How Medical Claims Processing Transforms Patient Healthcare

October 5, 2021
Image of small figurines shaped like doctors and patients against a white background.

Delays in medical claims processing can be physically, mentally and financially challenging for all parties. However, the automation of the medical claims process has the potential to transform patient healthcare. The key is an improvement in data flow between patients, healthcare providers, and insurance companies.  

For many years the insurance industry has been seeking to solve the most common delays in processing medical claims. The procedure is well documented, but unfortunately, missing information, delays, and miscommunication can significantly extend the settlement period. Carriers are finding a solution in medical claims processing, which is transforming patient healthcare.

Introducing the CMS-1500 and UB-04 Forms

When looking at medical claims, the CMS-1500 and UB-04 forms are central to the process. They are almost universal across the US medical billing industry. In theory, they should contain all of the information required to process a medical claim. However, this is not always the case.

Before looking at automated claims processing in more detail, it is essential to identify the subtle differences between the CMS-1500 and UB-04 forms.

See also: How to improve claims handling with automation

CMS-1500 claim form

Non-institutional medical care providers use a CMS-1500 form. These include individuals or medical entities other than a hospital. The term stands for “The Center of Medicaid Medicare Services” and is most commonly used by physicians and other medical professionals.

UB-04 claim form

The UB-04 form is used by institutions such as hospitals to bill for medical costs covered by medical insurance. The term stands for "Uniform Medical Billing", and the document is also referred to as the CMS-1450 form.

See also: Why Digital Coworkers are the best data extraction tools for UB-04 forms

Common reasons for medical claim denials and slow processing

Even though the CMS-1500 and UB-04 forms are well-known throughout the medical/insurance industries, they are often received only part completed. Unless the medical insurance company has all of the details, there is no way that a claim can proceed.

This is a problem that affects both the insurance and healthcare industries. Excessively lengthy back-and-forth conversations between the carrier and the medical provider only delay medical claim payments, create claims leakage, and exacerbate frustration for all parties.

Medical and healthcare providers

Working in tandem with the patient, medical and healthcare providers should be able to fill in a CMS-1500 medical claim form with relative ease. However, medical insurance companies are regularly forced to seek additional information and confirmation before processing a claim. This all takes time and negatively impacts customer service and patient satisfaction. Therefore, all parties must acknowledge the need for attention to detail. This should simplify the medical billing and claims process and ensure that the payments are settled relatively quickly.

Manually extracting data

Before automated medical claims processing, the vast majority of the work was completed manually. While there are automated data extraction tools available today, this process was carried out by a data entry clerk in the past. Manual data entry can be cumbersome at the best of times, let alone when data extraction is nearly impossible due to the standard of documentation provided. Only when the data clerk can identify the missing information can the form be returned to the healthcare provider. They will then need to provide an updated medical claim form, and the process will begin once more.

Medical claims processing outsourcing

It will be no surprise to learn that many medical insurance companies outsourced their data entry jobs to third parties. Companies based in India and the Philippines were popular because of the relatively low cost. Outsourcing this element of the claims process created cost savings and also removed the monotonous workload from many employees. Unfortunately, this option attracted unwelcome concerns regarding data protection, with many health insurance companies forced to think again.

While healthcare claims automation has been going on for some time within the industry, only now is it openly discussed. As the leading insurance companies tweaked the claims submission process favouring automation, that was the tipping point. As a result, automated claims processing is now commonplace across the insurance industry, especially with health insurance.

The benefits of medical claims processing automation

The healthcare system in the US is vast, with automated claims processing a vital part of the future. While Medicaid claims processing is one of the more recognised activities, the CMS-1500 and UB-04 forms accommodate many healthcare providers. We know the primary benefits of automated medical claims processing:

• Drastically reduced turnaround times

• Improved accuracy

• Flags created where data unclear or incomplete

• Automated response where additional information is required

• Processing of claim payments

• Fraud prevention

There is also a significant effect on healthcare insurance services in general. The automation of the time-consuming data extraction process ensures that the skills and experience of employees can be used elsewhere to expand the business. As competition grows in the insurance industry, redirecting staff to interact with customers directly will also be critical for customer retention.

In the current environment, staff skills and experience must be fully utilized where possible. There will still be some manual processes to complete, for borderline claims, for example, but on the whole, the monotonous workload will be lifted. It is important not to underestimate the impact this will have on staff morale and staff retention numbers.


The introduction of cutting-edge medical technology is never far from the headlines. However, behind-the-scenes medical claims automation is freeing up staff and finances to invest in new lines of business. This is one of the unseen benefits of automation in the medical industry, where machine learning and artificial intelligence are now commonplace.

The beauty of artificial intelligence is that the software package will learn and adapt in the future. However, automation is only a tool and must be wielded effectively. This involves understanding of its capabilities and limitations of automation, as well as the strengths and weaknesses of your staff.

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