The Engine Behind Your Health Insurance Claims
The ConnXion, Volume 3, Issue 2
Claims adjudication and benefit administration can be a difficult subject matter to wrap your brain around. Sometimes, even those in our industry get lost in the complexities. At WLT, we’re committed to meeting you where you are and educating you so you can make informed decisions.
Let’s break down the claims adjudication process step by step and use a metaphor that everyone can relate to: taking your car to a repair shop.
This is a situation many of us have experienced which, like engaging with health insurance, can be confusing and stressful. However, these two processes are also similar because they both require diagnostics, cost estimates, and final payments.
Let’s walk through the process step by step.
Step 1: Recognizing a Problem (Choosing a Healthcare Provider)
When your car starts making a strange noise, gets a flat tire, or has a warning light on, you decide where to take it for service—whether it’s a local mechanic, a dealership, or a specialty repair shop. Often your choice is dictated by the sense of urgency around the issue, but you also might consult reviews, recommendations from family or friends, or have an existing relationship with a repair shop.
Similarly, when you have a health issue, you choose a provider based on your needs, such as an urgent care clinic, a specialist, or visiting your primary care doctor.
Step 2: Doing Your Research (Understanding Coverage)
Before you go to the repair shop, you might do your own research to understand the issue and potential costs. That could involve consulting any service plan you may have or looking up the costs of parts and the average price for the work. Then you go to the repair shop and ask for an estimate.
Just as you might check out the cost of a brake pad or set of tires before you go to the repair shop, you might verify your benefit coverage in advance to avoid unexpected expenses.
Once you visit the doctor, you discuss symptoms and possible treatments while your insurance is checked to confirm what’s covered and what costs might be out-of-pocket.
Step 3: Approving the Work (Receiving Medical Care, Submitting a Claim)
Once you understand the issue and cost, you authorize the mechanic to start repairs.
Similarly, after discussing your symptoms and options with your doctor, you proceed with the recommended treatment.
Meanwhile, the payer receives the claim via their claims administration platform and leverages technology to review the claim and ensure it meets policy guidelines.
Step 4: Checking for Additional Issues (Applying Policy Rules)
Sometimes, during a repair, the mechanic finds additional problems that need to be addressed. They might have to follow a certain process because a part is under warranty, or a recall was issued.
Similarly, payers assess claims for special conditions like prior authorizations, policy limitations, or deductible requirements before finalizing payment decisions. Benefit administration platforms are often structured to accommodate unique rules for processing claims, allowing many to be auto-adjudicated instead of manually reviewed.
Step 5: Applying Discounts and Coverage (Adjusting Benefits, Processing Claim)
If your car is under warranty or you have a service plan, some costs may be covered, reducing your bill.
Similarly, health insurance applies negotiated rates, co-pays, and deductibles to determine the final patient responsibility. Then, the claims administration platform determines whether the claim is approved, denied, or requires further documentation before finalizing the decision.
Step 6: Reviewing the Invoice and Paying the Bill (Explanation of Benefits, Member Responsibility)
Once the mechanic finishes the work and ensures everything is functioning properly, the job is complete. Before paying, you review the mechanic’s invoice to understand the charges.
Likewise, the insurance company sends an Explanation of Benefits (EOB), outlining what was covered, the amount paid by insurance, and any remaining balance owed by the patient.
If your insurance doesn’t cover the entire cost, you pay the remaining balance—just as you settle the bill for your car repairs. This could involve direct payments, installment plans, or negotiating with the repair shop.
Step 7: Mechanic Gets Paid (Provider Reimbursement)
This is when things get a little more complicated. Because unlike at a repair shop when you pay the mechanic in full, the healthcare provider only receives part of their payment from the patient. The payer reimburses the provider for any additional agreed upon amount for their services.
Step 8: Addressing Billing Disputes (Appeals and Adjustments)
If you notice unexpected charges on your repair bill, you may dispute them with the shop. Or once you drive your car home, you might notice the issue wasn’t resolved and have to take it back to the shop.
Similarly, if a medical claim is denied or contains errors, patients and providers can appeal to have it reviewed and corrected.
Step 9: Keeping Maintenance Records (Tracking Healthcare Expenses)
Just as you might keep maintenance records in your glove compartment for future reference and warranties, patients and insurers maintain records of claims, payments, and benefits for tax purposes and future medical needs.
Wrapping It Up
Claims adjudication and benefit administration ensure that healthcare expenses are handled fairly and efficiently. By thinking of it as taking your car to the repair shop, the process becomes easier to understand.
At WLT Software, we provide powerful solutions that streamline these processes, making claims management and benefit administration seamless for providers, payers, and members alike.
Want to learn more? Contact us today to see how we can help simplify your claims process!