> ## Documentation Index
> Fetch the complete documentation index at: https://mso.getlemma.com/llms.txt
> Use this file to discover all available pages before exploring further.

# The life of a claim

> The backbone diagram of healthcare revenue: from scheduling through eligibility, documentation, coding, submission, adjudication, remittance, posting, and the patient balance.

A **claim** travels a fixed path from the moment a patient is scheduled to the moment the last dollar is collected. Every other page in this section hangs off this diagram. If you learn one thing about how healthcare gets paid, learn this sequence.

## The full path

```mermaid theme={null}
graph TB
    A[1. Patient scheduled] --> B[2. Eligibility check<br/>270 → 271]
    B --> C[3. Prior authorization<br/>278, if required]
    C --> D[4. Visit occurs<br/>point-of-care collection]
    D --> E[5. Clinician documents]
    E --> F[6. Encounter coded<br/>CPT/CDT + ICD-10]
    F --> G[7. Charges entered]
    G --> H[8. Claim scrubbed]
    H --> I[9. Claim submitted<br/>837]
    I --> J[10. Acknowledgments<br/>999, 277CA]
    J -->|rejected| H
    J -->|accepted| K[11. Payer adjudicates]
    K --> L[12. Remittance<br/>835]
    L --> M[13. Payment<br/>EFT, check, or VCC]
    L --> N[14. Posting]
    N -->|denied| O[15. Denial queue<br/>correct or appeal]
    O --> I
    N -->|patient balance| P[16. Statement]
    P --> Q[17. Patient payment<br/>or refund if overpaid]
    N -->|paid in full| R[Closed]
```

## Stage by stage

### 1–3. Before the visit

**Scheduling** is where revenue integrity starts. Capturing the correct subscriber ID, plan, and demographic data here prevents more denials than any downstream control.

**Eligibility (270/271).** Your system sends a 270 inquiry; the payer returns a 271 with coverage status, plan type, deductible remaining, copay, and coinsurance. Run it at scheduling *and* again at check-in — coverage lapses between them. Save the 271; it is your evidence in an appeal.

**Prior authorization (278, or a portal, or a fax).** Some services require the payer's approval before delivery. Missing authorization produces CARC 197, one of the most common and most preventable denials. See [Get prior authorizations](/guides/billing/get-prior-authorizations).

### 4–5. The visit

The patient is seen and the clinician documents. Two things happen here that matter for money:

* **Point-of-care collection** of copay and known patient responsibility. Money collected before the patient leaves is money you don't chase for ninety days.
* **Documentation** becomes the substrate for everything downstream. The code must be supported by the note, and in an audit the note is the only evidence that exists.

### 6–8. Turning care into a claim

**Coding.** Two code sets doing two jobs: **CPT** (or **CDT** in dentistry, plus **HCPCS Level II**) says *what you did*; **ICD-10-CM** says *why*. Modifiers qualify; place of service codes locate.

Coding is an exercise of clinical judgment and, in an MSO-PC structure, it belongs to the **PC**. The MSO can employ coders and provide the systems; it should not determine what codes are assigned. See [What an MSO can and can't do](/concepts/model/what-msos-can-and-cant-do).

**Charge entry** puts the coded encounter into the billing system.

**Scrubbing** validates against payer-specific edits before submission. Scrubber rejections are free; payer denials cost 30–60 days.

### 9–10. Submission and acknowledgment

The **837** transaction carries the claim to the payer through a clearinghouse. Three acknowledgments can come back:

|           | What it tells you                                          |
| --------- | ---------------------------------------------------------- |
| **TA1**   | Whether the interchange envelope was readable              |
| **999**   | Whether the file was syntactically valid X12               |
| **277CA** | Whether the payer **accepted the claim into adjudication** |

A 277CA rejection is not a denial — nothing was adjudicated. Fix and resubmit same-day.

### 11. Adjudication

The payer applies member eligibility, benefit design, the contracted fee schedule, medical necessity policy, coding edits, and coordination of benefits, then determines: allowed amount, payer liability, patient liability, and any denial.

This is a black box from outside, which is why the 835's explanation matters so much.

### 12–13. Remittance and payment

The **835** explains the determination line by line. The **payment** arrives separately, by EFT, paper check, or virtual credit card.

**The 835 and the payment are different objects and they do not map one-to-one.** One deposit can cover several remittances. Reassociate them using the **TRN** trace number, not by matching dollar amounts. See [The 835](/concepts/payments/understanding-835s).

### 14. Posting

Payments, contractual adjustments, and patient responsibility are recorded against the claim. Auto-posting handles the clean lines; an exception queue catches unmatched claims, takebacks, interest, and secondary transfers.

Every dollar of difference between billed and paid is explained by a **group code + CARC (+ RARC)** triple:

| Group code | Meaning                   | Action                              |
| ---------- | ------------------------- | ----------------------------------- |
| **CO**     | Contractual obligation    | Write off; cannot bill the patient  |
| **PR**     | Patient responsibility    | Bill the patient                    |
| **OA**     | Other adjustment          | Usually informational or a transfer |
| **PI**     | Payer-initiated reduction | Often appealable                    |

### 15. Denials

Lines paid at \$0 with a denial reason go to the denial queue, not to a write-off. The decision is **correct and resubmit** (the claim had bad data) versus **appeal** (the claim was right and the payer was wrong). See [Claim denials, explained](/concepts/payments/claim-denials).

### 16–17. The patient balance

PR amounts move to the patient ledger and into the statement cycle. If the patient overpaid, a very common outcome when point-of-care estimates exceed actual responsibility, you owe a refund, sometimes on a statutory deadline. See [Patient refunds and credit balances](/concepts/payments/refunds-and-credit-balances).

## How long it takes

| Stage                               | Typical elapsed time                |
| ----------------------------------- | ----------------------------------- |
| Visit → charge entry                | Same day to 1 business day (target) |
| Charge entry → submission           | Same day                            |
| Submission → 999                    | Minutes to hours                    |
| Submission → 277CA                  | Hours to 2 days                     |
| Submission → adjudication           | 14–30 days, payer-dependent         |
| 835 → EFT                           | 0–5 days                            |
| Denial → corrected claim resolution | 30–60 days                          |
| Denial → appeal resolution          | 30–180 days                         |
| Patient balance → collection        | 30–120 days                         |

**Total for a clean claim: roughly 20–40 days.** For a denied claim that must be appealed: 90–180 days, at meaningfully higher cost.

## Where money leaks

Ranked by how much revenue they typically cost:

1. **Eligibility failures**, no check, or checked too early
2. **Authorization failures**, not obtained, mismatched, or obtained but not captured on the claim
3. **Coding and documentation gaps**, the note doesn't support the code
4. **Credentialing gaps**, services billed before the provider's effective date
5. **Timely filing**, charge entry lag, or a claim lost in a rejection loop
6. **Unworked denials**, a large share of denied claims are simply never reworked
7. **Unbilled encounters**, visits that never became claims
8. **Underpayments**, the payer paid less than the contract requires and nobody checked
9. **Patient balances written off**, instead of collected

Note that the top four are all **upstream of submission**. Denials are mostly a front-end problem wearing a back-end costume.


## Related topics

- [Step 10: Submit your first claim](/start/zero-to-paid/submit-your-first-claim.md)
- [Step 11: Read your first 835 and get paid](/start/zero-to-paid/read-your-first-835.md)
- [Submit clean claims](/guides/billing/submit-clean-claims.md)
- [Post payments from 835s](/guides/billing/post-payments-from-835s.md)
- [Work the denial queue](/guides/billing/work-the-denial-queue.md)
- [The 837: how claims are told to payers](/concepts/payments/understanding-837s.md)
- [The 835: how payers answer](/concepts/payments/understanding-835s.md)
- [Claim denials, explained](/concepts/payments/claim-denials.md)
- [X12 healthcare transaction sets](/reference/edi/x12-transaction-sets.md)
- [CARC codes (Claim Adjustment Reason Codes)](/reference/edi/carc-codes.md)