What Steps Comprise the Life Cycle of a Medical Claim?

Although reimbursement is a vital aspect within a claim’s life cycle, it is certainly not the only vital piece. It is important to recognize and distinguish each stage from the other within the total life cycle of a medical claim to decrease errors and cost.

A claim goes through a multi-fold process before it becomes eligible for payment. An ineligible claim will either be denied or be corrected so it can then become eligible.

In the initial entry phase, a claim begins in either paper form or electronic form via Electronic Data Intercharge or Web Portal. The Enterprise Database Management System scanned paper submissions for Medicaid Information Technology (MITS) availability, enters and verifies required data. Claims are classified as Encounter Claims or fee-for-service claims.

MITS performs validation using provider contracts, recipient benefit plans, and reference code set information. This is where the proper codes are recorded.

It is recommended to utilize spreadsheets for each insurer to best understand which codes receive high reimbursements.

Data is collected and accessed for insurance information and demographic accuracy.

The following information is validated: recipient eligibility, provider eligibility, procedure codes, diagnosis codes, provider contract eligibility, reference data, and BPA rules. MITS also validates PA rules if Prior Authorization is needed.

Once the Validation phase is concluded, the claim moves forward to the Edit phase or the Suspended Claims phase.

In the Edit phase, MITS performs claim edits against the business rules and may also deny or suspend a claim. A suspended claim moves onward to the Suspended Claims phase. A passing claim moves onward to the Cost Avoidance phase to begin the reimbursement process.

Within the Cost Avoidance phase, MITS determines if a claim will go unpaid. MITS denies claims if a third-party is responsible.

A professional coder can verify medical coding based on a clinical record to help guarantee an insurer will be paid. MITS has Third Party Liability (TPL) functionality which ensures cost avoidance and cost recovery to guarantee Medicaid is only utilized as a concluding recourse. If a third party is not responsible, the claim continues onward to the Pricing phase.

In the Pricing phase, MITS finalizes price indicator and rate type in order to determine a payment amount and if there are prior authorization rates. Claims are suspended and immediately enter the Suspended Claims phase only if they require manual pricing.

During the Audit phase, claim service data is verified against other claims history or against other details for the same claim and recipient. Claims are verified by the MITS for duplicate service, service limitations, and service conflicts.

Any disputes in these areas warrant the claim as denied or suspended. Cleared claims continue onward to the Disposition phase.

During the Disposition phase, the disposition of edits and audits determines a claim’s status as either paid, denied, or suspended. MITS interaction is not required for a claim to paid or denied in this stage.

Suspended claims are reviewed further by a data correction staff who determines if a claim is denied. After data corrections are finalized, a claim reprocesses through the claim life cycle.

Suspended claims are then reassigned by MITS for further review. After corrections are made by a data correction staff, the claim returns to the initial phase of the claim life cycle once more.

As part of the Suspended Claims phase, the Suspense and Resolution phases is where suspended claims are reviewed by the data correction staff and assessed for compliance, error correction, and timeliness before continuing.

Upon a claim entering the Denied Claims stage, its status as such is finalized before it is moved to denied history.

The reimbursement phase is where payments are received and distributed to patients. If a claim has entered the Paid stage, it has been successfully processed by MITS without hindrance. The payment is then made by the provider and the status is noted as being paid. Encounter Claims also have a paid status when the Managed Care Plan pays the Provider.

Within the Adjustments and Voids stage, paper-based and scanned claims are completed in MITS. Dates of service are adjusted and voided claims are negated. A denied adjustment claim is created if a void is processed.

In the final stage, insurance payments are posted to the medical practice account.

Although all steps can certainly be time consuming, arduous, and complicated, the steps above are manageable if executed efficiently. When information is accurately tracked and collected, a practice can best understand its medical coding achievements and make necessary adjustments in the future.