How Insurance Claims Work: Step-by-Step Walkthrough

Admin
Dec 19, 2025
3 min read

Insurance claims are the backbone of a medical practice’s revenue—but even small errors can delay payments or cause denials. Understanding each step of the insurance claims process helps providers improve cash flow, reduce write-offs, and maintain a financially healthy practice.

Step 1: Patient Scheduling & Pre-Registration

The insurance claims process begins before the patient ever walks into the clinic.

Key actions at this stage include:

Collecting accurate patient demographics
Verifying insurance eligibility and coverage
Confirming referral and prior authorization requirements
Identifying copays, deductibles, and coinsurance

Why it matters: Incorrect insurance details or inactive coverage are among the top reasons for claim denials.

Step 2: Insurance Eligibility & Benefits Verification

Eligibility verification ensures the patient’s insurance is active on the date of service and that the services planned are covered.

This step confirms:

Plan type (HMO, PPO, Medicare, Medicaid, etc.)
Covered services and limitations
Prior authorization needs
Patient financial responsibility

At Sentinel Billing Solutions, we perform thorough benefit verification to prevent downstream claim issues and unexpected patient balances.

Step 3: Patient Check-In & Documentation

On the day of the visit:

Patient identity and insurance details are re-confirmed
Copays are collected upfront
Consent forms and signatures are obtained

Meanwhile, providers document the visit clearly and completely in the EHR, ensuring:

Medical necessity is supported
Diagnoses align with services rendered
Documentation meets payer and compliance standards

Strong documentation = stronger claims.

Step 4: Medical Coding (CPT, ICD-10, HCPCS)

After the visit, professional medical coders translate clinical documentation into standardized codes:

ICD-10 for diagnoses
CPT/HCPCS for procedures and services

Accurate coding is critical to:

Reflect medical necessity
Prevent under coding or over coding
Avoid audits and denials

Our coding experts stay up to date with payer-specific and Medicare guidelines to maximize reimbursement while staying compliant.

Step 5: Claim Scrubbing & Submission

Before submission, claims are scrubbed to identify and fix errors such as:

Missing modifiers
Invalid diagnosis-procedure combinations
Incorrect provider or facility details

Clean claims are then submitted electronically through clearinghouses to insurance payers.

Clean claims = faster payments.

Step 6: Payer Adjudication

Once received, the insurance company reviews the claim and determines:

Whether the claim is approved, denied, or partially paid
Allowed amount based on the contract
Patient responsibility

This process can take anywhere from a few days to several weeks, depending on the payer.

Step 7: Payment Posting & Reconciliation

After adjudication:

Payments are received via EFT or checks
Explanation of Benefits (EOB/ERA) is reviewed
Payments are posted to patient accounts

At Sentinel Billing Solutions, we also:

Verify payments against payer contracts
Identify underpayments or overpayments
Flag discrepancies for follow-up

Step 8: Denial Management & Appeals

Denied or underpaid claims are analyzed to determine root causes such as:

Authorization issues
Coding errors
Medical necessity denials
Timely filing limits

Our denial management team:

Corrects errors
Submits appeals with supporting documentation
Tracks outcomes to prevent repeat denials

Effective denial management directly increases practice revenue.

Step 9: Patient Billing & Collections

Once insurance processing is complete:

Patient statements are generated for remaining balances
Clear, accurate billing statements are sent
Patient inquiries are handled professionally

Transparent billing improves patient satisfaction and accelerates collections.

Why Understanding the Claims Process Matters

When each step of the insurance claims workflow is handled correctly, practices benefit from:

Faster reimbursements
Fewer denials
Improved cash flow
Reduced administrative burden
Better compliance and audit readiness

How Sentinel Billing Solutions Can Help

At Sentinel Billing Solutions, we specialize in cost-efficient, reliable, and transparent revenue cycle management services designed to help medical practices thrive.