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Claims processing in healthcare primarily refers to the management of billing and payment transactions. This involves a series of steps that take place after healthcare services have been provided, where the healthcare provider submits a claim to the insurance company or payer for reimbursement. The claims processing function includes verifying the information provided in the claim, ensuring that the services billed are covered under the patient's insurance plan, and coordinating the payment to the healthcare provider.

The claims processing mechanism is crucial for the financial viability of healthcare practices, as it helps ensure that providers are compensated for their work. Moreover, it also involves handling any disputes or appeals related to claims that may be denied or require additional documentation. Through effective claims processing, healthcare organizations can optimize their revenue cycle management, reduce errors, and improve cash flow.

Understanding this process is vital for healthcare management professionals, as it directly impacts the financial operations of healthcare facilities and their ability to provide continued care to patients.