Although reimbursement is a vital aspect within a claim’s life cycle, it is certainly not the only vital piece. It is important to recognise and distinguish each stage from the other within the total life cycle of a medical claim to decrease errors and cost.
Most of the people believe that a medical claim begins and ends with reimbursement. While reimbursement is undoubtedly a vital component, it is not the only piece in the life cycle of a medical claim. Understanding and distinguishing the different stages in the life of a medical claim is critical to decreasing errors and improving collections.
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.
To be eligible for payment, a claim goes through a number of processes. These processes are designed to weed out ineligible claims.
Here are the vital steps that comprise the life cycle of a medical claim.
- Data Entry Phase: In the initial entry phase, a claim begins in either paper form or electronic form via Electronic Data Interchange or Web Portal. During this step, data is entered, verified, and classified. The Medicaid Information Technology System (MITS) validates the provider’s contract, the recipient’s benefit plan, and the reference code information. The data is checked for accuracy in terms of both demographic and insurance information.The following information is validated: recipient eligibility, provider eligibility, procedure codes, diagnosis codes, provider contract eligibility, reference data and discordance with bill processing agency (BPA) rules.
- Editing Phase: Once the data has been entered and validated, it moves forward in the editing or suspended claims 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 are responsible. Professional coders are critical to ensuring that the claim passes this phase.
- 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.
- Audit Phase: The service data is cross-checked against prior claims by the same recipient and other details for the same claim. At this stage, denials can be on account of duplicate services, service conflicts, or limitations on services.
- Disposition Phase: Once a claim passes the audit phase, it enters the next stage where it is given a status of paid, suspended, or denied. Suspended claims undergo further review and are then either paid after data correction or denied. Suspended claims are reviewed further by data a correction staff who determines if a claim is denied. After data corrections are finalised, 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
- Reimbursement Phase: This phase constitutes the distribution of payment to providers. After successful processing by MITS, if a claim achieves paid status, payment is released to the provider. The final steps in the life cycle of a medical claim are updating scanned and paper-based claims in MITS and posting the payment to the account of the provider.
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.
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