What is Payer Adjudication: Tips to Improve Your Medical Claims Process

Our last blog post on the revenue cycle journey looked at clearinghouse edits. The next stop in the medical claims process is payer adjudication. 

Payer adjudication is when a third-party payer receives your medical claim and starts the review process. The payer decides, based on the information you provide, whether the medical claim is valid and should be paid. 

Expect payers to review claims meticulously. They want to be assured that you have all the records needed to back them up, especially for high-dollar claims. 

Healthcare payers use a specific file format—the EDI 277 Health Care Claim Status Response transaction set—to report on the status of medical claims. The 277-file generated by the clearinghouse indicates whether the payer has accepted your claim and can be automatically loaded into your practice management (PM) system. 

If a claim is denied, the 277-file will usually tell you the exact loop and segment where errors or omissions were flagged, as well as the reason for the denial. (Note: A loop is a section or block of an electronic data exchange (EDI) file and each loop contains multiple segments.)

Here are a few helpful tips to keep doing payer adjudication:

Use automation to pull info from the 277-file

Find a billing and PM solution that can automatically pull clearinghouse information to check whether a claim was accepted. Although some practices have staff perform these tasks, using automation saves time.

Be prepared for information requests

You may need to respond to a request for information from the insurer or a denial indicated in the 277-file. In some instances, a registered nurse or physician employed by the insurance payer may review related medical records to help adjudicate the claim. If manual review is required, you can face a significant delay. Provide any requested information quickly to accelerate payment and reduce aging of your accounts receivable.

Monitor results

Tracking is vital when it comes to payer adjudication. You’ll want to know the percentages of your claims that are being denied, which will also let you know the percentage of clean claims. Another metric you'll want to track is the effectiveness of appeals of denied claims. This helps determine which denials are worthy of the appeal effort.

In the next blog in the series, we will look at remittance and payment management. We will break down what each of them are and provide tips for better medical claims reconciliation.  

To learn more about boosting practice efficiency, enhancing patient convenience, and optimizing practice revenue, click here to read 10 Tips for Better Medical Billing and Practice Management.