Revenue Cycle Management Glossary
A plain-English guide to the terms, metrics, and workflows that power modern RCM operations.
Claims Adjudication
What is Claims Adjudication?
Claims Adjudication is the process by which a payer (insurance company) formally reviews a submitted healthcare claim to determine the amount, if any, they will pay the provider for the services rendered.
It is the core decision-making stage where the payer validates eligibility, checks coverage policies, and calculates financial responsibility. The outcome is communicated in an Explanation of Benefits (EOB) or Remittance Advice (RA).
Why Claims Adjudication is Critical for CFOs and Financial Leaders
The adjudication process represents the moment when billed services turn into guaranteed, collectible revenue.
- Cash Flow Predictability: Poorly prepared claims lead to delays and denials upon adjudication. Ensuring a high Clean Claim Rate (CCR) before submission accelerates adjudication, ensuring faster cash flow.
- Revenue Leakage Prevention: Adjudication is where underpayments occur. Superior RCM systems leverage data to flag and appeal these errors immediately, preventing costly Underpayment Recovery efforts.
Key Use Cases: Automation Addressing Adjudication Challenges
Automation on the provider side is crucial for ensuring a positive adjudication outcome.
- Pre-Adjudication : Automated Claim tools and AI analyze claims for common denial triggers before submission, drastically increasing the First Pass Resolution Rate (FPRR).
- Post-Adjudication (Denial Management): For claims denied during adjudication, ML models analyze the payer's reason code. The system automatically routes the denial and compiles documentation for an automated Appeals Process.
Claims Adjudication vs. Claims Submission
The difference lies in who is performing the action:
- Claims Submission is the action taken by the provider to transmit a claim to the payer.
- Claims Adjudication is the internal process taken by the payer to review and process that claim.
Resources and Education
- Candid Health Product: Automated Claims Solution /product/claims
- RCM Data & Analytics: Adjudication Analysis /data-reporting