When most people think about health plan savings, they picture high-level strategies like network design, pharmacy benefit management, or wellness initiatives. But one of the most important drivers of cost and performance happens quietly behind the scenes, a process known as claim adjudication.

Claim adjudication is the process of reviewing and processing medical claims to determine payment. It ensures that providers are paid correctly, members are charged accurately, and the plan is billed according to its rules. While it may not be the most visible part of plan administration, its impact is hard to overstate.

Efficient adjudication means fewer errors, faster payments, and fewer member complaints — all of which translate to meaningful savings and a smoother experience for everyone involved.

The Basics of Claim Adjudication

Now that we have a good understanding of what claim adjudication is — let’s look at how it works in practice. While each Third Party Administrator (TPA) may use different systems or workflows, most follow a similar path to review and process claims:

Intake and validation

Claims are received and checked for completeness, formatting, and eligibility. Missing or inaccurate data can trigger rejections or delays.

Coding and rules checks

Diagnosis and procedure codes are reviewed for accuracy. Plan-specific rules — such as exclusions, coverage limits, or authorization requirements — are applied to ensure proper alignment with benefits.

Coordination of benefits (COB)

If a member has multiple health plans, the TPA determines the order of payment responsibility to avoid duplication and ensure compliance.

Payment or denial

The claim is then paid, partially paid, or denied. Payment amounts reflect contracted rates and member cost-sharing responsibilities, and results are communicated through an Explanation of Benefits (EOB).

For self-funded employers, third-party administrators handle all of these steps, applying the plan’s rules and ensuring claims are processed efficiently. That makes claim adjudication a key performance lever — one that directly affects plan costs, provider relationships, and member satisfaction.

How Claim Adjudication Efficiency Impacts the Bottom Line

An efficient claim adjudication process isn’t just about speed — it’s about getting claims processed accurately and consistently. For self-funded employers, the way claims are processed can influence everything from administrative costs to member satisfaction and cash flow. Here’s how:

Fewer Errors = Cost Savings

When claims are processed accurately the first time, it reduces the need for manual rework, provider inquiries, and member appeals. It also helps avoid costly overpayments and duplicate claims — all of which can quietly eat into a plan’s budget.

Faster Turnaround = Better Cash Flow

Timely claim processing means providers are reimbursed faster, which improves relationships and reduces the volume of follow-up calls. For members, it means quicker resolution and fewer complaints — keeping service teams focused on higher-value work.

Accurate Processing = Plan Predictability

Consistent, rules-based adjudication helps employers better forecast claims expenses and stay within budget. When plan rules are applied correctly and consistently, employers gain greater confidence in their financial reporting and reserve planning.

Taken together, these efficiencies have a measurable impact on the bottom line. Yet many employers underestimate just how much poor adjudication can cost them — in the form of claim leakage, inflated admin costs, provider abrasion, and even member dissatisfaction.

For self-funded health plans, overlooking the importance of adjudication is more than a technical oversight — it’s a financial risk. Employers that take adjudication seriously, and partner with a TPA who does the same, are better positioned to control costs and protect the long-term sustainability of their plan.

What about Member Experience?

While much of the focus around claim adjudication centers on cost and efficiency, the member experience is just as important — and often overlooked. Behind every claim is an employee or family member who expects clear communication, timely resolution, and minimal hassle.

When claims are processed smoothly, members are less likely to experience delays, confusion, or surprise bills. This builds trust in the health plan and reduces the likelihood of disputes or HR escalations. On the other hand, even a single claim error can lead to frustration, financial stress, and a negative perception of the employer’s benefits program.

A capable TPA helps prevent these issues by ensuring not only accurate processing, but also clear and proactive communication with members. From timely Explanation of Benefits (EOB) statements to accessible support channels, transparency at each step helps minimize member abrasion and protect the overall reputation of the plan.

What to Look for in a TPA’s Claim Adjudication Process

Given how much is at stake — from plan performance to member satisfaction — it’s critical to partner with a TPA that takes claim adjudication seriously. Not all adjudication processes are created equal, and the right tools and expertise can make a significant difference.

If you’re in the market for a TPA here a few key factors to consider to make sure their claim adjudication process can help your organization:

Modern technology and automation

A strong TPA uses advanced claims platforms that support real-time edits, auto-adjudication, and integrated plan logic. This reduces manual errors, speeds up turnaround times, and ensures greater consistency in how claims are handled.

Experienced staff and compliance oversight

Look for a TPA with deep experience in claims administration, supported by internal quality checks and built-in compliance reviews. A knowledgeable team can spot potential issues early and ensure claims are processed in line with regulatory requirements.

Customizable rules and plan alignment

Every self-funded plan is different. Your TPA should be able to tailor adjudication rules to reflect your specific plan design — from unique cost-sharing structures to specialized provider arrangements — ensuring every claim is paid correctly.

Responsive support and transparency

The right healthcare technology matters, but so does service. A high-performing TPA provides clear EOBs, accessible member support, and hands-on guidance for employers — especially when exceptions or escalations arise.

Smarter Adjudication Starts with the Right Partner

Claim adjudication might happen behind the scenes, but it plays a front-line role in determining the success of any self-funded health plan. From reducing costs and avoiding errors to improving member satisfaction and provider relationships, efficient adjudication is one of the most powerful — and most overlooked — levers employers can pull.

At BHPS, we take that responsibility seriously. Our adjudication process combines flexible logic tailored to each plan’s design, transparent reporting to keep employers informed, and seamless provider coordination to help speed up resolution and reduce friction. Backed by a strong track record in accuracy and turnaround time, we help our clients manage claims smarter — and ultimately run their plans more effectively.

If you’re ready to take a closer look at your TPA’s claims performance, contact us today to see how we can help.