Claims adjudication and administration is the software that decides each health or dental claim: whether to pay it, and how much. To adjudicate a claim means to decide it. The software is sold mainly in the United States, to health plans, to third-party administrators and to the state governments that run Medicaid. A third-party administrator (TPA) is a company that processes claims on behalf of an insurer or an employer. Some of these products are built by companies with engineers in Hyderabad, Pune and Chennai.
The software takes a series of decisions. Is the patient a member of the plan on the date of treatment? Is the dentist or doctor in the plan's network? Does the plan cover this treatment, and has a limit been reached? What does the contract allow, and what share does the member pay? Each answer comes from the rules that health plan benefits configuration set up.
Take, for example, a dentist in Portland, Oregon, in the United States. The dentist sends a claim for a patient's cleaning and one filling, through a healthcare clearinghouse. The software confirms that the patient's dental plan is active. It sends the claim to claims editing, which finds the codes consistent. Then it applies the plan's rules. The plan covers two cleanings a year, and this is the patient's third, so the cleaning line is denied. The patient owes the dentist for it. The filling is covered at 80%. The dentist charges $180, but the contract allows $140. So the plan pays $112, and the patient owes $28. The software records the decision and sends the $112 to healthcare payments.
No person touched that claim. A claim decided entirely by rules is called auto-adjudicated, and most American health claims are decided this way. The rest stop in a queue for a person. These are complex claims, high-value claims, and claims that have been denied and appealed. Many of the people who review them work in India, in the operations centres of health plans and services firms.
That review is now changing. AI models read the medical record and the claim together, and they draft a decision with the reasons. A person then checks the draft. This is called human in the loop. US regulators and courts are now asking how health plans use such models when they deny care, so the person's review must be real.
India has TPAs too. An Indian TPA is licensed by IRDAI, the insurance regulator. Many Indian TPAs process claims for group health policies, the policies employers buy for their staff, such as through a group health insurance platform.