By Alan Dworetsky.
The basis of revenue cycle management and the foundation of providing patients with financial clarity is accurate insurance eligibility verification. In this comprehensive guide, we take a look at its core components and show how modern solutions are making this important process more efficient..
Insurance Verification Challenges
In today’s complex healthcare landscape, obtaining accurate insurance information is critical yet increasingly difficult. Common problems include old eligibility data, missed patient details or coverage changes, which impact the workflow and cause revenue loss if not addressed.
Without vigilant eligibility and benefits verification, critical mistakes can easily occur, including:
- Submitting claims to the wrong payer
- Failure to capture patient responsibility
- Writing off accounts that had further billable coverage
Such errors frequently result in denied claims and slowed reimbursement. They also contribute to already burdensome administrative tasks for staff.
A Closer Look at Three Core Challenges
Manual Processes
Despite technological progress, some providers still occasionally use manual verification through phone calls. They consume a significant amount of administrative time and risk human error due to misfiled paperwork or poor documentation.
Data Fragmentation
Vital insurance data is often scattered across different systems and departments, making it time-consuming for billing and administrative staff to gather complete coverage information.
Dynamic Change
Medicaid and Medicare coverage may be subject to change. Outdated information may lead to claim denials which otherwise could have been avoided.
Effects on Providers and Patients
Ineffective verification penalizes both healthcare providers and their patients.
For providers, the financial consequences are clear:
- Delayed revenue collections
- Risk of denial write-offs
- Higher administrative costs
For patients, the effects may be less direct but can significantly impact their experience:
- Unexpected out-of-pocket expenses
- Delayed treatment authorizations
- Billing disputes and complications
Any resulting patient dissatisfaction can harm the provider’s reputation and future referrals.
The Importance of Checking Patient Responsibility
Verification issues affect how deductibles and copays are managed. Data gaps make it difficult for staff to accurately inform patients about what they owe.
Inaccurate estimates can lead to patient complaints and allegations of deceptive pricing. Evolving technologies offer a smart way of improving the eligibility verification process.
The High Costs of Eligibility Failure
A recent Change Healthcare report analyzed the revenue impacts of eligibility-related claim defects. Findings revealed:
- Up to 20% of initial claims contain eligibility errors
- 23% increase in denial rates over 3 years
- From $1,012 to $7,876 (in public hospitals); and from $3,906 to $24,687 (in private hospitals): Average hospital claim value
Collectively, these factors equate to tremendous lost revenue, given the pricey claims affected.
For a 500 bed hospital submitting 5000 claims per month, denial rates spiking from 10% to 15% would translate into $25 million in annual revenue at risk.
The Core Elements of Insurance Verification
Effective verification relies on several key components working together:
Accurate Data Collection
- Obtain detailed coverage information during admission
- Record policy details precisely in centralized electronic records
- Identify any secondary or supplemental plans
Ongoing Eligibility Monitoring
- Conduct initial real-time verification upon admission
- Track coverage changes and adjustments
Benefits Confirmation
- Clarify types of covered services
- Review referral and authorization requirements
- Identify network status and out-of-network provisions
Financial Responsibility Communication
- Check for applicable copays, coinsurance, and deductibles
- Align and discuss the out-of-pocket costs with patients
Emerging Verification Solutions
Advancing technology enables automation to streamline verification process components, improving efficiency.
Automated Eligibility Verification Systems
Modern automated web-based platforms can validate coverage specifics in seconds.
They verify multiple payers and update provider systems through integration, reducing labor hours spent on calls and paperwork.
Popular options like eSolutions and Experian Health offer such capabilities. However, they lack regular automated patient coverage monitoring essential for billing accuracy.
Newer solutions fully automate verification and coordinate its various facets. These suites integrate verification and coverage tracking into a single system. Staff can access patient insurance records from a single dashboard, verifying eligibility and benefits in one step. This reduces disjointed data that can confuse the staff.
Two Standout Features
Insurance Discovery – Uncovers Additional Billable Coverage
Uncovers additional billable coverage by searching external databases, boosting legitimate claim submissions.
Automated Coverage Tracking – No More Manual Monitoring
Monitors coverage changes automatically, notifying staff of critical updates that may affect pending claims. This feature prevents multiple claim denials due to incorrect insurance data being used.
Spotlight on Approved Admissions Verification
Approved Admissions exemplifies how advanced technology can streamline the insurance verification process, accelerating revenue and admissions.
The unique platform verifies Medicaid, Medicare, and many other commercial payers while also continuously tracking changes.
Insurance Discovery
Approved Admissions also provides a coverage discovery tool that allows user to uncover additional active coverage by searching external databases in real-time. The feature maximizes revenue collection opportunities.
The searches identify probable payers from claim information, delivering new coverage details to maximize.
Integrations
A defining advantage is Approved Admissions’ tight integration with major EHR/PM systems, including Epic, Cerner, Allscripts, and Athena.
The bi-directional data exchange automatically transfers verified specifics into patient records while importing demographics to check against payer data. This closes gaps that commonly cause eligibility confusion and claim problems.
The integration speeds workflows by allowing staff to verify coverage, benefits, and responsibility right within their regular software systems, eliminating tedious screen switching.
Best Practices for Insurance Verification
Here is how you can maximize the use of insurance verification software:
Identify Verification Gaps
Analyze current methods to pinpoint shortcomings that lead to manual errors or use outdated information.
Map Future Workflows
Check in advance how the system will integrate into existing software. This will simplify future integration.
Notify Staff In Advance
Communicate the plans to use new software with the future responsible users. Organize training sessions or demos with the software provider in advance in order to give the employees the chance to learn the new tool.
Leverage Automated Tracking
Focus on insurance changes tracking features, as according to data from providers, every 6th Medicare or Medicaid patient will have changes in their coverage every month.
Missed changes are very costly and may represent a majority of claim denials that are related to incorrect insurance.
Run Regular Discovery Searches
Periodically search for potentially missed coverage (especially for self-pay accounts) to maximize your revenue collection opportunities.
The Critical Role of Accurate Eligibility Data
Complete patient insurance information is critical for other revenue cycle management tasks like coding, billing, authorization, etc.
Eligibility-driven denials inflict significant financial losses, requiring additional administrative work to refile correctly and delaying payment.
Key Metrics that Signify Improvements
Tracking key revenue cycle management metrics allows healthcare providers to quantify the effectiveness of their processes. This helps identify opportunities for improvement to boost financial performance.
Some vital metrics to monitor include:
Claim Denial Rate
The claim denial rate measures the percentage of submitted claims rejected by payers. A high denial rate signals issues in the claim generation and submission process.
To calculate:
Number of denied claims ÷ Total number of claims submitted x 100
Lowering denial rates reduces lost revenue from unpaid claims. It also cuts the administrative costs of reworking and resubmitting rejected claims.
Automating insurance eligibility verification and claim scrubbing helps minimize incorrect information, the primary driver of denials. Monitoring changes in first-pass claim acceptance rates shows the impact of these measures over time.
Days in Accounts Receivable
This metric tracks the average number of days from when services are provided to when payments are received. The lower the number, the better the organization collects its earnings.
To calculate:
Total outstanding accounts receivable ÷ Average daily net revenue
Proactively following up on outstanding claims and educating patients on financial expectations and payment options helps speed up collections. Regularly review A/R days, bi-weekly or monthly to track improvements.
Net Collection Rate
The net collection rate shows the percentage of total charges that the healthcare provider actually collects as payment after accounting for adjustments and write-offs. Higher is better.
To calculate:
Total payments received ÷ Gross charges x 100
Comprehensive charge capture, robust denial management, and efficient collection procedures improve this rate over time. Tracking this metric indicates the success of revenue cycle initiatives.
Bad Debt Rate
The bad debt rate reveals the percentage of services provided that are written off as uncollectible after exhaustive collection attempts. A lower rate is preferable.
To calculate:
Total bad debt write-offs ÷ Total charges x 100
Clear financial responsibility estimates and payment plan options for patients can reduce bad debt write-offs.
Tracking these vital metrics will provide quantitative insights into your revenue cycle performance. Compare the numbers before and after targeted process improvements to understand the extent of their impact.
Embrace the Future of Insurance Verification in Healthcare
The stakes are high: mistakes in insurance verification can lead to revenue loss and potential patient dissatisfaction. However, the tools and best practices outlined here offer a roadmap to mitigate the key risks related to incorrect insurance verification.
Eligibility automation tools simplify billing processes, reduce claim denials, and streamline the revenue cycle.
When looking for a suitable tool, first and foremost, ensure that the technology aligns with your organization’s specific needs and goals.
Look for technologies that seamlessly integrate with your existing electronic health record (EHR) and billing systems.
Evaluate whether the technology provides comprehensive payer connectivity, including support for a wide range of insurance providers such as Medicaid, Medicare, and commercial plans. This ensures that you can verify coverage across your patient population without limitations.
Consider features like automated coverage tracking, which continuously monitors patient insurance status and alerts staff to any changes that might affect billing or authorization.
Author’s Bio
Alan Dworetsky – Business Development Director, Approved Admissions
With 18 years of experience, Alan Dworetsky is a senior leader specializing in healthcare business development and strategic planning.
He knows a thing or two about healthcare software and revenue cycle management, with a deep understanding of how to best use technology for healthcare practices’ operational needs.
Alan’s work focuses on combining technology and smart planning to help businesses grow, solve challenges, and enhance billing operations.
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