Unveiling the Impact of Auto Adjudication Rates on Insurance Claims Processing

Understanding your insurance carrier’s auto adjudication rate can offer valuable insights into the efficiency of their third-party claims processing. Have you ever inquired about your auto adjudication rate and compared it to the industry average? The response might reveal more than you expect.

Is a rate below the industry average cause for concern? In general, plans with non-standard benefit structures or processes tend to exhibit lower auto adjudication rates than the industry average. While the degree of variance varies, it should typically not exceed 10% below the average. If your carrier provides a rate significantly below your expectations, it may signal that your third-party administrator’s claims processing system lacks sophistication or is not fully optimized.

Conversely, what if your auto adjudication rate is higher than the average? For plans with standard configurations, a rate at or slightly above the average is expected. However, exceeding the average by more than 5% may be a cause for concern, suggesting that the claims processor might prioritize automation over quality.

So, you’ve asked the question and received an answer—what’s next?

If the response doesn’t align with your expectations, collaborate with your third-party claims administrator to delve deeper into the reasons behind the discrepancy. Analyzing this data over the most recent five-year period can offer insights that guide the conversation in the right direction. Additionally, correlating this information with the results of a claims audit for a similar time frame helps assess potential impacts on your plan. If you haven’t conducted a recent claims audit, it might be opportune to consider one.

Incorporating this analysis into your routine health plan monitoring and oversight process each year can yield surprising revelations. It sparks valuable discussions and may detect underlying problems that would have otherwise gone unnoticed. The proactive approach of regularly assessing auto adjudication rates enhances your ability to address issues promptly and ensures the optimal performance of your claims processing system. Consider this analysis an essential component of your ongoing efforts to maintain the efficiency and effectiveness of your health plan.

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For more information on this topic, please contact a member of Withum’s Self-Insured Health Plan Advisory Services Team.