Table of Contents
Part I: The Adjudication Mandate: A Cross-Sector Analysis of Truth and Consequence
The act of resolving a claim, whether it concerns a medical procedure, a damaged property, or eligibility for social benefits, lies at the heart of vast economic and social systems.
This process, known as adjudication, is far more than a simple administrative function of payment or denial.
It is a formal, evidence-based mechanism for establishing the validity of a narrative, a system of verification that underpins the trust between individuals and the large institutions that govern critical aspects of their lives.
A claim, in essence, is a story: “I received this medical service,” “My property was damaged in this way,” or “I lost my job under these circumstances.” Adjudication is the formal process of testing that story against a pre-defined set of rules, be it an insurance policy or a body of public law.
The efficiency, accuracy, and perceived fairness of this process have profound consequences, directly impacting the financial stability of businesses, the well-being of individuals, and the public’s confidence in foundational institutions like insurance and government.
When this system functions poorly, the friction points—the denials, the appeals, the communication breakdowns—are not merely administrative hurdles; they represent a failure in this truth-verification process, which in turn erodes the claimant’s trust and imposes significant societal costs beyond the financial value of the claims themselves.
1.1 Defining Adjudication: From Legal Principle to Administrative Practice
At its core, adjudication is a legal concept referring to the formal process of resolving a dispute or deciding a case.1
In a judicial context, courts adjudicate by identifying the rights of the involved parties, analyzing the rights and wrongs of their past actions to render a final, binding judgment.1
This legal foundation is paramount because it establishes the expectation of a structured, evidence-based resolution, not an arbitrary decision.
The effects of a judicial decision are governed by doctrines like
res judicata, which bars the re-litigation of issues already decided, underscoring the finality and authority inherent in the act of adjudication.1
However, the application of adjudication extends far beyond the courtroom.
The term broadly encompasses any formal process of judgment or ruling that renders a final decision, such as the validation of an insurance claim or the determination of eligibility for government benefits.2
While the forum shifts—from a court of law to the back office of an insurance company or a government agency—the fundamental purpose remains constant: to resolve a submitted claim by applying a specific set of rules to a specific set of facts.
This administrative adjudication is the engine of modern insurance and social welfare systems, processing millions of claims daily to determine the distribution of rights and obligations.2
A critical principle inherited from the legal sphere is the concept that a case must be “ripe for adjudication”.1
This means the facts of the matter must have matured into an “actual substantial controversy” that warrants formal intervention.1
This principle prevents courts from ruling on hypothetical questions, a constraint rooted in the U.S. Constitution.1
This legal standard has direct and practical parallels in administrative claims processing.
A healthcare claim is not adjudicated until a medical service has actually been rendered and documented.
An auto insurance claim is not adjudicated until an accident has occurred and been reported.
An unemployment claim is not adjudicated until an individual has lost their job.
This “trigger event” makes the claim ripe for review and initiates the complex workflow of verification and decision-making that defines the adjudication process.
1.2 The Three Arenas of Adjudication: A Comparative Overview
While the core principle of adjudication is universal, its practical application varies dramatically across different sectors.
The purpose, core tensions, and even the specialized language of adjudication are shaped by the unique context in which claims arise.
Understanding these distinctions is essential to grasping the multifaceted nature of the process.
The three primary arenas for adjudication—healthcare, general insurance, and government benefits—each present a distinct set of challenges and objectives.
Healthcare Claims: The Financial-Clinical Nexus
In the healthcare sector, claims adjudication is the process used by a payer, such as a health insurance company, to evaluate a medical claim submitted by a healthcare provider.4
The ultimate purpose is to determine the payer’s financial obligation—how much, if anything, will be reimbursed to the provider for the services administered to the insured patient.4
This process exists within a complex and often fraught ecosystem, balancing the financial health of the provider’s practice, the specific terms of the patient’s insurance coverage, and the insurer’s imperative to manage costs and prevent fraud or unnecessary expenditures.6
The core tension in healthcare adjudication lies at the intersection of clinical judgment and financial liability.
The decision-making process is not merely transactional; it involves a detailed review of the claim for accuracy in patient details, as well as the validity of the medical codes used, such as the Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes.4
A critical step is the evaluation of “medical necessity,” where the payer assesses whether the services provided were reasonable and appropriate based on established clinical guidelines and coverage policies.7
This can lead to friction, as a provider’s clinical decision may be questioned by the payer’s financial review.
The outcome of this adjudication process directly impacts the revenue cycle and financial stability of healthcare organizations, making it a critical component of the industry’s operational backbone.7
The specialized vocabulary of this arena—including terms like eligibility verification, prior authorization, remittance advice, and Explanation of Benefits (EOB)—reflects its unique blend of administrative, financial, and clinical considerations.4
General Insurance Claims (Property, Casualty, Auto): The Investigative Mandate
In the realm of general insurance—encompassing property, casualty, and auto claims—the adjudication process is fundamentally an investigative mandate.9
Its purpose is to thoroughly review, assess, and determine the validity and monetary value of a policyholder’s claim for a covered loss.9
This process begins when a policyholder files a claim after an incident, such as a car accident or property damage, and is assigned to a claims adjuster.9
The core tension in this arena is the balance between fulfilling the insurer’s contractual promise to compensate the policyholder for legitimate losses and the insurer’s fiduciary duty to protect its assets from fraudulent or inflated claims.9
Unlike healthcare claims, which are often based on standardized codes, general insurance claims require a bespoke investigation.
The claims adjuster must act as an investigator, gathering evidence such as incident reports, photos, and witness statements; inspecting damaged property; and, in liability cases, determining who was at fault.9
This investigative work is crucial for assessing the extent of coverage under the policy terms and arriving at a fair and reasonable settlement amount.9
The key language of this sector reflects its investigative nature, focusing on terms like claims adjuster, investigation, liability, incident reports, valuation, and settlement negotiation.9
Government Benefit Claims (Unemployment, Disability): The Eligibility Determination
When it comes to government benefits, such as unemployment insurance or disability compensation, adjudication is a legally required review or investigation to determine if a claimant meets the strict statutory eligibility requirements.13
This process is initiated when an individual files a claim for benefits, for example, after losing a job.15
The core tension in this domain arises from the fact that the process is governed by public law and administrative regulations, not a private insurance contract.14
The adjudicator’s role is not to negotiate a settlement but to act as a neutral fact-finder, applying these complex laws and rules to the specific circumstances of an individual’s claim.15
For instance, in an unemployment claim, if the reason for job separation is anything other than a simple layoff (e.g., being fired, quitting), the claim is flagged for adjudication to determine if the claimant is disqualified from receiving benefits.16
The adjudicator must gather information from both the claimant and the former employer to make a fair and impartial decision.13
The primary objective is to ensure that public funds are disbursed correctly and only to those who are legally entitled to them, thereby protecting the integrity of the social safety net program.14
The distinct terminology of this arena includes administrative decisions, statutory eligibility, appeals to an administrative law judge (ALJ), and fact-finding interviews, highlighting its quasi-judicial and regulatory nature.13
Part II: The Anatomy of a Claim: Deconstructing the Modern Adjudication Workflow
The journey of a claim from submission to final resolution is a multi-stage process that, while varying in its specifics across sectors, follows a universally recognizable lifecycle.
This workflow is a complex interplay of automated systems designed for speed and efficiency and human experts tasked with handling nuance and complexity.
The entire system is heavily reliant on the quality and accuracy of the information provided at the very first step.
The high degree of automation in modern adjudication means that systems are optimized to process clean, error-free claims at a massive scale.
This creates a critical vulnerability: minor errors introduced at the front end, such as a simple typo or an incorrect code, can cascade through the system, triggering rejections and denials that necessitate significant back-end costs in the form of manual rework, appeals, and administrative overhead.
The cost to rework a single rejected healthcare claim, for example, averages around $25.6
This dynamic reveals that the most effective strategy for optimizing the entire adjudication lifecycle is not necessarily to refine the appeals process but to invest heavily in ensuring “front-end fidelity”—the perfection of data
before it enters the system.
2.1 Universal Stages of the Claim Lifecycle
Despite contextual differences, the path a claim travels can be broken down into six universal stages, from its initial entry into the system to its final disposition and potential appeal.
Stage 1: Submission & Intake
The adjudication process is set in motion when a claim is formally submitted by a claimant, policyholder, or a representative such as a healthcare provider.9
This initial submission is a critical data-gathering event, where essential information like patient demographics, medical diagnosis codes, incident reports, and policy details are captured.18
The integrity of this initial data is paramount.
Even minor errors, such as a misspelled name, an outdated insurance ID number, or an invalid procedure code, can lead to an immediate rejection of the claim before it is even fully processed.18
This stage represents the first and most crucial filter in the entire workflow.
Stage 2: Initial Review & Automated Processing (Auto-Adjudication)
Upon receipt, the vast majority of claims enter an initial review phase that is heavily automated.
This is where the concept of “auto-adjudication” comes into play.
In the healthcare sector, this is often referred to as “mass adjudication,” where sophisticated software systems perform a rapid, rules-based check of the claim.19
These systems verify the patient’s eligibility on the date of service, confirm that the service is a covered benefit under the patient’s plan, and scan for basic formatting errors or missing information.7
A remarkable 80% to 85% of all medical claims are processed and decided entirely by these automated systems without any human intervention.5
Interestingly, much of this critical infrastructure runs on very old software languages, such as COBOL, which was created in 1959.21
In general insurance, the intake process involves registering the claim in the system and assigning it to a human adjuster, though automation is used for initial data validation.9
In government benefits, the initial application is screened to determine if it raises any statutory red flags; if not, it may be approved automatically, but if issues are detected, it is flagged for a more detailed review.13
Stage 3: The Human Intervention Trigger (Manual Review)
Claims that cannot be resolved through automated processes are flagged and routed for manual review.18
This trigger can be activated for several reasons: the claim may exceed a certain dollar threshold, involve a particularly complex or unusual service, contain data that is inconsistent or incomplete, or simply match a pre-defined rule that requires human oversight.5
This manual review is performed by a range of trained professionals, including claims adjusters in the insurance industry, medical claims examiners (who are often nurses or doctors) in healthcare, and government adjudicators for public benefits.5
This human intervention comes at a significant cost.
In healthcare, for instance, the manual review of a single claim costs approximately $20.
To manage these expenses, insurers often set high monetary thresholds, such as $10,000 or $15,000, below which claims are preferentially auto-adjudicated whenever possible.21
Stage 4: Investigation & Evidence Gathering
For claims that require manual review, a deeper investigation and evidence-gathering phase often ensues.
This stage is most pronounced and explicit in the general insurance and government benefits sectors.
In a property or casualty claim, the assigned adjuster’s primary role is to investigate the circumstances of the loss.
This can involve conducting interviews with the policyholder, witnesses, and other involved parties; physically inspecting the damaged property; and collecting official records like police reports or medical files.9
The goal is to establish the facts, determine liability, and accurately value the loss.9
Similarly, in a government benefits case, the adjudicator must gather information from both the claimant and their former employer to resolve specific eligibility questions, such as the precise reason for a job separation.13
In healthcare, this stage is more focused on verifying the “medical necessity” of a procedure.
It may involve requesting additional clinical documentation from the provider or conducting a peer-to-peer review, which is a formal conversation between the patient’s treating physician and a medical reviewer from the insurance company.5
Stage 5: Determination & Communication
After the review and investigation are complete, the adjudicator makes a final decision on the claim.
This decision typically results in one of three possible outcomes: the claim is paid in full as submitted; it is partially paid or reduced, with the payer agreeing to cover only a portion of the amount claimed; or it is denied entirely.4
A reduction in payment in a healthcare claim, for example, might occur if the payer determines that the amount billed was too high for the patient’s diagnosis and approves a lower-level, less expensive procedure code instead.5
Once a determination is made, it must be formally communicated to the relevant parties.
In healthcare, this is done through an Explanation of Benefits (EOB) sent to the patient and a Remittance Advice (RA) or Explanation of Payment (EOP) sent to the provider, which details what was paid, adjusted, or denied and why.7
In general insurance, the outcome is communicated as a settlement offer or a formal denial letter.9
For government benefits, the claimant receives an official administrative decision letter explaining the outcome and the legal basis for it.13
Stage 6: The Appeals Process
In cases where a claim is denied or the payment is reduced, the claimant or provider has the right to appeal the decision.4
This right to appeal is a fundamental part of the adjudication process across all sectors and serves as a crucial check on the initial determination.
An appeal initiates a new, often multi-layered review of the claim.
In healthcare, an initial appeal might involve the provider contacting the payer to argue that the service did meet the payer’s rules, potentially leading to the aforementioned peer-to-peer review.5
For government benefits, there is often a formal, hierarchical appeals process that can escalate from a redetermination within the same agency to a hearing before an administrative law judge, and potentially even further to a judicial review.8
This process can be complex, time-consuming, and resource-intensive for all parties involved, extending the final resolution of the claim significantly.24
Table 1: Comparative Adjudication Process Across Key Sectors
To crystallize the distinct yet parallel workflows, the following table provides a side-by-side comparison of the adjudication process across the healthcare, general insurance, and government benefits sectors.
| Stage of Process | Healthcare | General Insurance | Government Benefits |
| Claim Trigger | Service Rendered | Covered Loss/Incident | Eligibility Event (e.g., Job Loss) |
| Key Actors | Provider/Biller | Claimant/Policyholder | Claimant |
| Initial Processing | Automated Code/Eligibility Check | Claim Registration/Adjuster Assignment | Application Review for Issues |
| Primary Reviewer | Automated System/Claims Examiner | Claims Adjuster | Adjudicator |
| Core Criteria | Medical Necessity/Policy Coverage | Liability/Policy Terms/Damage Valuation | Statutory Eligibility Rules |
| Evidence | CPT/ICD Codes/Clinical Notes | Police Reports/Photos/Witness Statements | Employer/Claimant Statements |
| Decision Output | EOB/Remittance Advice | Settlement Offer/Denial Letter | Administrative Decision |
| Appeals Path | Payer Reconsideration/Peer-to-Peer | Negotiation/Litigation | Administrative Law Judge Hearing |
Part III: The Adjudicator: Investigator, Negotiator, and Arbiter
Behind the automated systems and procedural workflows lies the indispensable human element: the adjudicator.
This role, whether titled claims adjuster, examiner, or adjudicator, is far more complex than that of a mere paper-pusher.
These professionals are the investigators, negotiators, and ultimate arbiters of individual claims, tasked with making critical decisions that have significant financial and personal consequences.
The role is defined by a fundamental and challenging conflict.
On one hand, adjudicators are expected to be empathetic, compassionate, and provide excellent customer service to claimants who are often in distress following an accident, illness, or job loss.26
On the other hand, their primary fiduciary duty is to their employer—be it an insurance company or a government agency—to evaluate claims accurately and cost-effectively, which often translates to limiting financial payouts.11
This inherent contradiction is a primary driver of both the immense stress experienced by adjudicators and the widespread dissatisfaction felt by claimants.
Every difficult claim forces the adjudicator to navigate the cognitive dissonance between their human impulse to help and their professional obligation to enforce the rules and protect the bottom line.
This dilemma suggests that attempts to improve customer satisfaction in claims handling cannot be solved by soft-skills training alone; it requires a systemic re-evaluation of how performance in this critical role is measured and incentivized.
3.1 The Modern Adjudicator’s Skillset
Success in the role of an adjudicator requires a multifaceted skillset that blends technical expertise with sophisticated interpersonal abilities.
It is a profession that demands both analytical rigor and emotional intelligence.
First and foremost, the job requires sharp analytical scrutiny.
The core function is to analyze vast amounts of information and review detailed reports with a high degree of precision, ensuring accuracy and identifying any discrepancies or red flags.10
This necessitates deep technical knowledge of the governing rules, whether they be complex insurance policies, constantly evolving government regulations, or, in the case of healthcare, intricate medical coding systems like ICD-10 and CPT.27
Second, the role demands significant investigative prowess, particularly in the property/casualty and government benefits sectors.
An adjudicator must be adept at gathering facts from diverse sources, conducting interviews with claimants, witnesses, and other relevant parties, inspecting physical sites of incidents, and compiling a comprehensive evidentiary record.9
This is a fact-finding mission designed to build a complete and accurate picture of the claim’s circumstances.
Third, strong skills in negotiation and communication are essential.
Adjudicators are responsible for communicating their findings and decisions, often in the context of negotiating a final settlement with a policyholder or their legal representative.9
They serve as the primary point of contact throughout the claims process, and must be able to clearly explain the rationale behind their decisions, manage claimant expectations, and navigate potentially contentious conversations with professionalism and clarity.12
Finally, a crucial and often underappreciated skill is empathy and emotional intelligence.
Adjudicators frequently interact with individuals who have just experienced a traumatic event—a serious injury, the loss of a home, or the loss of a livelihood.
They must be able to handle clients who are emotional, frustrated, and sometimes aggressive, all while remaining calm, professional, and empathetic.27
Building a rapport and establishing a foundation of trust, especially in the aftermath of a catastrophic event, is paramount to a successful and fair claims process.26
3.2 A Day in the Life: The Pressure Cooker of Claims Management
The daily reality for a claims adjudicator is one of immense pressure, competing demands, and a relentless pace.
It is a role where time management is not just a desirable skill, but a critical tool for survival.
The day typically begins not with a clean slate, but with an unending queue of new and ongoing claims that demand attention.12
Claims adjusters often manage overwhelming caseloads, with some handling as many as 150 or more cases at a single time.31
This volume is coupled with constant institutional pressure to close claims as rapidly as possible, creating a high-stress work environment.32
A typical day is a masterclass in juggling competing demands.
An adjudicator’s time is fragmented across a wide array of tasks: reviewing new claim documents, conducting on-site investigations or making phone calls to gather more information, meticulously evaluating policy coverage against the facts of the case, engaging in settlement negotiations, and, pervading all other activities, maintaining extensive and detailed documentation and reports for every action taken.11
Given this context, time management becomes a survival skill.
Adjudicators operate under strict deadlines for each stage of the claims process and must constantly prioritize tasks across their numerous cases to avoid falling behind.26
The pressure is so intense that experienced field adjusters often follow a self-imposed rule to “only inspect what you can also write up in the same day,” a strategy designed to prevent the documentation backlog from becoming insurmountable.26
This relentless need to balance speed, accuracy, and volume defines the challenging reality of the role.
3.3 The Psychological Toll: Burnout, Stress, and Adversarial Dynamics
The intense pressures of the adjudication role take a significant psychological toll on the professionals who perform it, leading to high rates of stress, burnout, and a frequently adversarial relationship with the very people they are meant to serve.
The combination of heavy caseloads, tight deadlines, long working hours, and the emotional labor of dealing with distressed and difficult clients makes claims adjusting a high-stress environment.27
The job is often described as mentally and emotionally draining, and without effective coping mechanisms and institutional support, it can easily lead to professional burnout.27
A major contributor to this stress is the inherently adversarial position in which adjudicators are often placed.
While they may see their role as determining a fair outcome based on the facts and the rules, claimants often perceive them as an adversary—an obstacle standing between them and the compensation they believe they are owed.11
The adjudicator’s goal is to arrive at an accurate settlement based on the terms of the policy, which frequently involves saving the insurance company money by denying or reducing payments.
This puts them in direct conflict with the claimant, whose goal is to maximize their financial recovery, creating a dynamic that is inherently tense and mistrustful.11
This adversarial dynamic is exacerbated by the use, or perceived use, of “bad faith” tactics and the erosion of trust.
Under pressure to close cases quickly and cheaply, some adjusters may resort to what claimants describe as “dirty tricks”.31
These can include poor communication and unresponsiveness, intentionally delaying the claims process, making unreasonably low settlement offers, and pressuring claimants to accept a settlement quickly before they have had time to fully assess their damages or consult with an attorney.28
While these practices may not be universal, their existence creates a widespread perception of systemic unfairness, deeply damaging the relationship between insurers and the public and reinforcing the view of the adjudicator as an opponent rather than a neutral arbiter.
Part IV: Systemic Friction: Diagnosing the Root Causes of Inefficiency and Error
The challenges encountered in the adjudication process—delays, denials, disputes, and burnout—are not merely a collection of isolated incidents or the fault of individual actors.
They are the predictable and often inevitable outcomes of a complex system grappling with deep-seated, systemic frictions.
These challenges are not independent; they are interconnected, forming a self-perpetuating cycle of complexity that drives inefficiency.
The cycle begins with the sheer intricacy of the rules: constantly evolving regulations and vast, complex coding systems.29
This complexity naturally increases the likelihood of human error during the initial creation of a claim.35
These error-prone claims are then fed into rigid, often legacy-based automated systems that are designed to flag or deny any deviation from the norm.21
This, in turn, generates a high volume of denials and rejections 29, which must then be handled manually through appeals and rework.
This massive manual workload falls upon a workforce of adjudicators who are already facing overwhelming caseloads and a looming talent shortage.25
An overloaded and burnt-out workforce is, unsurprisingly, more prone to making further errors and communicating poorly, which only serves to perpetuate the cycle of denials, disputes, and dissatisfaction.
This analysis reveals that point solutions, such as a new tool for managing appeals, are likely to have only a limited impact.
Breaking this vicious cycle requires a holistic approach that simultaneously simplifies the inputs, improves the automated processing, and provides better support for the human decision-makers at the heart of the system.
4.1 Data Integrity and the Garbage-In, Garbage-Out Problem
At the very foundation of the system’s friction is the challenge of data integrity.
The single greatest obstacle to efficient claims management is ensuring the accuracy and completeness of the data submitted at the outset.29
The principle of “garbage-in, garbage-out” applies with punishing force in adjudication.
The high cost of inaccuracy is a constant drain on the system.
Simple clerical errors, such as incorrect patient demographic information, mistyped policy numbers, or inaccurate medical codes, are a leading cause of claim denials and rejections.35
The problem of maintaining data quality has been significantly exacerbated by increases in complexity, such as the healthcare industry’s transition from the ICD-9 coding system, with its 14,000 diagnosis codes, to the ICD-10 system, which contains over 69,000 codes.29
Each additional code represents another potential point of failure.
This problem is compounded by the prevalence of disparate systems within many organizations, particularly healthcare providers.
It is common for providers to use multiple, disconnected IT systems from different vendors for different functions, such as patient registration at the front end and medical billing at the back end.36
When these systems do not communicate seamlessly, it forces staff to rely on manual data entry to move information from one system to another.
This manual process is not only inefficient but also a major source of errors, creating data silos that hinder the smooth and accurate processing of claims.35
4.2 The Shifting Sands of Regulatory Compliance
Adjudication does not occur in a vacuum; it operates within a dense and constantly shifting regulatory landscape.
Navigating this environment is a major source of systemic friction.
The process is governed by a complex web of rules that includes federal laws like the Health Insurance Portability and Accountability Act (HIPAA), a patchwork of state-level insurance regulations, and the ever-changing policies and procedures of individual payers.29
Adhering to all of these overlapping requirements is a formidable challenge.
A particularly acute pain point for healthcare providers is what can be called the payer rule problem.
Providers frequently complain that insurance payers’ internal adjudication rules and policies can change suddenly and without prior notification.36
This means that a claim that was coded and submitted correctly according to the rules in place last month may be denied this month because of an unannounced policy change.
This lack of transparency and predictability creates significant frustration and leads to a high volume of unexpected denials.
The overall burden of compliance is immense.
Staying current with the latest coding standards, legal requirements, and payer policies requires a continuous and significant investment in staff training, education, and technology.25
This places a heavy administrative and financial load on all parties in the ecosystem and diverts resources that could otherwise be used for patient care or customer service.
4.3 The Denial and Appeals Avalanche
The direct consequence of data integrity issues and regulatory complexity is a high rate of claim denials, which in turn creates a massive and resource-intensive appeals workload.
High denial rates represent one of the most significant barriers to a healthy revenue cycle for healthcare providers and a major source of frustration for all types of claimants.29
Recent analyses have found that some major insurers deny nearly 19% of all in-network claims submitted.29
Each denial disrupts the provider’s cash flow, increases operational expenses due to the need for rework, and damages the relationship between the provider, the patient, and the payer.6
The common reasons for denial are often administrative rather than clinical or legal.
The most frequent culprits include a failure to obtain prior authorization for a service, services being deemed not “medically necessary” by the payer, the claim exceeding the patient’s benefit limits, and a host of simple administrative or coding errors.29
This high volume of denials inevitably leads to the resource drain of appeals.
The process of managing denied claims—identifying the reason for the denial, gathering the necessary information to correct it, and navigating the payer’s formal appeals process—is exceptionally time-consuming and labor-intensive.35
The complexity of managing a large portfolio of appeals is a major operational challenge for administrators, leading to significant delays in final payment and resolution.25
4.4 The Human Factor: Staffing, Training, and Overload
The final layer of systemic friction is the human factor.
The systems and processes of adjudication are dependent on a workforce that is facing significant challenges related to workload, staffing, and training.
Many claims organizations are plagued by overwhelming backlogs.
During peak periods or following catastrophic events, the volume of incoming claims can quickly outstrip the capacity of the staff, leading to processing delays, increased frustration for both staff and claimants, and, in some cases, costly financial penalties for failing to meet statutory deadlines.25
These backlogs are exacerbated by chronic staffing shortages and training gaps.
The insurance industry is facing a significant talent gap, with a large percentage of experienced claims professionals expected to retire in the coming years.33
At the same time, developing and delivering the comprehensive training required to bring new hires up to speed is both time-consuming and expensive.25
This combination of a shrinking pool of experienced staff and the presence of new, less-trained employees is a direct contributor to the rate of claim errors and inefficiencies in the system.36
Part V: A New Lens for Judgment: Advanced Frameworks for Complex Claims
To move beyond the current cycle of inefficiency and error, particularly in the handling of complex claims that defy simple automated processing, a new cognitive approach is required.
The quality of adjudication in these gray-area cases can be dramatically improved by adopting and adapting the mental models used in other high-stakes, evidence-based professions.
This involves shifting the focus from merely following a procedural checklist to embracing a more sophisticated, analytical mindset.
Two professions in particular—forensic investigation and medical diagnosis—offer powerful frameworks for reimagining the cognitive work of the adjudicator.
These two models are not interchangeable; they are complementary tools designed for two distinct types of claim complexity.
The forensic model is best suited for event-driven, fact-based claims where the primary goal is to reconstruct a past event and determine causality.
This applies directly to property damage claims, accident investigations, and cases of suspected fraud, where the central question is, “What happened, and who is responsible?” In contrast, the diagnostic model is ideal for condition-based, interpretive claims, where the goal is to assess a current state based on ambiguous, incomplete, or evolving evidence.
This framework is perfectly suited for determinations of medical necessity, evaluations of disability claims, and other cases where the central question is, “What is the claimant’s condition, and does it meet the criteria for coverage?” Adopting this dual-framework approach suggests a fundamental shift in professional development for the industry.
Rather than generic “claims handling” training, advanced training could be specialized.
Adjusters handling property and casualty claims would be trained in the principles of forensic investigation, while medical reviewers and disability adjudicators would be trained in the principles of clinical reasoning and cognitive bias mitigation.
This would elevate the role of the adjudicator from a processor to a true decision scientist.
5.1 The Adjudicator as Forensic Investigator: A Paradigm of Objectivity
A forensic investigation is, by definition, a legally based and analytical process designed to gather evidence impartially in order to determine facts and assign responsibility.37
This mandate aligns perfectly with the requirements for adjudicating complex insurance claims involving accidents, property loss, or potential fraud.
By adopting the principles of forensic science, an adjudicator can bring a new level of rigor, objectivity, and defensibility to their decisions.
Applying these principles to claims adjudication would involve several key practices:
- Secure the “Scene” and Preserve Evidence: Just as a crime scene investigator’s first priority is to secure the scene to prevent contamination of evidence 39, an adjudicator’s first step in a complex claim should be to ensure that all relevant evidence—documents, photographs, expert reports, witness statements—is collected and preserved in its original state. This establishes a clean and reliable evidentiary foundation for the entire investigation.
- Establish an Unbiased Hypothesis: A core tenet of forensic science is the duty to gather all relevant facts before forming a theory about what happened.37 This is a powerful antidote to confirmation bias, the tendency to seek out information that supports a pre-existing belief.39 An adjudicator trained in this method would consciously resist the pressure to jump to a conclusion (e.g., that the claim is fraudulent or that it should be denied) and would instead focus on objective fact-gathering.
- Hypothesis Testing: Each potential explanation for the claim (e.g., “the damage was caused by the storm,” “the damage was pre-existing,” “the procedure was not medically necessary”) should be treated as a formal hypothesis. This hypothesis must then be rigorously tested against all the known facts and evidence.37 Any hypothesis that is not supported by the evidence must be systematically discarded. This structured process of elimination ensures that the final conclusion is the one that best fits the totality of the evidence.
- Root Cause Analysis: The ultimate goal of a forensic investigation is not just to document the outcome but to identify the root cause of the event.37 For an adjudicator, this means moving beyond simply validating the amount of the claim to understanding and documenting the precise cause of the loss. This deeper level of analysis leads to a more robust, logical, and defensible final decision.
- Objective Communication: Forensic experts are often called upon to act as translators, conveying highly technical findings in plain, understandable language to clients or a jury.37 Similarly, an adjudicator adopting this model would focus on clearly communicating the “why” behind their decision, grounding their explanation in the specific evidence and analysis performed, rather than in opaque policy language.
5.2 The Adjudicator as Medical Diagnostician: A Model for Navigating Ambiguity
Clinical decision-making in medicine provides another powerful model, one that is particularly well-suited for adjudicating claims characterized by uncertainty, ambiguity, and incomplete or conflicting information.41
Medical diagnosis is the art of identifying a disease from a complex pattern of signs, symptoms, and test results.42
It is a process of navigating uncertainty by systematically gathering data, forming a set of possible hypotheses (a differential diagnosis), and then iteratively testing and refining those hypotheses as new information becomes available.41
This methodical approach to ambiguity is an ideal framework for adjudicating complex medical necessity or disability claims.
Applying diagnostic principles to claims adjudication would involve the following practices:
- Formulating a “Differential Diagnosis”: When faced with a complex and ambiguous claim, an adjudicator should avoid fixating on a single binary outcome (approve/deny). Instead, they should generate a “differential diagnosis”—a list of all the plausible explanations or potential outcomes for the claim.41 This practice opens the mind to multiple possibilities and prevents premature closure on a decision.
- Iterative Data Gathering: A good physician understands that diagnosis is a process, not a single event.41 It often involves several cycles of examining the patient, ordering tests, reviewing results, consulting with colleagues, and observing the patient’s progress over time.41 An adjudicator should adopt a similar mindset, viewing their work not as a linear path to a quick decision, but as an iterative process of gathering information, reassessing the situation, and seeking additional data until the clinical or factual picture becomes sufficiently clear.43
- Recognizing and Mitigating Cognitive Biases: The field of medicine has extensively studied how cognitive biases can lead to diagnostic errors.41 Clinicians, particularly when under pressure, can fall prey to biases when they rely too heavily on intuitive, fast, “System 1” thinking and fail to engage their more deliberate, analytical “System 2” thought processes.41 Adjudicators, who work under similar time and caseload pressures, are equally vulnerable. By consciously adopting “cognitive forcing strategies”—such as slowing down, explicitly questioning initial assumptions, and considering alternatives—adjudicators can leverage their System 2 thinking to catch and correct potential errors before they become final decisions.41
- Reassessing the “Treatment Plan”: A hallmark of good clinical practice is the willingness to reconsider a diagnosis if the patient does not respond to the prescribed treatment.42 In the context of adjudication, this translates to a willingness to re-evaluate an initial decision in the face of new evidence. If, during an appeal, the claimant provides new information that contradicts the basis for the initial denial, a well-functioning adjudication system should be designed to reconsider its initial “diagnosis” with an open mind, rather than defensively doubling down on the original decision.
Part VI: The Future of Adjudication: Pathways to a More Intelligent and Equitable System
The future of claims adjudication lies in a strategic synthesis of technological augmentation, process optimization, and a fundamental reimagining of the human role in the system.
The goal is to move toward a future where adjudication is not a source of friction, frustration, and distrust, but a respected, efficient, and equitable process for resolving claims with clarity, consistency, and finality.
This requires addressing the systemic problems head-on and elevating the cognitive frameworks used by human decision-makers, creating a system that is both smarter and fairer.
6.1 Technological Augmentation: AI, Automation, and Blockchain
Technology is not a panacea, but its intelligent application is critical to overcoming the challenges of data integrity, backlogs, and inefficiency.
The future is not about replacing human adjudicators but about augmenting their capabilities, allowing them to focus on the complex, high-judgment tasks that require their expertise.
The next generation of smarter automation, powered by artificial intelligence (AI) and machine learning, holds the potential to revolutionize claims management.35
Unlike the current rules-based systems, AI algorithms can analyze vast datasets to identify subtle patterns, predict potential issues such as fraud or the likelihood of a claim becoming a high-cost outlier, and automate a wider range of routine administrative tasks.33
This frees up human experts from “grunt work” and allows them to concentrate their efforts on complex problem-solving, investigation, and negotiation, directly addressing the challenges of workload and burnout.33
Furthermore, emerging technologies like blockchain offer a pathway to enhanced trust and transparency.
A blockchain-based claims system could provide a secure, immutable, and transparent ledger for all claims data.8
Every transaction, from the initial submission to the final payment, would be time-stamped and cryptographically secured, creating a single, shared version of the truth for all parties.
This would dramatically reduce the risk of fraud, streamline audits, and mitigate the data integrity problems that plague the current system.8
6.2 Strategic Solutions: BPO and Process Optimization
Alongside technological advancements, strategic operational changes are necessary to improve efficiency and effectiveness.
This includes leveraging external expertise and, most importantly, redesigning processes to prevent errors at their source.
For many insurance carriers and healthcare organizations, Business Process Outsourcing (BPO) offers a powerful strategic solution to a host of challenges, including managing backlogs, ensuring regulatory compliance, handling complex appeals, and providing staff training.25
A specialized BPO partner can bring economies of scale, deep domain expertise, and access to advanced technologies that may be too expensive or complex for an organization to develop in-house.
This allows the organization to achieve scalability and flexibility, particularly during unexpected surges in claim volume.25
Perhaps the most impactful strategic shift is a relentless focus on “front-end fidelity.” As the analysis has shown, the entire adjudication system is disproportionately affected by the quality of the initial data submission.
Therefore, the most effective long-term investments are those that improve data quality at the point of creation.
This means investing in fully integrated IT systems that eliminate the need for manual data re-entry, developing patient and provider portals that use real-time validation to catch errors as they are made, and utilizing sophisticated clearinghouse solutions that can “scrub” claims for common errors before they are ever submitted to the payer.5
This represents a fundamental shift from a reactive model of fixing denials to a proactive model of preventing them.
6.3 Reimagining the Adjudicator: From Processor to Decision Scientist
Ultimately, the quality of adjudication rests on the judgment of the human decision-makers who handle the most complex and contentious claims.
Elevating the capabilities and changing the incentive structures for these professionals is the final, crucial piece of building a better system.
The industry must move beyond basic procedural training and begin investing in advanced training that teaches critical thinking skills.
By formally training adjudicators in the cognitive frameworks of forensic investigation and medical diagnosis, as outlined previously, organizations can equip their teams to better handle complexity, recognize and mitigate their own cognitive biases, and make more robust, consistent, and defensible decisions.
This would transform the role from that of a processor to that of a true decision scientist.
This transformation in skill must be accompanied by a change in incentives.
The systemic conflict between the need for empathy and the pressure for cost-containment must be addressed by evolving the performance metrics used to evaluate adjudicators.
Instead of focusing narrowly on speed and cost-containment (e.g., number of claims closed per day), metrics should be broadened to create a more balanced scorecard that also rewards quality, accuracy, low appeal rates on initial decisions, and claimant satisfaction.
By aligning the adjudicator’s professional goals with the claimant’s desire for a fair and thorough process, organizations can begin to reduce the adversarial dynamics that currently define so many interactions.
6.4 Conclusion: Towards a System of Clarity, Consistency, and Credibility
The act of adjudicating claims is a cornerstone of our insurance and social benefits systems.
The effectiveness of these systems hinges on a delicate and complex balance of technology, process, and human judgment.
The path forward requires a multi-pronged approach: embracing intelligent technologies to augment human capabilities, strategically redesigning processes to ensure data integrity from the start, and, most importantly, elevating the cognitive skills and incentive structures for the human decision-makers at the heart of the process.
By tackling the systemic frictions that create inefficiency and by adopting more sophisticated frameworks for judgment, the industry can aspire to a future where adjudication is no longer a byword for frustration and distrust, but is instead recognized as a credible, consistent, and clear process for resolving claims with the fairness and finality that all stakeholders deserve.
Works cited
- adjudication | Wex | US Law | LII / Legal Information Institute, accessed August 15, 2025, https://www.law.cornell.edu/wex/adjudication
- What Is Adjudication? Definition, How It Works, Types, and Example – Investopedia, accessed August 15, 2025, https://www.investopedia.com/terms/a/adjudication.asp
- Adjudication | Administrative Conference of the United States, accessed August 15, 2025, https://www.acus.gov/page/adjudication
- Claims Adjudication | Definitive Healthcare, accessed August 15, 2025, https://www.definitivehc.com/resources/glossary/claims-adjudication
- What is Claims Adjudication? – Ensora Health, accessed August 15, 2025, https://ensorahealth.com/blog/what-is-claims-adjudication/
- How Claims Adjudication Impacts Healthcare Providers’ Bottom Line – Nextech, accessed August 15, 2025, https://www.nextech.com/blog/adjudication-in-healthcare
- Adjudication & payment process in the revenue cycle | MedEvolve, accessed August 15, 2025, https://medevolve.com/revenue-cycle-101/adjudication-payment-rcm-process/
- How Claims Adjudication Reduces Healthcare Claims Delays? – Mirra Health Care, accessed August 15, 2025, https://mirrahealthcare.com/insights/claims-adjudication-a-guide-to-reducing-healthcare-claims-delays
- What Is The Claims Adjudication Process? – Dick Law Firm, accessed August 15, 2025, https://www.dicklawfirm.com/blog/2024/january/what-is-the-claims-adjudication-process-2/
- A Day in the Life of a Catastrophe Insurance Adjuster August 2025 – 2021 Training, accessed August 15, 2025, https://www.2021training.com/a-day-in-the-life-of-an-insurance-adjuster/
- A Day In The Life Of An Insurance Adjuster – One Claim Solution, accessed August 15, 2025, https://www.oneclaimsolution.com/a-day-in-the-life-of-an-insurance-adjuster/
- Career Day in the Life: Claims Adjuster – Insurance Relief, accessed August 15, 2025, https://www.insurance-relief.com/blog/career-day-in-the-life-claims-adjuster/
- Adjudication | OED Unemployment Insurance – Oregon …, accessed August 15, 2025, https://unemployment.oregon.gov/adjudication
- introduction, accessed August 15, 2025, https://oui.doleta.gov/dmstree/handbooks/301/one.htm
- Adjudication Explained | Oregon Unemployment Insurance, accessed August 15, 2025, https://unemployment.oregon.gov/uploads/docs/Adjudication-Explained.pdf
- Adjudications, accessed August 15, 2025, https://www.kslegislature.gov/li_2020/b2019_20/committees/misc/adjudicationsfaqs5520.pdf
- Compensation – Claims Process – Veterans Benefits Administration, accessed August 15, 2025, https://www.benefits.va.gov/compensation/process.asp
- Understanding Claims Adjudication: How It Works & Why It Matters – MedVision Inc., accessed August 15, 2025, https://www.medvision-solutions.com/blog/understanding-claims-adjudication-how-does-it-work
- Claims Adjudication Process in Five Steps | Office Ally, accessed August 15, 2025, https://cms.officeally.com/blog/claims-adjudication-process-five-steps
- Medical claims adjudication: Understanding how claims are processed | Outsource Accelerator, accessed August 15, 2025, https://www.outsourceaccelerator.com/articles/medical-claims-adjudication/
- Health Insurance Claims Adjudication Explained – AHealthcareZ – Healthcare Finance Education, accessed August 15, 2025, https://www.ahealthcarez.com/health-insurance-claims-adjudication
- Day in the Life of a Claims Adjuster – Career Glider, accessed August 15, 2025, https://www.careerglider.com/blog/day-in-the-life-of-a-claims-adjuster/
- What is Claim Adjudication? – YouTube, accessed August 15, 2025, https://www.youtube.com/watch?v=qy1VGT0WJlc
- [ANSWERED] What is a Claim Adjudication? – YouTube, accessed August 15, 2025, https://www.youtube.com/watch?v=UaUNxC3LMZA
- Common Challenges in Claims – Clarity Performance Solutions, accessed August 15, 2025, https://clarityperformance.solutions/5-common-challenges-in-claims-administration/
- Adjuster 101: day in the life of a field adjuster |… – Crawford & Company, accessed August 15, 2025, https://www.crawco.com/blog/adjuster-101-day-in-the-life-of-a-field-adjuster
- Top Challenges Faced by Insurance Claims Adjusters, accessed August 15, 2025, https://www.fivestarclaimsadjusting.com/centralflorida/blog/2023/top-challenges-faced-by-insurance-claims-adjusters.html
- Complaints About Insurance Claim Adjusters – Adley Law Firm, accessed August 15, 2025, https://adleylawfirm.com/posts/complaints-about-working-as-an-insurance-claim-adjuster/
- How to Navigate Common Challenges in Claims Management – Outsource Strategies International, accessed August 15, 2025, https://www.outsourcestrategies.com/blog/navigate-common-challenges-in-claims-management/
- A Day in the Life of an Insurance Adjuster: Behind the Scenes, accessed August 15, 2025, https://www.adjustmentgroup.com/post/a-day-in-the-life-of-an-insurance-adjuster-behind-the-scenes
- Dirty Tricks Insurance Adjusters Use – Dolman Law Group, accessed August 15, 2025, https://www.dolmanlaw.com/blog/dirty-tricks-insurance-adjusters/
- Insurance Adjusters Face Overwhelming Workload Challenges – Claims Pages, accessed August 15, 2025, https://www.claimspages.com/news/insurance-adjusters-face-overwhelming-workload-challenges-20240722/
- 3 Tips for Reducing Claims Adjuster Stress & Why It Matters… A Lot – Riskonnect, accessed August 15, 2025, https://riskonnect.com/claims-administration/three-tips-preventing-claims-adjuster-burnout/
- Top 6 Claims Processing Pitfalls (and How to Avoid Them) – Pulpstream, accessed August 15, 2025, https://pulpstream.com/resources/blog/claims-processing
- Overcoming Challenges in Claims Management | Apexon, accessed August 15, 2025, https://www.apexon.com/blog/common-challenges-in-claims-management/
- 7 reasons for claims errors and how to avoid them – Healthcare Blog – Experian, accessed August 15, 2025, https://www.experian.com/blogs/healthcare/7-reasons-for-claims-errors-and-how-to-avoid-them/
- 8 steps to a successful forensic investigation – Sedgwick, accessed August 15, 2025, https://www.sedgwick.com/blog/8-steps-to-a-successful-forensic-investigation/
- Lesson 3.1 – Principles of Investigation – NET, accessed August 15, 2025, https://resourcehub01.blob.core.windows.net/training-files/Training%20Materials/043%20NIO/043-010%20NIO%20Lesson%203.1%20-%20Principles%20of%20Investigations.pdf
- What is Forensic Investigation? A Comprehensive Guide to Crime Scene Investigation, accessed August 15, 2025, https://financialcrimeacademy.org/what-is-forensic-investigation/
- Crime Scene Investigation – National Institute of Standards and Technology, accessed August 15, 2025, https://www.nist.gov/system/files/documents/forensics/Crime-Scene-Investigation.pdf
- Physician-Patient | Clinical decision-making | CMPA Good practices, accessed August 15, 2025, https://www.cmpa-acpm.ca/en/education-events/good-practices/physician-patient/clinical-decision-making
- Diagnostic Reasoning and Decision Making | Principles and Practice of Hospital Medicine, 2e | AccessMedicine, accessed August 15, 2025, https://accessmedicine.mhmedical.com/content.aspx?sectionid=133179305&bookid=1872
- A four-step approach to clinical decision making – AAFP, accessed August 15, 2025, https://www.aafp.org/pubs/fpm/blogs/inpractice/entry/decision_making.html
- (PDF) A Model for Clinical Decision-Making in Medicine – ResearchGate, accessed August 15, 2025, https://www.researchgate.net/publication/321510386_A_Model_for_Clinical_Decision-Making_in_Medicine
