Take a look behind the scenes of claim processing

So, you’ve filed a claim—but then what? Where does it go and what happens next?  Insurance companies don’t always share what happens behind the scenes, so in the spirit of transparency we're re-sharing this information for anyone that needs a refresher. Below, we walk you through each step at how the average claim gets processed.

Phase 1: Establish our relationship with the provider

First, the insurance company asks:

1. Is this provider in our system?
   a. Some providers are in our system even if they’re not contracted with us.
2. Is this provider contracted with us?
3. Is prior authorization required per contract?
4. Does the contract allow for payment of the service?

Phase 2: Issue payment & explanation

Next, the insurance company prepares an electronic remittance that includes:

Phase 3: Questions and appeals

Then, if a provider has questions, they can use the self-service tools in our portal or call/chat with customer service. That way we can disclose our appeals process, so providers understand denials.

We encourage to visit our policies & guidelines page with links to information that will help you find out which services, treatments, and drugs are covered under our plans.

Claim Adjustment Reason Codes  and Remittance Advice Remark Codes are standard codes used in health insurance claims processing to provide explanations for adjustments made to healthcare claims. These codes help communicate why a claim has been paid differently than expected, denied, or partially paid.

CARC (Claim Adjustment Reason Codes):

• Purpose: CARC codes are used to explain the reason for a payment adjustment (e.g., why a claim was denied, reduced, or increased).
• Common reasons: These include non-covered services, patient responsibility, duplicate claims, or issues with patient eligibility.
• Example of CARC: CO-45: Charges exceed the contracted fee arrangement. This code indicates that the provider billed more than the allowable amount as per the contract with the insurance company.

RARC (Remittance Advice Remark Codes):

• Purpose: RARC codes provide additional explanations or details related to the adjustment, complementing the CARC.
• Common uses: RARC codes are used for specific, detailed messages like providing more information about prior authorizations or explaining specific documentation requirements.
• Example of RARC: M127: Missing patient medical record for this service. This means the claim requires the submission of the patient’s medical record to process.

CARC codes explain the high-level reason for a claim adjustment, while RARC codes offer more detailed or supplementary information. These codes are used by payers to help providers understand adjustments made on their claims.