Medical claims are the foundation of healthcare revenue cycle management. When processed correctly, they ensure that providers are paid efficiently for their services. But when they’re mishandled, whether due to coding errors, missing documentation, or improper workflows, delays, denials, and compliance issues follow.
This guide explains what a medical claim is, walks you through the medical claim processing cycle, and shares real-world scenarios to help healthcare providers and billing teams avoid costly mistakes.
What Is a Medical Claim?
A medical claim is a formal request submitted by a healthcare provider to an insurance company to receive payment for services rendered. It includes essential details like patient demographics, procedure codes, diagnosis codes (ICD-10), and provider information.
In short, it’s the provider’s bill to the payer. If the claim lacks accuracy or supporting documentation, it could be delayed or denied, negatively impacting cash flow.
There are two main types of medical claims:
- CMS-1500 forms: Used for outpatient services
- UB-04 forms: Used for inpatient and hospital billing
A clean claim, one submitted with no errors, has a significantly higher chance of being processed and reimbursed on first pass. According to the AMA, the clean claim rate among top-performing providers exceeds 98%.
Claims in Healthcare: The Core of Revenue Management
So, what is a claim in healthcare? It’s not just paperwork, it’s a revenue lifeline. Claims serve as a legal and financial bridge between providers and payers.
Inaccuracies in claims are among the top three causes of payment delays in the U.S. healthcare system (source: HFMA). This is why medical claims billing requires a blend of skilled coding, payer rule expertise, and systematic tracking.
Medical Claims Examples
- Submitting a CPT code 99213 for a level-3 office visit along with an ICD-10 code M54.5 for lower back pain.
- Billing for a chest X-ray (CPT 71046) that accidentally omits the referring provider’s NPI, leading to rejection.
These small details are where millions are lost across practices each year.
Medical Claim Processing Step-by-Step
Here’s how medical claim processing typically works:
- Patient registration & insurance verification
- Medical coding of diagnoses and procedures
- Claim creation using EHR or billing software
- Claim scrubbing for code validation and format errors
- Claim submission to clearinghouses or directly to payers
- Payer adjudication and explanation of benefits (EOB)
- Payment posting and follow-up for underpaid or denied claims
Each of these steps must be carefully managed to ensure revenue isn’t trapped in limbo.
Common Pitfalls in Medical Claims & How to Avoid Them
Let’s explore practical problems that lead to denials and reimbursement delays:
Revenue Code Error Example
A hospital billed revenue code 0450 (Emergency Room) for a non-emergency outpatient lab service. Since the revenue code did not match the nature of the service, the payer flagged it for review and delayed payment.
Correction
Revenue code 0300 (Laboratory) should’ve been used, aligned with the CPT code submitted. This illustrates the importance of matching revenue codes with actual procedures.
Best Practice
Use payer-specific billing guides to crosswalk CPT codes with revenue codes before submission. CMS and most private payers offer digital access to these resources.
Best Practices for Clean Medical Claim Submissions
To reduce denials and maintain a healthy revenue cycle, providers should follow these proven practices:
- Verify patient insurance before each visit (every time, no assumptions).
- Use certified coders to ensure accuracy in ICD-10, CPT, and HCPCS codes.
- Implement automated claim scrubbing tools to catch missing modifiers or outdated codes.
- Stay updated on payer-specific rules, especially for high-volume carriers like Medicare and Blue Cross.
- Review denial trends monthly to correct patterns at the source (coding, front desk errors, documentation gaps).
According to CMS, administrative inefficiencies cost the U.S. healthcare system over $250 billion per year. A streamlined medical claim processing workflow can help your practice stay on the right side of that number.
Compliance & Regulatory Reminders
Medical billing is not just about getting paid, it’s about doing it ethically and legally.
- HIPAA compliance in data sharing and claims transmission is non-negotiable.
- Upcoding or unbundling of services is a federal offense that can lead to fines or criminal charges.
- Documentation must support every service billed; if it’s not in the chart, it didn’t happen.
CMS audits and Recovery Audit Contractors (RACs) are increasingly targeting providers who fail to follow proper claim protocols.
AffinityCore: Your Partner in Claims Accuracy
Handling claims in healthcare is complex, and mistakes are expensive. That’s where AffinityCore comes in.
We specialize in medical claim processing and medical claims billing tailored to the needs of practices, hospitals, and billing companies. From coding audits to denial management and payer communications, our team brings unmatched attention to detail and compliance.
Whether you’re a small clinic seeking the best medical billing services for small practices or a growing practice struggling with denial backlogs, AffinityCore helps you gain control over your revenue cycle.
Final Thoughts
A well-processed medical claim isn’t just about revenue, it’s about running a sustainable, compliant, and patient-focused operation.
Understanding how to properly code, scrub, and submit medical claims is no longer optional. It’s foundational. And with payer rules constantly evolving, even experienced providers need support to stay ahead.
AffinityCore brings you the accuracy, compliance, and clarity your practice deserves, backed by proven processes and a results-driven team.
Need help improving your claims process?
Let’s talk about how AffinityCore can support your team.
Visit AffinityCore’s Medical Billing Services page to learn more.
