California Life-Only & Accident and Health AgentAccident and Health InsuranceMedium
A physician's office submits a claim to a health insurance company for services rendered to a patient. The insurance company reviews the claim to ensure the services were medically necessary and the charges are appropriate for the region. What process is the insurance company performing?
- APremium Rating
- BClaims Adjudication
- CPolicy Delivery
- DUnderwriting
Show answer & explanationAnswer & explanation
Correct answer: B. Claims Adjudication
Claims adjudication is the process by which an insurance company reviews a claim to determine if it is valid, if the policy covers the services, and how much the insurer is obligated to pay.
Why the other options are wrong
- A. Premium rating is the process of setting premiums based on risk factors, done before policy issue.
- C. Policy delivery is the act of physically giving the policy to the insured, not a claim review process.
- D. Underwriting is the process of assessing risk before issuing a policy, not after a claim is submitted.
Claims Adjudication
The process by which an insurance company reviews a healthcare claim to determine if it is valid, covered by the policy, and what amount the insurer will pay.
- Occurs after a claim is submitted.
- Involves checking for medical necessity, coverage, and appropriate charges.
- Results in approval, denial, or adjustment of payment.
Memory trick: Insurance has processes for risk, policy, and claims.