How are healthcare claims submitted?

Editorial team Published on

Healthcare claims are submitted electronically or via paper forms by healthcare providers to insurance payers to request reimbursement for services rendered.

🗒 The Submission Process

  • Documentation: Providers record clinical notes during a patient visit.
  • Coding: Certified coders translate notes into standard ICD-10, CPT, or HCPCS codes.
  • Generation: Billing software creates a standardized claim form (CMS-1500 or UB-04).
  • Scrubbing: Claims pass through a Clearinghouse to check for errors.
  • Transmission: Clean claims are sent to the insurance payer.

💻 Submission Methods

  • Electronic Data Interchange (EDI): Direct computer-to-computer transmission using HIPAA standards.
  • Direct Data Entry (DDE): Web portals provided by insurers or Medicare.
  • Paper Submission: Printed claim forms mailed to the payer's intake department.

What are the 5 steps to the medical claim process?

The medical claim process moves from patient registration and clinical coding to insurance submission, payer adjudication, and final billing resolution.

📋 1. Registration and Eligibility Verification

  • Collect patient demographics and active insurance details.
  • Verify coverage limits, copays, and deductibles.
  • Confirm prior authorization requirements before care.

📝 2. Medical Coding and Documentation

  • Document the patient encounter and clinical notes.
  • Translate diagnoses and treatments into standardized codes (ICD/CPT).
  • Create an itemized bill reflecting the services.

📤 3. Claim Submission and Clearinghouse Review

  • Transmit the coded claim to a clearinghouse.
  • Check for formatting errors or missing data.
  • Forward the clean claim to the insurance payer.

🔎 4. Payer Adjudication and Review

  • Perform automated checks for duplicate or incomplete claims.
  • Evaluate medical necessity against policy guidelines.
  • Determine allowable pricing, copay deductions, and final payout.

💵 5. Remittance and Patient Billing

  • Issue payment or a denial reason to the provider.
  • Send an Explanation of Benefits (EOB) to the patient.
  • Bill the patient responsibility balance if applicable.

In what format are healthcare claims sent?

Healthcare claims are sent in either electronic or paper formats.

Electronic Formats (Standard)

Most claims today are transmitted digitally using secure Electronic Data Interchange (EDI) in the HIPAA-compliant 5010 format (ANSI X12 standard).

  • 837P (Professional): Used by individual providers, doctors, and specialists (the electronic version of the CMS-1500).
  • 837I (Institutional): Used by hospitals, clinics, and facilities (the electronic version of the UB-04).
  • 837D (Dental): Used for dental work (the electronic version of the ADA Dental Claim).
  • NCPDP: Used for pharmacy and prescription drug claims.

Paper Formats (Physical)

Paper claims are printed on specific physical forms and mailed when electronic submission is not possible or waived.

  • CMS-1500: Used for physician and office services.
  • UB-04 (CMS-1450): Used for hospital and facility charges.
  • ADA Dental Claim: Used for dental procedures.

How do health insurance companies process claims?

The health insurance claim process is a step-by-step procedure where your medical provider or you request payment from your insurance plan for healthcare services.

1. Receiving Care and Submitting the Claim

  • In-network care: Your doctor's office or hospital automatically submits the claim to your insurer using standardized medical codes. You do not need to do anything.
  • Out-of-network care: You may need to pay upfront and file a claim yourself. You will need an itemized bill, diagnosis codes, and a completed claim form from your insurer's portal. You can review a Guide to Filing a Health Insurance Claim for more details on documentation.

2. Insurance Company Review

  • Checking details: The insurer checks the form for completeness, patient eligibility, and matching medical codes.
  • Determining coverage: They apply your plan benefits, contractual rates, deductibles, and copays to calculate what the plan covers and what you owe.

3. Payment and Explanation of Benefits (EOB)

  • Provider payment: If approved, the insurer sends the covered payment directly to the healthcare provider.
  • Explanation of benefits: You receive an EOB showing the billed amount, discount, insurance payment, and your remaining responsibility. Note that an EOB is not a bill; your provider will send a separate bill if you owe money.

How does medical claims submission work?

Medical claims submission is the formal process where a healthcare provider sends a coded, itemized request for payment to a patient's insurance company.

Step-by-Step Submission Process

  • Patient Registration: The clinic collects your personal details, ID, and insurance card during your visit.
  • Eligibility Check: The office verifies that your insurance policy is active and covers the scheduled care.
  • Clinical Documentation: Your doctor records your symptoms, diagnosis, and treatment notes in your chart.
  • Medical Coding: Specialists convert your diagnosis and treatments into universal codes (like ICD and CPT codes).
  • Claim Generation: The provider enters these codes and charges into a standardized form (such as a CMS-1500).
  • Clearinghouse Scrubbing: Most claims go through an electronic intermediary that checks for errors or missing data before reaching the insurer.
  • Submission: The clean claim is transmitted electronically to the insurance payer for review.

What Happens Next?

  • Adjudication: The insurer reviews the claim to check coverage, patient rules, and medical necessity.
  • Payment and Remittance: The insurer pays the provider for covered amounts, and a statement is sent to you for any remaining balance like a copay or deductible.

How Healthcare Claim Processing REALLY Works From Start To Finish

9 related questions found

What should you not say when making an insurance claim?

When making an insurance claim, you should avoid admitting fault, downplaying injuries, or guessing at details.

Statements to Avoid

  • "I'm sorry" or "It was my fault": Even a polite apology can act as a legal admission of liability and reduce your payout.
  • "I'm fine" or "I'm not hurt": Adrenaline can mask serious injuries like whiplash. Saying you are fine early on lets insurers deny later medical claims.
  • Guessing or speculating: Do not guess about speeds, distances, or the exact cause. If you do not know, state that you are not sure.
  • "Yes" to recorded statements: Insurers may use recorded statements to trap you in minor inconsistencies. You can decline them.
  • "I accept that offer": Accepting a quick initial settlement closes your case permanently before you know your total repair or medical costs.

Safe Communication Tips

  • Stick strictly to basic facts like the date, time, and location.
  • Tell the Gary Martin Hays & Associates or your own legal counsel details if you feel overwhelmed.
  • Review the Anapol Weiss guide for more on avoiding adjuster traps.

What is the golden rule of medical billing?

The golden rule of medical billing is “If it isn't documented, it didn't happen.”

This core principle means that you must never code or bill for any medical service, procedure, test, or supply unless it is completely and clearly recorded in the patient's medical record.

Why the Rule Matters

  • Proves Medical Necessity: Insurance companies require written proof that a treatment was necessary before they will pay for it.
  • Prevents Claim Denials: Missing notes lead to rejected claims, delayed payments, and lost revenue.
  • Protects Against Audits: Detailed records serve as legal defense during insurance audits or accusations of improper billing.

Best Practices to Follow

  • Be Timely: Write down patient notes immediately during or right after the visit, rather than days later.
  • Be Thorough: Include chief complaints, test results, diagnoses, and exact treatment steps.
  • Match Codes: Ensure that the billing codes match the written clinical notes precisely.

What are the two types of claims submitted for health care services?

The two primary types of healthcare claims submitted for reimbursement are professional claims and institutional claims.

Professional Claims

  • Definition: Bills submitted by individual practitioners or group practices for non-facility services.
  • Used For: Office visits, doctor consultations, outpatient treatments, surgeries, therapy sessions, and diagnostic tests.
  • Formats: Submitted on the CMS-1500 paper form or electronically as the 837P transaction format.
  • Coding Systems: Uses CPT and HCPCS codes for procedures and ICD codes for diagnoses.

Institutional Claims

  • Definition: Bills submitted by facilities and healthcare organizations for facility-related and inpatient services.
  • Used For: Inpatient hospital stays, emergency room visits, skilled nursing facility care, and room and board charges.
  • Formats: Submitted on the UB-04 (also known as CMS-1450) paper form or electronically as the 837I transaction format.
  • Coding Systems: Uses revenue codes, ICD-10 diagnosis codes, and Diagnosis Related Group (DRG) codes.

How long do health insurance claims take?

Health insurance claims typically take 30 to 45 days to process from the date the insurance company receives them, though electronic submissions are often faster.

Typical Processing Timelines

  • Electronic Claims (EDI): Processed within 7 to 14 days because automated systems handle verification and coding.
  • Standard / Paper Claims: Take 30 to 45 days due to required manual data entry and handling.
  • Explanation of Benefits (EOB): The final paperwork detailing approvals or adjustments may take 3 to 12 weeks to reach you.
  • Federal ERISA Guidelines: For employer-sponsored plans, urgent claims must be handled within 72 hours, pre-service claims within 15 days, and post-service claims within 30 days.

Common Reasons for Delays

  • Coding Errors: Incorrect or missing medical codes (ICD-10 or CPT) lead to rejections or requests for clarification.
  • Missing Information: Incomplete patient forms or a lack of clinical notes from your doctor slow down reviews.
  • High-Cost Procedures: Expensive or complex treatments face extra scrutiny, medical necessity audits, and utilization reviews.
  • Out-of-Network Care: These claims require extra verification and coordination compared to in-network providers with pre-established contracts.

For further guidance, consult resources like the Rapid Claims Guide or HealthPartners for insights on managing medical claims.

Is there a downside to filing an insurance claim?

Yes, filing an insurance claim can lead to higher future monthly payments and the loss of money-saving discounts.

Main Downsides of Filing a Claim

  • Higher Premiums: Insurance companies often raise your rates after you file a claim because they view you as a higher risk.
  • Loss of Discounts: You may lose your "claims-free" discount, which can increase your overall costs even more.
  • Permanent Record: Every claim stays on your permanent loss history record (such as C.L.U.E. reports for homes or CLUE/MVR for autos) for several years, even if the insurer pays out very little or nothing at all.
  • Risk of Non-Renewal: Filing multiple small claims in a short time frame can lead an insurance company to label you high-risk and refuse to renew your policy.
  • Deductible Costs: You must pay your deductible (the amount you agree to pay out-of-pocket before insurance kicks in) before the company pays the rest. If the repair cost is lower than or very close to your deductible, you get little to no financial help while still getting a mark on your record.

When You Should Still File

Despite the risks, you should file a claim for major disasters, severe car crashes, major structural or water damage, or any incident involving injuries or other people's property. In those cases, paying out of pocket would cause extreme financial hardship. As noted in discussions on UpLift, it is usually best to pay for minor repairs out of pocket if the cost is only slightly higher than your deductible.