Follow a single claim through every microsecond of its journey from provider submission to final payment - here's the complete technical breakdown.
Healthcare Claim Adjudication Complete Table of Contents
Phase 1 Initial Reception and Validation
Step 1 The Claim Arrives
Step 2 Transport Layer Security Check
Step 3 Initial Payload Inspection
Step 4 EDI Syntax Validation
Step 5 Data Element Validation
Step 6 Segment Relationship Validation
Phase 2 Business Rule Processing and Initial Screening
Step 7 Business Rule Engine Initialization
Step 8 Duplicate Claim Detection
Step 9 Date and Time Validation
Step 10 Procedure Code Validation
Step 11 Diagnosis Code Validation
Phase 3 Member and Provider Verification
Step 12 Member Lookup and Identity Resolution
Step 13 Eligibility Verification Engine
Step 14 Coverage Period Validation
Step 15 Dependent Eligibility Checking
Step 16 Provider Directory Validation
Step 17 Provider Contract Status Verification
Step 18 Network Status Determination
Phase 4 Authorization and Pre-Approval Verification
Step 19 Prior Authorization Requirements Check
Step 20 Authorization Database Search
Step 21 Authorization Match Validation
Step 22 Unit Consumption and Tracking
Step 23 Referral Validation
Phase 5 Clinical Review and Medical Necessity
Step 24 Medical Coding Edit Engine
Step 25 Diagnosis-Procedure Relationship Analysis
Step 26 Medical Necessity Determination
Step 27 Experimental Investigational Screening
Step 28 Frequency and Duration Analysis
Phase 6 Fraud Detection and Risk Assessment
Step 29 Provider Behavior Analytics
Step 30 Real-Time Fraud Scoring
Step 31 Pattern Recognition Analysis
Step 32 Anomaly Detection
Step 33 Sanctions and Exclusions Screening
Phase 7 Benefits Calculation and Pricing
Step 34 Benefit Configuration Retrieval
Step 35 Covered Service Determination
Step 36 Fee Schedule Assignment
Step 37 Allowed Amount Calculation
Step 38 Deductible Application Logic
Step 39 Coinsurance and Copayment Calculation
Step 40 Out-of-Pocket Maximum Processing
Phase 8 Secondary Coverage and Coordination
Step 41 Other Coverage Identification
Step 42 Primary Payer Determination
Step 43 External Payer Communication
Step 44 COB Calculation Processing
Step 45 Subrogation Identification
Phase 9 Payment Authorization and Settlement
Step 46 Accumulator Updates
Step 47 Payment Authorization Generation
Step 48 Electronic Funds Transfer Preparation
Step 49 Check Processing Workflow
Step 50 General Ledger Integration
Phase 10 Communication and Documentation
Step 51 Explanation of Benefits Generation
Step 52 Provider Remittance Processing
Step 53 Member Portal Updates
Step 54 Provider Communication Workflows
Step 55 Regulatory Notification Requirements
Phase 11 Quality Assurance and Compliance
Step 56 Statistical Sampling for Audit
Step 57 Compliance Monitoring
Step 58 Audit Trail Generation
Step 59 Exception Reporting
Step 60 Performance Metrics Collection
Phase 12 Appeals and Grievance Preparation
Step 61 Appeal Documentation Preparation
Step 62 Grievance Tracking Integration
Step 63 Legal Hold Processing
Phase 13 Data Analytics and Machine Learning
Step 64 Data Warehouse Population
Step 65 Machine Learning Model Updates
Step 66 Predictive Analytics Processing
Step 67 Business Intelligence Integration
Phase 14 Financial Settlement and Reconciliation
Step 68 Daily Settlement Processing
Step 69 Bank Reconciliation
Step 70 Financial Reporting Integration
Phase 15 Continuous Monitoring and Optimization
Step 71 Real-Time Performance Monitoring
Step 72 Capacity Planning Analytics
Step 73 System Health Monitoring
Step 74 Security Monitoring
Step 75 Process Optimization
Summary Statistics
Total Steps 75
Total Phases 15
Average Processing Time 2.3 seconds for auto-adjudicated claims
Daily Volume 2.1 million claims processed
Peak Capacity 50000 transactions per second
System Uptime 99.97 percent
Auto-Adjudication Rate 87 percent of submissions
Microservices Involved 47
Databases Queried 23
Audit Events Generated 300 plus per claim
Phase 1: Initial Reception and Validation
Step 1: The Claim Arrives
The provider's Epic practice management system fires an EDI 837 Professional transaction containing 23 service lines into your intake API gateway at 2:47:23 PM on a Tuesday. Your F5 load balancer immediately performs SSL termination and routes this 47KB payload to one of twelve active ingestion microservices running in your primary AWS us-east-1 region, while simultaneously logging the transaction to your centralized ELK stack for audit purposes.
Step 2: Transport Layer Security Check
Your API gateway validates the provider's OAuth 2.0 bearer token against your identity management service, checking digital certificates and ensuring the submitting entity matches the billing provider NPI in the claim header. If authentication fails, the system immediately returns an HTTP 401 with a standardized error response and blocks any further processing to prevent unauthorized submissions.
Step 3: Initial Payload Inspection
The ingestion service performs rapid payload analysis, checking file size limits (50MB max), scanning for malicious content using antivirus engines, and validating the EDI envelope structure before queuing the transaction for deeper processing. Suspicious payloads get quarantined in isolated storage with immediate security team notifications.
Step 4: EDI Syntax Validation
Your custom EDI parser, built on top of Microsoft BizTalk Server libraries, rips apart the transaction into 847 individual data elements, checking each segment against the HIPAA 5010 implementation guide while a separate thread validates control numbers, interchange headers, and functional group structures. If even one loop identifier is malformed or a required segment is missing, the entire claim gets rejected with an HTTP 400 response and a detailed TA1 functional acknowledgment queued for immediate return to the provider.
Step 5: Data Element Validation
Each data element undergoes field-level validation including data type checking (numeric, alphanumeric, date formats), length verification, and enumeration validation against HIPAA code sets. The system validates 127 different data element types in parallel, using cached validation rules that are refreshed every 15 minutes from your master data management system.
Step 6: Segment Relationship Validation
The parser verifies hierarchical loop relationships, ensuring that patient loops are properly nested under subscriber loops, service lines reference valid claim headers, and all required parent-child relationships are maintained. Cross-segment validation rules check for consistency between related data elements across different segments of the transaction.
Phase 2: Business Rule Processing and Initial Screening
Step 7: Business Rule Engine Initialization
Keep reading with a 7-day free trial
Subscribe to Thoughts on Healthcare Markets and Technology to keep reading this post and get 7 days of free access to the full post archives.