Claims Process Definition Overview

Metric definitions for claims are complex. Individual definitions are easier to understand in the context below.

1. Finalized versus Open Claims. One way to view the claims process has two types of claims, Open claims and finalized claims. Open claims are claims that are in process. From a payer perspective these are claims that are between Receipt Date and Check Date (see Lifecyle of a Claim). A provider generally takes a broader perspective and regards 'Open' claims any claims associated with a Patient Account that has not been paid. Whichever perspective, open claims are claims that are in some way not finalized -- that is paid or denied. Finalized claims are claims for which a payment decision has been reached. They are paid or denied. Two caveats bear with respect to finalized claims. First, providers regard claims a closed or finalized with the Patient Account has been paid (or written off). Second, although a payer may have reached a decision and paid or denied a claim, approximately 20% of all claims are reprocessed (either as duplicates, as adjusted claims, or as resubmitted denials).
2. Production versus Efficiency. One way to simplify claims process performance management is to split it between metric used to manage daily production (open claims) and metrics used to manage process efficiency (finalized claims). Metrics used to manage open claims (current production) are grouped into one set. These are the daily measures used to understand and manage production. Examples of In addition to production related metrics include claim aging and total claims backlog. On the other side are the metrics used to manage operational efficiency (finalized claims). Examples of finalized claims metrics include Denial Rate, Auto-Adjudication Rate, and EDI Rate. These are metrics that are sometimes used in daily production circumstances but largely serve as indicators of overall process efficiency. Changing an EDI or AA rate generally requires a process improvment type of effort. Another way to look at these two set of metrics is as follows: Production metrics are what you should track every day. Finalized metrics are what you should set your annual goals against.
3. Multi-Step Process. Claims is a complicated and multi-step process. There are many variations in terms of how payers input claims (front end edits), how they apply code review logic, how they match (referrals and authorizations) and many other steps. For all of its uniformity at one level, many of the individual claims process steps are unique to individual payers.
4. Rework and Resubmits. As noted above, depending upon the payer, between 10 and 20 percent of claims are actually rework. There are three reasons for this. First, because providers are encouraged to resubmit denied claims (assuming they address the reason for denial). Second, many providers carry a 5% duplicate rate (that is 5% of their claims submissions are dupes). Third, most payers adjust between 2 and 5 percent of their claims. Roll these three reasons together and using rough math, it nets about 20% of claims as reprocessed. Arguably the next significant challenge facing payers is to reduce this rework.