How to Develop a Medical Claim Processing Automation Software?

Updated 02 Feb 2024
Published 07 Oct 2021
Satyam Chaturvedi 2460 Views
How to Develop a Medical Claim Processing Automation System

The healthcare industry is among the very few industries that have adopted IT systems in their early stages.

If you visit any healthcare service provider, you will find a lot of IT-enabled processes, right from patient admission to treatment management, from diagnostics to billing and medical claim processing. Everything is being performed digitally.

However, now the healthcare industry is migrating to the next level, which is automation. Wherein all processes are identified, and then they are automated to improve the efficiency and effectiveness of functions.

The aim of automation is to deploy IT systems that control functionalities and reduce human involvement in the processing of information and monitoring of services.

The usage of IT systems automation has been growing in other industries for many years now, and healthcare industry is also catching up fast on this front.

Medical Claim Processing Automation System

As any Healthcare organization and its financial operations expand, it becomes important to keep Billing, Payment, and Claims process under control, so that organizations can focus on offering the best services to their customers.

Cloud-based healthcare solutions and automated Medical claim processing solutions can assist a Healthcare service provider to reduce the cost of insurance claims, improve patient payment management, and enhance revenue.

The Medical claim solution can be easily integrated with existing enterprise software or could be developed from scratch.

What is Medical Claim Process, and How it works? 

A medical claims process software is used by healthcare organizations to manage the entire medical claims lifecycle, right from submission to settlement.

These software solutions are developed to automate the claims process, which otherwise could take a lot of time and resources of a healthcare organization. 

Medical Claim process work

Here is how a Medical claim process system works: 

  1. An EMR/EHR sends a bill, which lists all the services provided to the consumer. Every service is associated with a specific CPT code, each diagnosis service is coupled with an ICD-10 code. This is also called a superbill, and it is usually available in HL7 format.
  2. Once this bill reaches the Billing management system, it performs a quick check of patient’s insurance plan and it also validates the authenticity of the information provided. This data becomes the basis for claim processing. We may have multiple claims formed within a single superbill, as we may have multiple insurance organizations covering different types of services.
  3. In this step, all the claims are dispatched to the Medical billing Clearing house. This department clubs all the claims into a specific format (EDI 837) accepted by the Insurance company. 
  4. Once the insurance company receives the claims, it validates all the information for further processing. In case of any issues or concerns, the process runs all the way back. 
  5. The insurance company sends the information back to the Clearing house that had sent the claim. Upon receiving the information, the Clearing house dispatches the same information to the Billing management solutions for settlement. 

Now as you have understood the basic medical claims process, you may have got an idea about the opportunity of automation to improve the overall process efficiency and effectiveness.

The usual Claim process takes time, as the information travels from different systems, in different formats, processed by the Clearing House, then Insurance provider also performs several kinds of validations. We can save a lot of costs and resources by Automation.

mobile app development

Why do we need an Automated Medical Claims Process system?

The term ‘Automation’ carries a false and negative notion of being responsible for job reduction. Initially, when automation was implemented into the automobile industry, people used to think that it will reduce the workforce.

However, when it was introduced, it actually reduced the redundant jobs by the automobile workers and helped the organizations to pay more focus on customer services and other core process areas.

The same holds true for the healthcare industry as well, as automation can help them to reduce the manual data entry work, and automate the data validation work so that the medical staff can stay more focused on supervisory processes and intelligent analytics.

Automated Medical Claims Process system

The approach towards medical claims management was very simple, hire more people to process more claims. That method was not too efficient and successful, as the cost used to be increased a lot.

To keep the cost under check and improve resource efficiency, automation is introduced for medical claim process. Technology is being utilized to execute the claims faster and in a transparent manner

Automated medical claims processing is becoming a necessity for the healthcare industry. Continual evaluation and monitoring of data can be executed via automated medical claims process systems, which is making them hotcake for Healthcare service providers.

Automated Medical claims Benefits

Benefits of Medical Claims System

An automated Medical claims system can offer the following benefits:

Reduced Labor:

Automated medical claims management system can certainly reduce manual tasks and ensure they are executed efficiently and faster to improve performance.

This gives a healthcare service provider an opportunity to engage its employees in other higher functioning roles and core clinical activities.

Better Quality:

Automated medical claims system processes the claims using the technology, which makes it free of errors and prevents commonly committed human errors. This is possible as the technology used ensures data entry and analysis remain consistent.

Enhanced Predictability:

An automated claims process system offers a better insight into claims, and it enables automatic claims approval and rejection. This also avoids unnecessary overheads and provides predictable outcomes for decision-makers.

Less Supply Cost:

The manual medical claims process involves a massive amount of paperwork and other resources, which put an extra cost on operations.

Whereas the automated claims processing system enables an organization to cut down the cost of paperwork and other resources, which helps them to keep lower supply costs.

Better Data-based Analysis:

The automated claims adjudication process uses the data to perform insightful analysis, that can be used to take correct decisions to optimize resources and enhance performance.

Challenges for Automated Medical Claims System

Medical billing and claim processing are constantly evolving with the use of technology. The conventional reimbursement models are not that efficient and practical, and they put more pressure on reimbursement agencies as they must adhere to stricter protocols and timelines as well. 

The claims processing system itself has 3 distinct avenues: Technical, Operational, and Financial. The Technical aspect deals with processes, systems, and user interactions.

The operational aspect is more about vendor communication, staff management, and process workflow. The financial aspect is all about billing information, accounts receivable, collections and denials.

An automated medical claim processing system comes with its own set of challenges, which are as follows:

  • Strict timeline demands
  • Less resource allocation for revenue cycle
  • Less expertise for Claim adjudication process
  • Frequent evolution in reimbursement strategies
  • Increase in Billing costs
  • Organizational incompetence
  • Lag in responses
  • Inefficiencies due to disparate standards

Features for Medical Claim Software

An automated medical claim processing system must have the following modules and features:

Financial Management and Claim processing

This is a basic module that handles financial management and claim processing. It ensures all claims are sent and received automatically, including code, charge entry, and resubmissions. This module must include the following features:

  • Claims generation and processing
  • Remittance advice generation
  • Dunning management
  • Compliance tracking
  • Claims scrubbing

Patient billing-

This module performs bill creation, processing, payment tracking, invoice generation, and keeping track of payment history. It also maintains the appointment and treatment-related information.

This module provides billing transaction templates, which come in handy while processing the bills.

This module handles sending notifications and reminders to customers, such as appointment reminders, insurance expiration reminders, and unpaid payment notifications. Performing all these actions in a conventional system consumes a massive amount of time. 

Patient billing

This module must contain the following features:

  • Billing creation
  • Invoice generation
  • Payment Tracking
  • Appointment Management
  • Treatment Information
  • Automatic Notification management

Automated Insurance Verification

This is an important module, which verifies and validates the insurance details of a customer. This includes both walk-in and scheduled patients, once the information is entered, this module verifies that information and returns with the status.

This speeds up the patient admission process while reducing the denial rate. The medical claim system must integrate with renowned insurance service provider networks.

Patient Data Storage and Security

The medical claims processing system must store sensitive patient information, insurance details, banking details, payment details, and patient medical history information at a secured storage space.

It could be in-premises or on Cloud, based on the requirements and availability of resources. The information must be secured with adequate security protocols and authentication mechanisms. 

The Data storage must follow the HIPAA or GDPR standards. It is also important to follow Data compliance in different countries. So it is important to engage vendor who knows all the ins and outs of healthcare industry and Information Security.

It is critical to have Automatic backups facility as it enables to recover data in event of any mishappening.

  • 2 Factor Authentication
  • Cloud Data Storage
  • Strong Authentication mechanism
  • Automatic Backup and Restore

Reporting and Data Analytics

It is quite important to have a system, that can not only provide us with robust reporting but also incorporate Data Analytic features to perform further analysis to support decision making.

Medical Reporting and Data Analytics

Efficient Reporting and Data analytics can help an organization to monitor their financial performance, resource utilization, patient trending, and several other important aspects of operations, as this helps an organization to identify the improvement opportunity and enhance productivity.

  • Reports
  • Big Data Analytics
  • Dashboard Creation
  • Data Modelling

Medical Claim System – Development Process

Developing an automated medical claim processing system requires proper planning. From the outset of your development and business process, you’ll have to make several key accounting and business decisions. We must follow the below process to initiate the development process.

Select a Team

First of all, we must decide if we need in-house developers, freelancers, mobile application experts, and outsourcing firms.

There are various parameters to select the correct engagement model, but regardless of what you select, the team must be fully committed towards project right from start to finish.

Every member of development team must be engaged, tasks should be assigned to them with an associated deadline.

Budget Estimation

Budget and Expense estimation is a crucial step before engaging the in-house or outsourced developers.

It is important to know the development cost, the resources required for development process, support required from investors. All these aspects must be assessed and answered in this phase.

app development cost

Requirement Definition and Analysis

This is a benchmarking phase, where we must define the solution requirements.

It all depends on the business goals and vision of an organization, the objective they want to achieve from the solution, the features they want to offer to their customers, and at the same time the kind of value the business is envisioning from the proposed solution.

We must acknowledge all requirements and discuss them with the development team.

These requirements must be written down in a document called ‘software requirements specifications.’ The specifications should be detailed, and we must ensure that development team should adhere to them. 

Integration with Insurance Vendors

The proposed claim processing software must have complete integration with insurance service providers, 3rd party applications, and APIs.

It helps the application to validate patients’  insurance eligibility and other critical information. Integration is important, as it helps developers to add modules and extra features by extending the existing modules, instead of creating them from scratch.

UI/UX development

A medical claim processing solution contains a plethora of information, and it is important to design the user interface in such a way that user is not overwhelmed with the barrage of information.

UIUX development

The user interface should be easy to use and navigate, the menu must be intuitive. The font readability and color scheme should be capable enough to improve the software’s usability. 

Choose a platform

We must be aware of the platforms where the application will function. It should have adequate mechanism so that it can run on desktop, mobile, or other handheld gadgets.

Or perhaps we need a web-based application that can run in the browser. In order to develop a suitable system, we must be aware of all these aspects of the software solution. 

Security Mechanism integration

Medical claim processing system processes confidential and sensitive information, therefore we must pay more focus on integrating adequate security features and mechanism to prevent any security breach.

The application must have secure backups restore, and encryption features while complying with data protection and regulation such as HIPAA, PCI, and GDPR.

Read More:- Security Measures to be Taken While Developing a Mobile Application

Storage Provisioning

We must know what amount of information we are going to store and retrieve. We must select the correct storage strategy and options like Cloud or Private server. 

This is an important decision to make, and accordingly, infrastructure investment or Cloud vendor engagement is required.

Automate Medical Claims processing solution

Steps to Automate a Medical Claims Processing

Once we develop the level of solution, we can implement the below 7-Step approach to automate a Medical claim processing solution. We can implement the strategy to automate the entire claim processing lifecycle – from claim submission to claim adjudication and finally to reimbursement.

Automated Population of Claims Information:

This phase is to reduce the manual intervention while entering the data. The system should be developed to generate the data based on initial entries in an automatic manner. This mechanism ensures that data is generated organically and programmed efficiently.

Patient Coverage Validation:

This step contains the usage of technology to perform validation of eligibility of the patient’s insurance coverage. Once this step is performed, the payment and recovery process kicks in. This phase prevents unnecessary delay and inactive coverage, which may cause claim denials.

Error Identification and Remediation:

We must use artificial intelligence and other technology to identify the errors in the claim document and rectify them then and there. It is important to eliminate the errors before the final submission by using automated suggestions.

Discrepancies Identification:

We must use technology and tools, that can highlight the discrepancies in the claims so that they can be rejected or sent back for more information.

This will enable rapid problem solving and enhanced efficiency for this process. The solution must be capable enough to predict the claims based on past inputs. Such a mechanism helps software to prioritize the claims and process them immediately.

Digital Claim Submission:

We must create or integrate automation solutions, that can create, verify, and submit the claims digitally. This eliminates the need of unnecessary paperwork and other time-consuming activities. Digital documentation increases the user accessibility a few notched higher.

Real-Time Updates:

An automated claims processing solution must provide real-time access to current and past claims while decreasing the amount of manual processing. We must utilize interactive transactional mechanisms to ensure effective claims adjudication.

Accounts Receivables Monitoring:

We must implement quality execution to provide access to financial and other pending matters. It helps us to reduce costs related to medical and policy claims, which ultimately improves tracking of recoverable and prevent potential frauds.

Read More:-  How to Develop Mobile App for Technician Booking Platform?

Cost to build an Automated Medical Claims System

The cost of developing an automated Medical claims process system is very much dependent on the hourly rates of the team you are going to hire. This is the basic reason why most of the western countries outsource their projects to Asian countries like India. Here we have a comparison of average hourly rates in different regions.

Region Monthly Price (Per Resource) Average Price (Per Hour)
North America $6k-$12k $40-$80
South America $4k-$7k $30-$50
United Kingdom $8k-13k $60-$90
Eastern Europe $4k-$8k $30-$60
Australia $4k-$7k $30-$50
Middle East $4k$7k $30-$50

With the above figures, it is quite evident that cost of Automated Claims processing system in USA and UK will be on higher side, whereas the cost will remain on lower side in India and South American countries.

It is highly recommended to outsource the system development work to these countries, as they can offer quality software products at a much lower cost.

However, we must state that this is just an estimated cost, the actual cost could be higher or lower, depending on the features and technology used to develop the situation.

This estimate does not cover other costs and efforts, such as time spent on communication, project preparation, project release activities, project promotion, and several other activities, which can certainly influence the project cost.

Technology Stack

Technology Stack for Medical Claim Software

The selection of a Technology stack for Automated Medical Claims system totally depends on the project complexity and application requirements. We can utilize the following Technology stack to develop the required solution :

  • Backend Development  – Django, Laravel 
  • Frontend Development – React JS, Vue JS
  • Mobile development – React Native, Flutter
  • Database – MongoDB, MySQL, AWS Redis, Microsoft SQL
  • Logging Controls and Checks – AWS CloudTrail, AWS Config, AWS Resource Inventory 
  • Monitoring and Log Maintenance –  AWS CloudWatch
  • Storage & Backup Technology – Amazon S3
  • Notification Service – Amazon SNS
healthcare app development


Healthcare Industry is going through a phase where manual processes are transforming into automated processes to keep the cost in check, mitigate the inefficiencies, reduce the complexities and delays.

Amid such a time, an automated medical claims processing system comes as a big boon for this sector, as it can streamline the entire lifecycle of claims processing.

Whether it is getting rid of conventional data entry, or complex validation using technology or preventing human errors – the benefits are endless.

The days are gone, where claim professionals used to perform mundane and tedious tasks while being buried under the truckloads of paperwork. At the same time, the endless emails and phone calls repeated back and forth communication processes are replaced with real-time claim notifications and instant responses to user queries.

Automated claim processing systems are poised to enhance satisfaction among all stakeholders in the healthcare industry while reducing the financial burden and other operational costs.

If you are planning to develop such a system, you can carefully choose the features and modules you want to integrate into your system.

If you want to get our help to develop such an automated system for your organizations, then please get in touch with us. Our team of seasoned developers will develop a top-notch solution, with all the beneficial features at an affordable cost.

Satyam Chaturvedi

Satyam Chaturvedi is a Digital Marketing Manager at Arka Softwares, a leading app development company dealing in modern and futuristic solutions. He loves to spend his time studying the latest market insights.

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