HLTH 3510 Week 5 Insurance Claim Walkthrough Example

Following Maria's Colonoscopy Claim From the Front Desk to the Remittance: Eligibility, Submission, Edits, Adjudication and the Adjustment Codes That Explain the Payment

Student Name

Walden University

HLTH 3510: Health Insurance and Reimbursement

Instructor Name

Month Day, Year

Following Maria's Colonoscopy Claim From the Front Desk to the Remittance: Eligibility, Submission, Edits, Adjudication and the Adjustment Codes That Explain the Payment

The Claim Being Followed

This walkthrough follows one claim: the gastroenterologist's professional claim for Maria's screening colonoscopy with snare removal of a polyp, coded last week with the screening diagnosis first, the polyp second and the procedure code with modifier 33. It traces the claim from the front desk, before the procedure, through submission, edits and adjudication to the remittance that comes back to the practice and the statement Maria receives. The dollar figures are invented to make each step visible. The structure of each step follows the electronic transactions that federal rules require health plans and providers to use for claims and payments.

Stage 1: Before the Procedure, Eligibility and Benefits

Two weeks before the procedure, the practice's front desk sends an electronic eligibility inquiry to Maria's plan and receives a response confirming that she is enrolled, that the gastroenterologist is in network and that her plan has a $1,000 deductible, of which $200 has been met, and 20% coinsurance. The response also indicates that preventive screening colonoscopy is covered at 100% in network. These inquiry and response messages are among the standard electronic transactions adopted under HIPAA's administrative simplification rules (45 C.F.R. Part 162). The front desk notes the information in Maria's account and tells her that, if the procedure is billed as a screening, she should not expect a bill from the gastroenterologist.

Stage 2: Charge Capture and Claim Creation

After the procedure, the gastroenterologist signs the procedure note. The practice's coder reviews it, assigns the codes described last week and enters them in the practice management system, which creates a charge at the practice's standard fee for code 45385, illustratively $1,600. The system builds an electronic professional claim, the standard format for physician and other professional services, containing Maria's identifying and insurance information, the rendering and billing provider identifiers, the date and place of service, the diagnosis codes in order and the procedure code with modifier 33.

Stage 3: Edits Before and After Submission

Before the claim reaches the plan, it passes through two sets of edits. First, the practice's clearinghouse runs automated checks for missing or invalid data, such as an invalid diagnosis code or a mismatch between Maria's name and her member ID. Maria's claim passes. Second, when the plan receives it, the plan's system runs its own edits, including checks for codes that should not be billed together. Had the coder listed the plain colonoscopy and the snare procedure side by side, this edit is where the plan would strip out the plain one as already included. Claims that fail edits are rejected before adjudication and must be corrected and resubmitted, which delays payment but does not create a formal denial.

Stage 4: Adjudication

Adjudication is the plan's decision about whether and how much to pay. The plan's system checks, in order, that Maria was eligible on the date of service, that the provider is in network, that the service is a covered benefit and which benefit category applies, and what the contracted price is. Because the claim lists the screening diagnosis first and carries modifier 33, the system applies the preventive benefit: no deductible and no coinsurance. The contracted allowed amount for 45385 under the gastroenterologist's contract is, illustratively, $520. The plan pays $520 and the remaining $1,080 is a contractual adjustment that the practice agreed to accept.

Stage 5: The Remittance and Its Codes

The plan sends the practice an electronic remittance advice, the standard transaction that explains payment, along with the electronic funds transfer. For Maria's claim, it shows: billed $1,600; allowed $520; paid $520; adjustment of $1,080 with group code CO and claim adjustment reason code 45. The group code CO means the adjustment is a contractual obligation, so the practice may not bill the patient for it. Code 45 tells the practice that it billed above what its contract with the plan allows. No patient responsibility appears. Claim adjustment reason codes are maintained in a standard list so that every payer explains its decisions in the same vocabulary (X12, n.d.).

If the claim had been processed as diagnostic, the remittance would have looked different: allowed $520, of which $800 remaining deductible would have absorbed the full $520, shown with group code PR and reason code 1, deductible amount. PR means patient responsibility. That one line is the difference between Maria owing nothing and owing $520 for the gastroenterologist alone.

How Long Each Stage Takes

Timing matters to a practice's cash flow and to a patient's peace of mind. In this example, the eligibility check happened two weeks before the procedure. The coder finished the claim two days after the procedure, once the note was signed. The clearinghouse passed the claim within hours. The plan adjudicated it in about two weeks, a typical time for a clean electronic claim, and the payment and remittance arrived a few days later. From procedure to posted payment took a little under three weeks.

A claim that failed an edit would have added a week or more for correction and resubmission. A claim that was denied and appealed could take months. Practices track the number of days their claims spend in accounts receivable for exactly this reason: every stage where a claim stalls costs money, and every stall that ends in a patient statement risks confusing the patient. Clean claims, coded correctly the first time, are the cheapest claims a practice ever processes.

Stage 6: Posting and the Patient Statement

The practice's billing staff post the payment and adjustment to Maria's account. Because the remittance shows no patient responsibility, her balance is zero, and no statement is sent. Had the remittance shown a PR amount, the practice would send Maria a statement for that amount. Billing staff are trained to compare the remittance with the expected benefit; a PR amount on a claim coded as preventive should prompt a review before any statement goes out, since it suggests the plan processed the claim incorrectly or the coding was incomplete. Our textbook notes that the administrative complexity of U.S. billing, with many plans and many rules, accounts for a substantial share of health care costs (Shi & Singh, 2022), and this walkthrough shows where some of that effort goes.

References

Administrative requirements, 45 C.F.R. Part 162 (2024).

Shi, L., & Singh, D. A. (2022). Delivering health care in America: A systems approach (8th ed.). Jones & Bartlett Learning.

X12. (n.d.). Claim adjustment reason codes. https://x12.org/codes/claim-adjustment-reason-codes