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Getting a big premium increase? How claims might be affecting your group plan



How auto-adjudication can lead to premium increases

Auto-adjudication isn’t a term most employers are familiar with, but it can be a factor in rising group benefits costs. What is it, and how can it result in premium rate increases?

The term refers to how insurance companies approve claims sent by the hospital. In other words, when an employee visits a hospital, and the hospital files a claim with the insurer, the insurer then has to “adjudicate” the claim, either resulting in a denial or a payment.

Through the negotiation process between insurers and hospitals, insurers often agree to “auto-adjudicate” a portion of hospital claims. This means the claims are subject to less scrutiny and are typically paid automatically. Why would insurers agree to do this, and why would hospitals want them to?

Hospitals want claims to be auto-adjudicated because it means they get paid faster. The auditing process takes time, and it slows down the hospital’s cash flow.

Insurers agree to auto-adjudicate a portion of claims, because typically, hospitals will agree to larger discounts on their services in return.

While this can seem like a good trade-off for employers, it can actually result in higher claims, and more expensive premiums.

Medical bills often have mistakes, including those that are auto-adjudicated. Employers may find that their employees are being overbilled, which results in higher payouts from the insurer. In turn, the insurer passes these costs back onto the employer group.

Many employers will benefit from a higher level of scrutiny of their group’s medical claims. To learn more about Bernard Health helps employers audit medical claims and save money, click below to schedule a free consultation.

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