Can Insurance Eligibility Verification Improve Cash Flow?

The importance of managing the cash flow of your medical practice cannot be overstated. Many providers face delayed reimbursement due to denied claims (the provider’s fault) caused by billing errors and delayed payment by the patient, as their insurance is inactive. All of these delay factors will ultimately impact the total cash flow of a practice.

Insurance eligibility verification helps alleviate this issue, as it allows the practice to confirm a patient has insurance coverage prior to treatment. It is an important component of front-end revenue cycle management and allows billing to have all necessary information at the beginning of the billing process. Overall, insurance eligibility verification will improve practice cash flow, allow faster reimbursements for healthcare services billed to insurance companies, and prevent revenue leakages in medical billing.

Definition of Insurance Eligibility Verification 

Insurance eligibility verification is the process of validating a patient’s insurance coverage prior to providing medical service. Some of the components checked during the validation include:

• Active status of the insurance policy.
• Services that are covered and what benefits they provide.
• Copayment and deductible information.
• Referral or authorization requirements.

When the information is validated prior to treatment, the healthcare provider will be able to avoid billing errors and prevent revenue leakage in medical billing.

If the information is not properly validated, the provider will inadvertently bill a patient with either inactive insurance or those services provided will not be included under the patient’s insurance plan. Ultimately, this may result in denied claims and delayed payment to the provider.

How Eligibility Verification Improves Cash Flow

Reduces Accounts Receivable Days 

Delayed payments in medical billing are one of the largest problems with delayed payments. When claims are denied due to eligibility issues, corrections must be made, and the claim must then be resubmitted, creating additional time to collect payment on those claims.

When eligibility is verified prior to processing a claim, it helps reduce accounts receivable days because claims submitted are correct at the outset. Claims that are processed in less time provide healthcare providers with quicker access to payment for their services, leading to greater financial stability.

Accelerate Healthcare Reimbursement 

Patient insurance errors (i.e., incorrect or missing insurance information) are among the most frequent reasons for delayed claims. Eligibility verification ensures that all necessary billing information is complete and accurate before submitting a claim.

This allows providers to accelerate healthcare reimbursements, as claims will be able to be processed rapidly by insurers, and thus fewer requests for additional documentation will be needed; faster insurance reimbursement provides a direct source of steady cash flow.

Preclude Revenue Leaks in Medical Billing 

Revenue leaks occur when healthcare providers experience lost revenue as a result of billing errors, claim denials, or unrecovered payments. Identifying potential coverage issues early through eligibility verification can assist providers in resolving them prior to the delivery of care.

For example, if a patient’s insurance has been deactivated or requires preauthorisation, these issues may be identified and resolved prior to the provision of care to avoid unrecovered claims; this proactive approach helps prevent revenue leakage in medical billing while also allowing healthcare providers to obtain full reimbursement for the services provided to patients.

Increases Clean Claim Submission Rate

A clean claim is one that has been billed accurately with all necessary data, processed without delay, denial, or rejection, and paid promptly.

Healthcare organisations may notice an increase in clean claim submission rate when they verify patient insurance coverage prior to billing. When claims are sent out accurately the first time, there is less chance of claims being denied; therefore, there are fewer delays and problems with receiving reimbursement for services provided.

Reduces Claim Rework Costs

When claims are denied, the billing team must investigate why the claim was denied (review the reason), identify what errors were made (correct the errors), and then send the corrected claim back to the payer. Claim rework is time-consuming and costly.

Using eligibility verification prior to sending claims, billing departments can prevent many of the errors that lead to denied claims. As a result, billing personnel can spend their time working on additional important tasks, rather than continually fixing and resending billing claims.

Strengthens Front-End Revenue Cycle Management

Revenue cycle performance is greatly impacted by how well the front-end functions of a healthcare organization’s business office perform. Examples of front-end processes include patient registration, insurance verification, and verifying patient benefits.

Incorporating eligibility verification as part of front-end revenue cycle management improves billing accuracy and payment efficiency. it allows them to capture accurate data at the time of service, which results in better billing accuracy, quicker payment timeliness, and a more consistent flow of revenues.

Additional Benefits for Healthcare Practices

Beyond just making money for your business, verifying an individual’s insurance eligibility has a number of operational benefits:

Communication with patients: Informed patients know what they will be responsible for in terms of co-pays and out-of-pocket expenses prior to receiving care.

Patient Satisfaction: When you provide transparency regarding the cost of the services provided by your organization, you reduce the likelihood that patients will receive unexpected medical bills.

Administrative Cost Savings: Billing errors are fewer; therefore, staff are required to spend less time on correcting claims and processing other paperwork.

Planned Financial Performance: The use of predictable revenue allows organisations to create a more accurate budget and plan accordingly as it relates to resources.

Together, these benefits support better healthcare financial performance improvement.

Automated and Technological Solutions for Eligibility Verification 

Many healthcare organizations have implemented automation in the form of eligibility verification tools. These automated tools allow organizations to directly connect to insurance databases and immediately determine if an individual has active coverage or not.

Automation Benefits Organizations:

• Quicker completion of eligibility checks
• Fewer manual errors
• Ability to handle increased patient volumes
• More consistent billing and financial reporting

Automating eligibility verification enables healthcare organizations to optimize medical billing revenue while efficiently verifying an individual’s eligibility to receive medical care.

Best Practices for Effective Eligibility Verification

Healthcare providers are able to increase their potential financial benefits by implementing the following best practices:

• Verify coverage prior to each visit—patient coverage is subject to change on an ongoing basis.
• Utilize automated eligibility tools – Automated eligibility tools reduce the time required to verify and the opportunity for errors.
• Educate your front-desk staff—adequate education will assist in collecting valid information from patients at the time of registration.
• Document the results of eligibility verifications—Documenting the results of eligibility verifications will enable you to address and resolve any issues that may arise in a timely manner.
• Notify patients of their financial responsibilities—Notify patients of their copays and deductibles prior to their visits to ensure they understand their financial responsibilities.

These best practices will help you develop an effective and efficient revenue cycle and ultimately enhance your financial performance.

Conclusion

Eligibility for insurance verification is an efficient yet effective tool to use within the process of the revenue cycle of healthcare by verifying coverage early on. As such, this will allow healthcare providers to improve practice cash flow from their practices, reduce accounts receivable days it takes to collect accounts receivable, and get paid faster insurance reimbursement.

Additionally, when used correctly as part of a comprehensive approach to managing the front end of a healthcare provider’s revenue cycle, it reduces medical billing revenue leakage, increases the number of clean claims submitted to payers, and decreases the cost associated with reworking claims.