Between a hospital submitting an invoice and an insurer paying it sits a pipeline of eligibility checks, coding, automated edits and medical review. A walkthrough of every stage — and where claims actually get stuck.
A health claim looks like a payment and behaves like a negotiation. Between the hospital issuing an invoice and the insurer releasing money sits a pipeline — eligibility, authorisation, coding, automated validation, medical review, contractual pricing — and every stage can pass, query or reject what the previous one sent. Understanding that pipeline explains most of the mysteries members and employers encounter: why an approval was needed before a scan, why a claim paid less than the invoice, and why a rejection can happen weeks after the treatment it concerns.
This guide walks the pipeline end to end. It describes generic industry practice; the sequence is remarkably consistent across markets even where the systems differ.
Before treatment: eligibility and pre-authorisation
Adjudication starts before any invoice exists. When a member presents at a network provider, the provider first verifies eligibility — is this person covered today, under which plan class, with which benefits and co-payments? In paper-era systems this was a card and a phone call; in modern markets it is an electronic query answered in seconds.
For anything beyond routine consultations, the provider then requests pre-authorisation: a description of the proposed treatment, sent to the insurer for approval before it happens. Pre-authorisation is the insurer's main tool for managing cost and appropriateness upstream — far cheaper to question a procedure before it occurs than to dispute it afterwards — and its response sets the terms the eventual claim will be judged against. An approved authorisation is not yet a payment promise; it is a statement that this treatment, for this member, at this provider, falls within cover.
The claim takes shape: coding
After treatment, the encounter has to be translated into a language a payment system can process. Diagnoses and procedures are recorded as standardised codes, quantities and prices attach to each line, and the bundle — codes, amounts, authorisation reference, supporting documents — becomes the claim. Coding is where medicine meets accounting, and it is a skilled, error-prone step. A mistyped code, a mismatch between diagnosis and procedure, or a service outside the authorisation's scope will surface later as a rejection, even though the care itself was legitimate.
Submission and the edit gauntlet
The submitted claim first meets automated validation — the edits. Software checks that the member was eligible on the service date, the authorisation matches, the codes are valid and mutually consistent, the sums add up, and no duplicate of the claim already exists. In digitised markets the majority of clean claims pass these gates and are adjudicated with no human touching them; straight-through processing is the quiet achievement of modern claims platforms.
Market infrastructure matters enormously here. Where claims flow through standardised national rails — Saudi Arabia's nphies platform, launched by the Council of Health Insurance to unify how providers and insurers exchange eligibility, authorisation and claims transactions, is a leading regional example — the format wars that once consumed adjudication effort shrink, and the edit gauntlet becomes consistent across the market rather than bespoke per insurer.
Adjudication proper: benefits, review and pricing
Claims that pass the edits meet the benefit engine, which answers three questions in sequence. Is each line covered under this member's benefit table, or excluded? Do annual limits, sub-limits and waiting periods leave room to pay it? And what does the member owe — the co-payment or deductible carved out of the approved amount?
A minority of claims are routed onward to human medical review: high values, unusual code combinations, patterns suggesting over-treatment, or flags from fraud-detection models. Reviewers — typically clinicians — judge whether the billed care was medically necessary and consistent with the diagnosis. This is the stage members experience as delay, and it is also where insurers earn or lose provider trust, because slow, arbitrary review poisons a network relationship faster than hard bargaining ever does.
Finally, pricing: the approved services are repriced to the insurer-provider contract. This is why paid amounts routinely differ from invoiced amounts — the contract price, not the list price, governs. The gap between the two is not money the member owes; it is the discount the network negotiation bought.
Payment, remittance and the argument afterwards
The insurer settles approved claims to the provider in periodic payment runs, accompanied by a remittance advice itemising what was paid, what was reduced and what was denied, line by line, with reason codes. Providers reconcile, then dispute: resubmitting corrected claims, appealing medical-necessity denials, escalating contractual disagreements. A meaningful share of ultimately-paid claims pass through this loop, which is why claims figures for a period keep moving after the period ends — adjudication has a long tail.
Members see a compressed version of the same machinery. In-network, cashless treatment hides almost all of it; reimbursement claims — pay first, claim back — expose the member to the full pipeline personally, documents and all, which is why digital journeys that pre-validate reimbursement submissions save so much grief.
Why any of this matters to a platform
If you distribute medical cover, adjudication is where the product you sold becomes real. Three practical consequences follow. Expect and explain the difference between invoice and payment — repricing confuses every first-time employer. Build member journeys that track claim status honestly, including the review stages, because silence during a two-week adjudication reads as denial. And when choosing insurer partners, weight their adjudication performance — straight-through rates, payment timeliness, denial transparency — as heavily as their premiums, because at claim time that operational quality is the product.
A paid claim is the end of a pipeline that started before the treatment did. Once you can see the stages, the delays stop looking like obstruction and start looking like what they are: a system checking, line by line, that the right money goes to the right place for the right care — and occasionally getting stuck doing it.