibility & Preauthorization
The member's insurance coverage is checked. This confirms whether or not they are eligible for payment based on the date of service. At this stage, pre-approval for treatments or services may also be checked to ensure that the patient receives the correct procedure and level of care for their coverage. Eligibility confirms active coverage. Preauthorization confirms that the payer will cover a specific service under the member’s plan.
3. Claim Preparation
The claim is built. Medical coding translates the clinical documentation provided by healthcare professionals into standardized codes. These include:
- Diagnosis codes – explaining the conditions the patient was treated for
- Procedure/service codes – explaining the levels and practice of care given
These codes determine what can be billed, confirm coverage requirements, and ensure the claim can be processed correctly.
At this stage, the claim will also be scrubbed. This is a quality check procedure to ensure all coding is accurate. Scrubbers will look for:
- Missing or invalid codes
- A mismatched diagnosis vs procedure
- Formatting or compliance problems
- Duplicates or incomplete claim fields
- And more
4. Processing & Validation
The insurer will process the claim. This can involve several steps, some of which might require secondary coding or clarification.
The submission will be logged, validated, and processed electronically. After confirming whether the documentation is complete, the claim will be forwarded, or the payer may request additional information.
5. Adjudication & Review
The payer's processing system will review the claim against its policy rules and evidence. Straightforward claims may receive auto-adjudication, allowing them to move quickly to the next step. More complex cases could require a manual review from an assessor, medical reviewer, or case manager.
6. Outcome & Resolution
A decision is made on the outcome of the case. This can take at least one of the following forms:
- Payment approved
- Payment partially approved
- Payment denied
- Case pending more info
Should a case go to appeal, or require more information, the payer may request documentation or additional evidence to support the claim. Supporting evidence can include, but is not limited to:
- Clinical notes
- Invoices
- Referral letters
- Reports
- Photos
Denial can be linked to several reasons. A denied claim will then be further processed and may be subject to additional follow-up work such as corrections, resubmissions, or appeals. If relevant, patient billing will follow at this stage.
7. Finalization & Continuous Improvement
At this stage, the claim is considered closed. Quality checks and final reporting are used to ensure the process has progressed correctly. Trends are analyzed, and factors such as errors, delays, and denial drivers are monitored and recorded. These can then be used to improve speed, accuracy, and outcomes in future cycles.
What role does Aptarro play in the claims cycle?
The claims process can be fraught with the opportunity for error and can be lengthy and time-consuming, as every detail of a complex case needs to be recorded, verified, and double-checked. Manually speeding up the claims process is not the answer; all this does is put pressure on revenue cycle teams and could lead to them making further unnecessary mistakes as they try to hit targets.
Enter Aptarro. Our AI-powered software is designed to identify and correct claim errors early. Teams can reduce administrative burden and focus on streamlining workflows to optimize their team's efficiency and drive focus to the claims that need attention the most.
Our software can apply built-in and custom rules to every change before submission to detect errors at every level without any human intervention. Identify incomplete coding issues and boost coder productivity to improve claims handling at every stage of their life cycle.
Ready to find out how Aptarro can transform your approach to the insurance claim life cycle? Request a demo today, and get ready to enhance satisfaction among physician coding and billing staff, eliminate the burden on your administrators, and streamline your claim life cycle from beginning to end.
Author