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Claims Adjudication: A Guide to Reducing Healthcare Claims Delays

Last Updated on 24 Jun, 2025
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Claims Adjudication: A Guide to Reducing Healthcare Claims Delays

If a simple claim takes weeks to resolve or gets denied without a clear explanation, the issue may lie in a common confusion in the process of claims adjudication. This leads to errors, delays, confusion, and inefficiencies in the multi-step healthcare reimbursement cycle impacting both revenue and care delivery.

To understand why this process matters, it’s important to look at what each process involves and how they are connected within the overall claims lifecycle.

Claims adjudication involves collecting patient and provider data, verifying it for accuracy, and ensuring compliance before the claim is submitted to the payer. The payer reviews the claim based on the member’s benefits, policy rules, and medical necessity to determine whether the claim is approved, denied, or adjusted.

This blog post talks in depth about claims' lifecycle and explains how they enable proper reimbursement, help healthcare organizations reduce errors, avoid payment delays, and improve the company’s financial performance. To begin with, let’s first understand what claims adjudication is about.

What is Claims Adjudication in Healthcare? 

Claims adjudication is the process by which payers assess medical claims to determine if they should be approved, adjusted, or denied based on accuracy, eligibility, and compliance as per their necessary requirements.

To understand how payers reach a reimbursement decision, let’s break down the key steps involved in the claims adjudication process.

Breaking down each step in the adjudication process clarifies how payers evaluate claims, offering providers insight into the logic behind approvals, denials, and payment adjustments. This transparency allows providers to act proactively, improving the rate of first pass claim acceptance. 

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The Detailed Claims Adjudication Process

Detailed Claims Adjudication Process

Step 1: Initial Processing/Review

  • The claims adjudication process begins when healthcare providers submit a claim to the insurance company for reimbursement.
  • The insurer verifies basic patient information such as name, date of birth, insurance ID and provider credentials.
  • The claim is reviewed to ensure it is complete, correctly formatted and free of errors or missing data.
  • Inaccuracies in demographic information or coding may cause the claim to be rejected or returned for correction.

Step 2: Validation/Automatic Review

  • Once the initial review is complete, the claims undergo an automated validation process.
  • The insurance system applies payment policies and coverage rules to determine benefit eligibility.
  • The system checks whether prior authorization was obtained for services that require it.
  • Details like coverage dates, procedure codes and benefit limits are validated to ensure alignment with the patient’s health plan.
  • Medicare requires claims to be submitted within 12 months of the service date.
  • Claims that fail these checks are flagged for manual review or returned for correction.
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Step 3: Medical Necessity Review

  • Claims involving certain services or higher-cost treatments are forwarded for a medical necessity review.
  • Medical professionals use automated pre-payment to assess whether the procedures were appropriate and necessary based on the patient's diagnosis.
  • Diagnosis and procedure codes are evaluated to ensure they are relevant and aligned with accepted clinical guidelines.
  • Additional documentation, such as clinical notes or lab results, may be required to support the medical necessity.
  • This review flags and prevents unnecessary or inappropriate healthcare utilization.

Step 4: Final Reimbursement Decision

  • After all reviews are completed, the insurer makes a final decision on the claim.
  • The claim is either approved for full or partial payment, denied, or adjusted based on the evaluation.
  • Patients receive a Medicare Summary Notice (MSN), and a Remittance Advice is sent to the provider.
  • These documents include payment details, denial reasons (if applicable) and any patient responsibility amounts.
  • Providers have the right to appeal denied claims by submitting additional information within the insurer’s specified timeframe.

Step 5: Appeals Process 

If a claim is denied or only partially paid, providers and beneficiaries have the right to appeal the decision. The appeals process for Medicare claims follows a strict five-level hierarchy* as outlined by CMS:

  • Redetermination: The first level, where the claim is reviewed by a different person within the same Medicare Administrative Contractor (MAC) that made the initial decision.
  • Reconsideration: If dissatisfied with the redetermination, the provider or beneficiary can request a reconsideration by a Qualified Independent Contractor (QIC).
  • Administrative Law Judge (ALJ) Hearing: If the amount in controversy meets the minimum threshold, the next step is a hearing before an Administrative Law Judge.
  • Medicare Appeals Council Review: If still unsatisfied, the case may be reviewed by the Medicare Appeals Council.
  • Judicial Review in Federal District Court: The final level, if the amount in controversy is high enough, is a judicial review in federal court.

Each level of appeal must be requested within specific timeframes and may require submission of additional documentation. Providers and members are notified of their appeal rights and instructions in the Medicare Summary Notice (MSN) or Remittance Advice.

Now that we’ve discussed the claims adjudication process in detail, it’s clear that breakdowns can occur at any stage, from initial processing to final appeals decision. These inefficiencies not only delay payments but also increase operational tasks, raise claims denial rates, and affect the overall reimbursement cycle.

Mirra’s Claims Adjudication Solution addresses these challenges by providing end-to-end visibility, built-in CMS logic, and performance analytics, all while simplifying the claims adjudication process. By ensuring clinical and financial data are aligned before a claim reaches the payer, Mirra helps both providers and payers reduce errors and faster decisions. This is achieved with intelligent automation, document digitization and integrated pricers that support compliance.

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How does Mirra’s Claims Adjudication Solution Enhance Efficiency in the Revenue Cycle? 

Mirra’s Claims Adjudication Solution Enhance Efficiency in the Revenue Cycle

For Healthcare Providers:

  • Standardized data entry reduces input errors.
  • Pre-adjudication reviews spots issues before claims go out.
  • Real-time dashboards help track claims status.
  • Regular training supports better documentation and coding accuracy.
  • ClaimsLite® digitizes paper claims for faster processing.

For Payers:

  • Automates repetitive tasks like eligibility checks.
  • Runs complex rules to catch policy violations or duplicates.
  • Monitors trends and metrics (e.g., high-dollar claims, denial reasons).
  • Mirra’s built-in editor applies 40M+ edits, including CMS NCCI logic.
  • Integrated pricers (PDPM, Outpatient, Inpatient) ensure accurate payments.

The Future of Claims Management

Future of Claims Management

As healthcare systems become more tech-enabled and data-focused, claims management is rapidly evolving. New technologies and regulations are shaping how claims are processed and adjudicated, making them faster, more accurate and less prone to error.

  • Machine Learning & AI

Machine learning automates complex reviews by identifying patterns in coding, documentation, or billing to reduce manual workload and errors. AI enhances claims handling by predicting potential claims denial, flagging high-risk claims before they’re submitted.

  • Blockchain

Blockchain technology offers a secure and transparent way to manage claims data. Each transaction is time-stamped and traceable, reducing the risk of fraud. It also ensures auditability, which means every step in the claims process can be tracked and all parties see the same version of the data in real time.

  • Interoperability

Improved interoperability allows for seamless data sharing between EHRs, insurance payers and billing platforms. This reduces duplication, speeds up claims movement and ensures everyone has access to the right information when it’s needed.

  • Regulatory Changes

Ongoing updates from CMS (Centers for Medicare & Medicaid Services) and newly introduced interoperability rules are driving the healthcare industry toward more integrated and transparent operations. These regulations will continue to influence how quickly claims are processed, particularly for Medicare Advantage and other federally regulated plans.

Conclusion

Healthcare reimbursement is complex and demands accuracy at every step. By understanding claims adjudication, healthcare organizations can focus their improvement more effectively. Instead of treating claims management as a single function, high-performing healthcare organizations build specialized capabilities for each phase.

To stay competitive in the claims reimbursement space, providers and payers must invest in modern technology, continuous training, and cross-functional collaboration. The long-term financial health of their business and member satisfaction will depend on their ability to adapt to the evolving technologies that support payment processing, while maintaining precision across the claims lifecycle.

Ultimately, excellence in claims management isn't just about recovering revenue, it's about creating operational efficiency that allows healthcare providers to focus their resources where they matter most, delivering exceptional patient care.

Mirra Health Care’s Claims Adjudication Solution helps healthcare organizations to reduce errors, accelerate decisions, and ensure payment accuracy. With automated checks, real-time validation, and built-in rules, it simplifies the adjudication process and removes uncertainty from claims review.

Schedule a demo to cut turnaround time and improve your claims adjudication rate with Mirra.

Reference https://www.cgsmedicare.com/jb/redeterminations/appeals-process.html

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Claims Adjudication
Claims Adjudication Solution
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NANCY GAREAUCEO of Ultimate Health Plans (Retired)

"In 2021, Ultimate Health Plans (UHP) partnered with Mirra Health Care (Mirra) to develop a software platform to support processing Claims, Customer Service, Eligibility, Enrollment, Premium Billing, Encounter Processing and a Provider Portal for our Medicare Advantage Plans. Mirra collaborated well with our operations and compliance teams to successfully design and implement a system that was innovative, efficient, and compliant with all Medicare and Florida Medicaid guidelines and requirements all within the scope of our required timeline. We greatly benefitted from the Mirra Project Management Team’s regular communication with Stakeholders through monthly meetings and recurring weekly breakout-focused calls, which were geared towards troubleshooting and goal alignment. Mirra was able to quickly maneuver and adapt their systems to our needs, resulting in successful implementation and go-live. Mirra continues to support our compliant operation and growth in the ever-changing healthcare industry rapidly and effectively updating their systems with new Medicare and Florida Medicaid rates and guidelines to ensure seamless compliance and efficiency. I have absolutely no reservation in recommending their systems to any Payer searching for improvement in their operational efficiency."

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