How Does the Healthcare Claims Workflow Work?

Who is involved, and how do payments happen?

Claims Lifecycle Overview:

1. Appointment Booking: The patient schedules an appointment with a hospital or clinic.
2. Registration & Check-in: The front desk registers the patient upon arrival.
3. Consultation & Diagnosis: The doctor or healthcare provider examines the patient, notes down the details, and orders any necessary tests.
4. Tests & Results: If lab, radiology, or pathology tests are needed, they are sent to relevant departments, and the results are later integrated into the system.
5. Billing & Charges: Charges for the consultation, tests, or other services are recorded and sent to the hospital’s billing system.
6. Claims Submission: The billing system compiles the charges and submits them as claims (in formats like EDI 837) to the insurance payer, either directly or through a clearinghouse.
7. Claims Processing & Payment: The payer reviews the claim, processes payments, or requests further information if needed.
8. Explanation of Benefits (EOB): Patients receive an EOB detailing how their insurance covered the claim.

Note: Each step may involve additional sub-processes depending on the healthcare setup and policies.

What is Claims Adjudication?

This is the process where the payer evaluates a claim to decide whether to approve, deny, or send it for further review. It involves checking details like patient eligibility, provider credentials, insurance plan coverage, and compliance with industry regulations.

What is a Clearinghouse?

A clearinghouse acts as a middleman between healthcare providers and insurance companies. It helps process claims by performing initial error checks, formatting them correctly, and ensuring smooth transmission between providers and payers.

What Are 837 and 835 Transactions?

• 837 (Claim Submission): A standardized format used for submitting healthcare claims electronically.
• 835 (Payment & Remittance): A format used for sending payment details and remittance advice back to providers.

What is an EOB?

An Explanation of Benefits (EOB) is a statement from the insurance company explaining how a claim was processed. It is different from a patient bill, which comes from the hospital if there’s an outstanding amount to be paid.

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