What is the meaning of "claims processing" in health insurance?

Claims processing refers to the procedure by which an insurer evaluates the claims submitted by healthcare providers or policyholders related to covered medical services. When a healthcare service is rendered, the provider submits a claim to the insurance company detailing the services performed and their costs.

The insurer then reviews the claim to ensure it meets the policy's coverage criteria, verifies the medical necessity of the services rendered, and assesses the submitted documentation against the terms and conditions of the health insurance policy. Once all criteria are met, the insurer processes the claim by determining how much they will reimburse the provider (or pay the policyholder, if applicable) based on the agreed-upon terms of the policy. This involves applying any deductibles, co-pays, or coinsurance amounts before finalizing the payment.

This understanding of claims processing is essential in health insurance, as it illustrates the crucial steps involved in ensuring that medical services are not only billed correctly but also reimbursed fairly according to the policyholder's coverage.