Adjudication
Definition
Adjudication is the payer's process of reviewing, processing, and deciding on a submitted claim. The payer determines claim validity, calculates payment amounts, applies coverage rules and plan limitations, and issues an Explanation of Benefits (EOB) documenting the decision.
Why It Matters
Adjudication outcomes determine your revenue. Understanding the process helps you submit cleanest claims, anticipate coverage denials, and manage cash flow by tracking claim status. Poor adjudication results waste time on appeals and administrative costs. Optimizing for adjudication improves cash collection.
How It Works
When you submit a claim electronically, the payer's system receives it and runs automated edits. The system verifies patient eligibility, checks medical necessity against policy guidelines, applies the contracted fee schedule, reviews bundling rules, confirms coding accuracy, and validates all required data fields. If the claim passes all edits, it is approved for payment and processed according to plan terms. If edits fail, the claim is denied, adjusted, or suspended for manual review. Manual adjudication by payer staff occurs for complex or ambiguous claims. The payer then issues an EOB document detailing approval, denial codes, payment amount, and patient responsibility.
Related Terms
How long does adjudication typically take?
Standard adjudication timeframes vary by payer and plan type, typically 10-30 days for electronic claims. Medicare generally processes within 14 days. Complex claims or those requiring manual review can take 30-60 days or longer. Some payers offer expedited adjudication for urgent claims, but this is not standard. Check payer-specific timelines in your contracts.
What happens during adjudication?
The payer's system performs automated edits: verifies eligibility, checks for medical necessity, applies fee schedules, reviews bundling rules, and checks for coding errors. If the claim passes all edits, payment is approved and processed. If edits fail, the claim is denied or adjusted. Complex claims move to manual review by payer staff.
See How Altair Optimizes Claims for Adjudication
Altair performs pre-submission validation to ensure claims pass payer edits on first submission. See how it works.
This glossary is for informational purposes. Consult official billing guidelines and payer policies for definitive definitions. Last updated: 2026-04-06.