CMS-1500 Claims Processing Workflows

Who Processes CMS-1500 Forms?

The CMS-1500 claims form is the paper alternative to EDI for Medicare/Medicaid reimbursement. After a couple decades of rapid digitization, paper claims are only a small percentage of industry-wide volume. Nonetheless, so many claims are submitted each year that even that small share still amounts to millions of forms!

Some providers still rely on the CMS-1500 out of technological necessity. In general, providers of all sizes use the form only rarely, since the need usually arises from claim attachments or COB scenarios for which they find paper more convenient.

The actual processing of CMS-1500 data usually falls on one of three intermediaries: insurers themselves, clearinghouses, or third-party administrators (TPAs). This is a pivotal link in chain of events that ultimately makes it possible for patients to receive and pay for care. Consequently, these firms’ efficiency at extracting CMS-1500 data can have an outsized impact on the overall efficiency, cost, and timeliness of the entire billing ecosystem.

Standard Workflow Steps in CMS-1500 Processing

The claims form recipients need to do at least four things. Every organization has its own complexities and customizations, but at a high level, the workflow entails:

1. Receiving or creating a digital copy of the form

Processors handling the smallest quantities of forms may bypass this step in favor of entering data from the paper copies themselves. However, we find it more common (and prudent) to scan copies as they arrive, then work from the scanned document rather than the original. This provides archival and routing opportunities than are impossible with paper and, more importantly, allows for automated data extraction.

2. Extracting all data from relevant form fields

Data extraction is the core of the CMS-1500 processing workflow. Whether by hand or with an automated solution like ClaimsCapture, processors must retrieve key patient and provider data along with diagnostic and procedural codes. There may be hundreds of unique data points within a claim, as well as attachments or other supporting documents to reviewing and categorize. This is by far the most time-consuming and error-prone workflow step for organizations that still rely on hand-keying.

In addition, teams with less robust data capture tools may find that black-and-white copies are especially tough to automate. The red, drop-out background of the original CMS-1500 forms makes it easy for a computer to differentiate text from field boundaries/instructions. Few applications use optical character recognition (OCR) sophisticated enough to make that distinction for B&W documents. This is a major limitation of conventional “automation” solutions, so teams with any responsibility for data capture from B&W forms will do well to evaluate vendors carefully on this point.

3. Validating the completeness and accuracy of the data

Accuracy is of the utmost importance, since lapses tend to result in denials, underpayments, or (at best) a costly loss of time and effort. Part of the difficulty in this step is validating the data on two levels:

Were the correct characters extracted? As a trivial example, this includes distinguishing “1” from “7”, “O” from  “0,” and so forth.

If so, are these the appropriate data in the first place? From invalid addresses to a coding error on the provider’s part, there are numerous ways that data can be correctly identified, but still incorrect, and thus disrupt the revenue cycle.

In manual CMS-1500 workflows, the former is challenging enough, and the latter can be totally insurmountable. Human data entry workers simply cannot confirm address validity as they go, nor can they validate CPT or ICD-10 codes without significant training and time to access additional resources. As a result, validation tends to fall by the wayside until specific issues arise.

4. Converting the data into a digital format for submission to CMS

As the final step before submission for reimbursement, the processor will convert the extracted and validated CMS-1500 data into a digital format. This is generally the EDI 837 transaction set (ANSI ASC X12N 837P). It may be the easiest portion to automate, but it can only convey whatever data (accurate or not) the prior steps have produced. As the saying goes: garbage in, garbage out!

Fiting ClaimsCapture into a CMS-1500 Workflow

Think of ClaimsCapture as a knowledge worker-in-a-box: full understanding of your business rules and data quality needs, but able to implement them with superhuman speed and precision. It bypasses the inherent accuracy and speed limitations of manual CMS-1500 processing, thereby avoiding quality issues and revenue cycle risks.

ClaimsCapture enters the picture following the first step—digitization—by monitoring a folder or other repository for new forms. After extracting form data automatically, it executes several processes that do things like confirm addresses and identifiers, validate codes, double-check arithmetic, and even interact with other tools/workflows.

Once data quality prerequisites are met, ClaimsCapture can build XML for EDI 837 submission, create CSVs, export to ODBC-compliant databases, and initiate or feed into other workflow steps. Most importantly, all these outputs arrive with speed, accuracy, and ROI that manual processing cannot match.

Custom Logic & Processes in ClaimsCapture

Customers often ask for proprietary business logic before go-live, especially when business processes and use cases are well documented in advance. That said, users often observe ClaimsCapture’s effectiveness with CMS-1500 forms and wish later to use the same technology for other workflows, often integrating it with third-party applications along the way.

In any case, our consultants and developers will work with you to capture every nuance of your business process(es) and encode them in a robust and easily managed fashion, compatible with on-prem and virtualized architectures alike.


For further information on ClaimsCapture, CMS-1500 automation, or our approach to data extraction, please contact us or register for an upcoming webinar.