Is it Cheaper to Adjudicate and Deny or Just Pay Claims?

If adjudication makes sense, then everybody at the big payers must deny more claims than their salary.

Introduction

This week’s article is going to be short and sweet. Today we are going to discuss if it is actually cheaper for the insurance company to just pay all claims or adjudicate and deny. Paying all claims is basically our business model at Sentia, because we automate the entire process, so it has to be streamlined and automatic. We are going to dive into what exactly the adjudication process is and how it works. Then we are going to compare costs and figure out if this even needs to be done at all.

What is Adjudication?

Simply put, claims adjudication is a process in which an insurance company decides whether to approve or reject a claim. One of the most complex parts of the medical claim is how and on what grounds they are adjudicated and the different stages to get there. Read more about this here.

What does Adjudication Cost?

The cost of adjudication is difficult to calculate, but we can state that any employee in the insurance company is either selling something or denying claims to pay their salary, then the cost is high. We know that a company like UnitedHealthcare employs 140,000 people and the average salary there is $112,705. The salaries alone are $15.8 billion, plus the benefits and all the big buildings and infrastructure. Let’s call that a nice round $22 billion because that is what UHC claimed to make last year.

The point to note here is that most or all of UHC’s stated earnings come from denying claims.

What can we do about Waste?

Clearly, without denials UHC ceases to exist. While this is fine with me and probably most of us, the people they insure may have a different opinion. At Sentia we solved the adjudication problem by automating it. We provide the practice or hospital the electronic medical record (EMR) and then detect and pay for procedures in real time. We don’t even have a claims process. The doctor and patient can see what the insurance will pay, usually 150% of Medicare, either in the EMR or the patient portal. This eliminates everything the big insurers do that isn’t ‘pay for your healthcare.’ That means no 140,000 employees (each), no big buildings, no medical coding, no adjudication, no denials, no delays and best of all, little cost. In fact since we are the insurance company, we charge $10 per month, plus the actual cost of the risk, for the entire service. That pays for the EMR, all the servers and entire system all for $10 per month. This alone should save at least 50% from the cost of healthcare in the US putting us on par with the least expensive nationalized insurance in the world, while maintaining the best care. Nothing will change with your doctor or care, in fact, they will probably make more. We are simply automating and streamlining the financial process that gets everyone paid.

Conclusion

We have shown that there is money to be made in NOT adjudicating claims. In previous articles, we have proven a way to save more than 75% from the cost of health insurance and have addressed both of the big problems with health insurance in the US: cost and education. We have all of this written and deployed in a prototype application. The only thing we really need to get this all started is to clean up that application and turn it into an enterprise system with logging, administration and redundancies in hardware. We will need funding, probably about $10 million over the first year. For comparison, United Healthcare had revenue of $371.6 billion and net earnings of $22.3 billion in 2024. With about 50% upfront savings we should service and retain 90% or more of the 330 million insured people in the US. That gives us a revenue of $36 billion.

This figure shows that this is a viable business proposition.

We have shown a way to make patients healthier by educating them on the consequences of their behavior, and a way to capitalize on that to the sum of $1.2 trillion or about 25%. If we add that to the process automation savings of our solution, we are in the ballpark of more than 75% savings in total. We already have the best doctors and the best equipment; we just need to implement the above detailed framework to give them all the tools necessary for success.

We have this system in prototype now, fully functioning.

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