How a claim is processed

A claim is the bill your provider sends to your insurance company asking to be paid for the care you received. Understanding the steps helps you spot mistakes — which are common — and know what you actually owe.

Written by Aptiva Health Editorial Team · Reviewed by Eric Lowe, Healthcare Consultant · Editorial & review standards · How we research

A claimA request your provider sends to your insurer to be paid for the care you received. is the bill your providerAnyone licensed to give you medical care — a physician, nurse practitioner, or physician assistant. Clinics use "provider" as a catch-all for whoever is caring for you. sends to your insurance company asking to be paid for the care you received. Understanding the steps helps you spot mistakes — which are common — and know what you actually owe.

The steps, start to finish

1. You get care. The provider records each service with standardized billing codes.
2. The provider submits the claim. Usually electronically, to your insurer. (Some out-of-networkProviders without a contract with your plan. Your costs are usually higher, and some plans doA medical doctor — "MD" or "DO" — with four years of medical school plus a multi-year residency in a chosen field. not cover them at all. providers make you submit it.)
3. The insurer checks eligibility and coverage. Are you currently covered? Is this service covered under your plan? Was any required prior authorizationYour insurer's approval before it will cover certain care, tests, or medicines. Without it, the claim can be denied. (advance approval) obtained?
4. The insurer applies the contract rate. For in-networkProviders and facilities that have a contract with your plan, usually at lower negotiated prices. care, it reduces the charge to the negotiated “allowed amountThe most your plan will pay for a covered service — the rate it negotiated. You may owe a share of it, but usually not more..”
5. The insurer applies your cost-sharing. It subtracts your deductibleThe amount you pay out of pocket each year before your plan starts sharing most costs. Until you reach it, you usually pay the full negotiated price for covered care., copayA flat fee you pay for a specific service, like a doctor visit or a prescription. It can apply even before you meet your deductible., or coinsuranceThe share of a covered cost you keep paying after you meet your deductible, written as a percent. Your plan pays the rest. and decides how much it will pay.
6. The insurer pays its share to the provider.
7. You receive an Explanation of Benefits (EOB)A summary from your insurer showing what was billed, what the plan paid, and what you may owe. It is not a bill.. This statement shows what was billed, the allowed amount, what the plan paid, and what you owe. The EOB is not a bill.
8. The provider sends you a bill for your remaining share.

Where things go wrong

Claims get denied or misprocessed for ordinary reasons: a wrong billing code, a service coded as not-covered, missing prior authorization, or an out-of-network provider you didn’t expect. Always compare your EOB to the provider’s bill — if the numbers don’t match, call and ask before you pay.

Why this matters to you

The EOB is your receipt and your audit tool. Reading it lets you catch errors, confirm your deductible progress, and avoid paying more than your share. If something looks wrong, you have the right to ask questions and, if needed, to appealA formal request asking your insurer to reconsider a denied claim. Many denials are overturned. (next article).

Learn the parts of an EOB at the HealthCare.gov glossary, and see medical-billing consumer guidance from the CFPB.