How Are Medical Insurance Claims Processed?

The Claim

After a patient visits the doctor, the resulting claim is likely submitted to a medical billing specialist who is charged with submitting the claim to the appropriate insurance entity.

The method by which the claim is submitted may reflect on how fast it is processed. For instance, Medicare gives a priority to claims which are filed electronically, responding to the claim within about 14 days as opposed to 27 days for claims filed by paper. Most other insurance providers are now following Medicare's lead and paying priority attention to claims which are filed electronically as well.


The charges on the claim may be classified by two code systems in order to standardize billing procedures and allow providers, investigators and researches to quickly understand the treatment methods used on the patient. The first code system is a five digit code known as Current Procedural Terminology or CPT. The second code is referred to as the International Classification of Diseases, Version 9, or ICD-9-CM. In the cases of rapidly developing medical diagnosis and treatment, this code base may have trouble keeping up with the treatments. A case in point, the Post-Licensure Rapid Immunization Safety Monitoring (PRISM) treatment for the H1N1 flu cannot be captured by the CPT code. This could lead to possible confusion among medical providers and may also hinder medical researchers who are trying to research the usage of a given treatment.


Once the medical insurance claim is received by the health insurance claims processor, it is subject to review by a claims examiner. The claims examiner can be expected to review the claim to ascertain if the requested costs are in line with the diagnosis. The examiner will utilize publications with information about the medical issue in question to determine the propriety of the treatments for which payment is being sought. The examiner may also participate in other investigative activities such as interviewing medical specialists to get their opinion on the claim. Based on her observations, the examiner will authorize the payment or send the claim to an investigator for additional review.


Following the claims approval, payment is sent to the medical provider in accordance with pre-negotiated rates that have been agreed to by both the health care provider and the insurance company.