The 8 Steps in the Life Cycle of a Claim

Updated: Jun 9

The goal of a medical claim is reimbursement for the medical services rendered or, in one simple word, payment. But there are several steps in the life cycle of a claim that lead to reimbursement, denial or no response from the payer. It’s the performance of these steps that can lead to a “clean claim,” where payment is rendered upon receiving the claim, or it can become a much lengthier process. This is because when a payer denies or doesn’t respond to a submitted claim, then the medical billing staff steps in to problem solve and trace back over each step to see where the problem may lie.


The opportunity for a clean claim begins the moment a patient calls to make an appointment. This is where the life cycle of a claim begins and is one of eight steps towards receiving full payment for services rendered.


“Understanding the life cycle of a claim helps you get claims paid faster and solve denials more efficiently,”

--Boost Midwest President Marie Stacks, MHSA


Insurance benefits are complicated. Clinicians must balance what procedures the patient’s insurance covers with the clinical best practice. In addition, some patients have dual coverage and both policies must undergo the same careful process.

To provide clarity and a foundation to the medical claims process, the Clinic-ology Training Academy begins with these 8 steps in the life cycle of a claim:


1. Patient Registration. This is the most important step to starting a clean claim — The moment when the front office team enters information from a new or returning patient. As this information is used when submitting the claim, the data entered should be verified as complete and accurate before moving beyond this process.


2. Patient Services Rendered. Next, the medical provider sees the patient and enters the correct medical billing codes for the care rendered into the practice management system (PM). This is used further in the process, when the medical coding and billing team prepares the claim for submission to the insurance company.


3. Charge Entry and Reconciliation. This step is where the claim is completed and reviewed before submitting it to the insurance provider. The medical coder uses the information entered during the patient’s visit by the provider to create accurate, billable medical codes for the claim. Then the medical biller reviews the codes and ensures that the bill meets billing standards. The claim information on the patient’s medical history and demographic information were already gathered during patient registration.


4. Electronic Claim Submission. The claim is now ready to be submitted for reimbursement and the coder is responsible for its accuracy and completeness. Electronic submissions are considered the best practice, as paper claims manually completed are considerably more prone to errors. Also, many practices use a third-party organization, often referred to as a claims scrubber as well as a clearinghouse. An extra step that can help monitor for potential errors and maintain a higher clean claims rate for the practice.


5. Remittance and Payment Processing. A claim is either paid, denied or receives no response at all. If the submitted claim is clean — properly coded with all patient information included and accurate — the practice should receive payment. If reimbursement comes with the first submission, congratulations! You submitted a clean claim and the payment is posted. If a claim is denied or no response is given, the next two steps outline the extended billing process.


6. A/R and Denial Management. In the world of medical insurance, payers adjudicate each claim received. This is the process whereby the payer evaluates a claim and decides whether it is valid and complete. For claims denied or not responded to because of errors or mis


sing information, the accounts receivable process kicks in to review the entire claim and address missing or inaccurate information. Then, the claim is re-submitted to the payer.


Here, the question to ask is, why was the claim denied? If the answer isn’t found by the practice’s back office team — meaning the claim appears complete and clean — then the clinic may make a formal appeal to the payer for reimbursement. This can be a long and complicated process with an extended delay in receiving payment. That is why it’s so important that the entire clinic team creates accurate and clean claims from the start.


7. Patient Collections. Nearly all insurance plans require a co-payment from the patient for medical services. And it falls on the billing team to secure those payments, unless the medical practice requires co-payments at the time of the visit. While this can be straightforward when the co-payment is clear, for many patient visits it’s not immediately apparent what charges will be part of the bill and how much a patient is responsible for.


If the patient doesn’t remit payment at the first notification, billers may re-send bills or call the patient directly. If a bill remains delinquent, the medical practice should determine whether to use a collection agency to secure the payment. Every medical practice should have guidelines on how delinquent patient payments are handled.


8. Practice Analytics and Reporting. This is the final step in the life cycle of a claim and is as important as the first step, Patient Registration. Key performance indicators (KPIs) are monitored and evaluated for the entire life cycle process. Then, this information is used to highlight inefficiencies or areas lacking best practices that lead to denied claims and/or late patient payments. Keep in mind that Clinic-ology offers consulting services on assessing, evaluating and analyzing practice analytics as one of its services available to medical practices.


It’s clear that for front and back office teams responsible for the creating and submitting the claim, the process can at times be complicated and frustrating. But having a thorough knowledge of each step helps streamline the processes and results in faster reimbursements and a contented and empowered office staff. This is where Clinic-ology can step in and help. Our Training Academy, consultant services and support resources will ensure that staff knows all the ins and outs of the claims process, including pitfalls and trouble spots, and lead to a shorter revenue cycle for your practice.


For more information, visit www.clinic-ology.com or contact info@clinic-ology.com


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