The Impact of Accurate Insurance Verification on Your Practice’s Bottom Line

The typical pattern is that revenue does not vanish from a healthcare business instantaneously, but instead is drained gradually over a period of time through one unverified claim, one denied reimbursement, and/or one uncollectable co-payment at a time. For many medical providers, the number one factor contributing to this slow, silent, and ongoing depletion of money is a much more preventable issue than a complicated billing error: poor or incomplete insurance verification at the beginning of the revenue cycle.

The numbers associated with the financial impact of inaccurate insurance information as one of the top five reasons why claims are denied for every specialty in the U.S. are absolutely staggering. The rate of error associated with manual insurance verifications can be as high as 15% – 20%, but using automated real-time insurance verifications reduces this number to less than .5%. Yet, there are still thousands of practices that fail to verify insurances in a consistent and accurate manner, therefore continuing to suffer financial losses without ever identifying the root cause of those losses.

The Medicators have worked with hundreds of healthcare practices in an effort to help them eliminate front-end billing errors that are silently stealing revenue from their business. The commonality among these clients has been that accurate insurance verification is not simply an administrative courtesy; it has also been found to be a measurable and direct contributor to the profitability of their practices. 

Inaccurate Insurance Verification Is Generating Claim Denials Costing Your Practice Thousands Monthly

When a claim is sent to a payer that has been verified, the practice incurs two costs: the lost reimbursement due to denial and the time/labor required to identify, correct and resubmit the claim. Both of these costs represent a significant financial burden to the average practice; however, nearly all of these costs are grossly underestimated by the typical practice. 

The insurance verification failures most consistently damaging practice revenue:

• Billing against inactive or lapsed policies: Patient insurance is subject to constant changes due to employer changes, open enrollment periods, and life-changing events. If a claim is sent to a payer without being verified on the date of service, a claim may be sent to a payer for a patient that has terminated their coverage resulting in a denial that has no recovery opportunity.

• Incorrect member IDs or patient demographics: If a piece of information in a patient record is incorrect (e.g., a transposed number or a misspelled name), a claim will automatically be rejected, resulting in a denial. The only thing that can help eliminate these administrative errors is to utilize a structured verification workflow.

• Undetected plan changes between visits: Patients will change their insurance provider and/or add coverage without notifying the practice. If an appointment is not verified on the date of service, the practice will remain unaware of changes until the claim is denied. 

The direct financial impact of verification-related denials can be quantified. If a practice sees 40 patients per day and has a verification-related denial rate of 5%, that practice will see 2 claims denied each day as a direct result of incomplete verification. These 2 claims will result in $370 of exposure to being denied. This can total more than $90,000 a year in completely avoidable revenue loss.

At Medicators, Insurance Eligibility Verification  is completed in real time at both the time of making the appointment and the date of service. By completing eligibility verification in real time, we are able to eliminate the coverage gaps that lead to preventable denials 

Unverified Benefit Details Are Directly Reducing Your Net Collection Rate

The process of verifying that there is insurance coverage is just the first step in ensuring a practice receives appropriate payment for services rendered. The next – and arguably more important – part of the verification process is to verify each patient’s benefits prior to seeing them at every appointment to know exactly how much payment will be collected from them. 

The benefit insurance verification gaps suppressing net collection rates:

• Unknown deductible balances causing missed collections: If a practice does not know how much of each patient’s deductible has been satisfied, the staff will not be able to explain an accurate amount owed to the patient prior to their appointment. This will leave the patient without knowledge of their actual balance owed, thus making it exponentially more difficult for the practice to collect payment after the patient leaves the office. 
• Incorrect co-pay quotes reducing time-of-service collections: Similarly, because co-pay amounts vary by plan type, provider specialty and service type, quoting a flat co-pay will not only lead to a lack of the ability to collect an accurate amount from the patient prior to services rendered but, because of the repeated nature of this example in a practices’ daily billing cycle, practices will be consistently undercollecting every time a patient comes in.

• Unidentified out-of-network exposure creating compliance risk: Lastly, there is also the risk of violating the No Surprises Act due to the inability to verify the patient has in-network coverage prior to providing services. This creates unanticipated charges and disputes from the patient, which will utilize administrative staff time and money while yielding no revenue to the practice. 

Industry standards indicate that a practice should have a net collection ratio of over 95% healthy net collections at the practice level. For every percentage of under-collection there is a dollar amount of potential revenue that is permanently lost to the practice. Because of this, practices that use a comprehensive benefit verification process see improvements in net collections within the first month of billing. 

Missing Prior Authorization Requirements Are Producing Full-Value Claim Losses

The most expensive of all insurance verification failures, missed preauthorization requirements are also often a total loss since they are non-payable with no way to recover payment. Since prior authorizations cannot be obtained retroactively, once service is rendered without the necessary pre-approval, the claim is denied and the associated revenue is permanently lost. 

The authorization failures complete eligibility workflows prevent:

• Unidentified authorization requirements at scheduling: Many specialist visits, imaging studies, injections, or surgical procedures require pre-authorization or approval from the patient’s specific insurance carrier. When eligibility verification fails to identify pre-authorization requirements upfront, such as when an authorization is required for services to be rendered, the service is rendered without an authorization, or pre-authorization, and the claim denied regardless of the appropriateness of the clinical scenario.

• HMO referral requirements missed at point of scheduling: Many times, patients with HMO insurance will be required to obtain a referral from their primary care physician prior to the specialist being able to bill. When this is not identified via the verification process, the specialist will be denied payment for the denied claim; this will not be due to any clinical information related to the services rendered but is due to an oversight made in the front end verification process in which a complete workflow would normally catch the error immediately.

• Expired authorizations billed without renewal confirmation: Most authorizations issued expire within a certain number of days, typically 30-90 days. Practices that do not verify the status of an existing authorization on the day a service is rendered risk submitting a claim with an expired authorization and will be subject to the loss of the ability to appeal the claim. Most payers will not allow an appeal of a claim; therefore, it will be a permanent loss. 

At The Medicators, we build pre-authorization tracking into the eligibility verification process so that the entire eligibility verification is performed on both the patient and the service, and the pre-authorization requirement will be identified at the time of verification, secured, and confirmed as currently active prior to the submission of any claims to the payers. 

Administrative Costs Rise Every Time Insurance Verification Is Done Incorrectly

Poor verification impacts finances beyond just denied claims. Each error that goes through to a payer creates an administrative burden figuring out the reason for denial, correcting the issue, resubmitting the claim, and following up with the payer which takes time away from staff members, increases the practice’s operational costs, and uses up resources that could be used for patient care. 

The operational cost drivers inadequate insurance verification produces:

• Manual verification consuming 5–7 minutes per patient: Using a manual process, it takes the typical practice about 5–7 minutes per patient to verify eligibility. If the practice sees 40 patients per day, that’s over 4 hours each day spent on eligibility verification using a manual process. If the practice uses an automated verification process, the same number of patients would be verified in under 30 seconds each, freeing up those 4 hours of staff time to communicate with patients and complete revenue-generating activities.

• Denial rework multiplying administrative costs: It costs between $25 and $118 to resolve a denied claim, depending on the complexity of the claim. If the practice generates 40 verification-related denials each month, the practice incurs a monthly rework cost of $1,000 to $4,720 for working through the denials, and, as a result, the practice may experience delayed or lost reimbursement.

• No standardized protocol creating inconsistent results: If staff do verification differently, there will be varying outcomes, so any missed detail on benefits would be unpredictable. There is no audit trail without a defined process to support the appeals process, so it would also be impossible to use the data to identify persistent problems before they become chronic issues. 

Once you move to an automated, structured way of verifying, your administrative overhead will consistently decrease, and you will see a measurable return on investment in as little as 90 days after implementation. 

Accurate insurance verification Improves Patient Experience and Long-Term Practice Revenue

The long-term revenue generated by the patient population associated with a given practice depends primarily on the ability of the practice to verify all the components of an accurate financial process, including verifying the accuracy of a patient’s estimated financial liability and providing that information to the patient before the visit. 

What thorough Insurance Verification delivers beyond the billing department:

• Financial transparency that drives treatment acceptance: Through providing an accurate estimate of the patient’s financial liability before their visit, based on verified information regarding deductibles and co-pays, patients arrive with an appropriate financial plan and are much more likely to accept and fulfill their recommendations for treatment and complete their treatment plans.

• Upfront collections that eliminate bad debt exposure: Reducing the amount of time spent sending billing statements after a patient’s appointment has a direct impact on increasing the practice’s net collection rate. This is due in part to the removal of the cost of generating post-visit billing statements, collection follow-ups, and ultimately bad debt write-offs associated with not obtaining consumer payments prior to service.

• Patient retention built on billing trust: When patients receive a surprise bill for a non-covered medical service due to a lack of insurance verification prior to their appointment, that patient can permanently be lost to the practice. Practices that have a clear financial process are much more likely to retain their patients, generate additional patient referrals, and create the type of reputation that will help establish a sustainable long-term revenue base. 

How The Medicators Maximizes Your Bottom Line Through Accurate Eligibility Verification

The Medicator views Insurance Verification of eligibility as an integral part of the entire revenue cycle (as opposed to just something that happens between appointments). 

Here is exactly what we deliver for every practice:

• Verify coverage and status of all insurance policies at time of appointment scheduling and also again on day of service. 
• Confirm that all benefit details (e.g., deductibles, co-insurance, co-pays, how much has been met to date, and whether a patient is still in-network) are known before each appointment. 
• Identify and track the prior authorization and referral requirements throughout the entire process, leading up to the day of service. 
• Find and document all secondary insurance coverage present in order to receive reimbursement from both the primary and secondary insurers. 
• Eliminate the manual verification process through the use of automated verification systems that have been integrated with the payers, thus reducing the error rates below 0.5%. 
• Provide all patients with financial responsibility estimates prior to the appointment date in order to improve collections at the time of service. 
• Provide insurance verification documentation for each patient with a complete audit trail of actions taken in order to support denial appeals. 

The Medicators will provide you with the front-end Insurance Verification infrastructure required to maintain a clean claims process, strong collections process, and increase the growth of your bottom line no matter if you operate as a solo practitioner, multi-specialty group, or hospital facility 

Call The Medicators or visit themedicators.com to claim your Free Practice Revenue Analysis today.

Frequently Asked Questions

1. How does accurate insurance verification directly impact a practice’s bottom line?
   Eliminates claim denial while improving net collections, reducing rework costs, and facilitating patient collections upfront all of which lead to increased revenue retained from every patient visit.
2. What does a single insurance verification error cost?
   A denied claim with a value of $150 to $300 may have an additional rework cost of $25 to $118. A denial, multiplied by multiple errors monthly, could easily lead to tens of thousands of dollars in annual revenue losses.
3. How does verification improve time-of-service collections?
   When co-pays and deductibles are validated prior to the appointment, the patient has arrived with their payment, increasing the likelihood of collecting at the time of the visit, reducing the likelihood of bad debt after the visit has occurred.
4. What is the difference between eligibility and benefits verification?
   Insurance Verification of whether the patient has active insurance eligibility and paying benefits validate the elements (deductibles, co-pays, co-insurance percentages, prior-authorization) of the patient’s insurance plan so that the billing can be accurate.
5. How often should insurance eligibility be verified?
   At every visit, a missed or undetected change to the patient’s insurance plan could result in a full claim denial with no ability to collect from the insurance company.
6. Can automated verification replace manual eligibility checks?
   Yes. Automation reduces the time to complete eligibility verification from 5-7 minutes to less than 30 seconds per patient resulting in previously verified accuracy in less than 0.5% of cases (15 to 20%). This will result in measurable ROI in the first billing cycle.
7. How does The Medicators protect practice revenue through Insurance Verification?
   Through an integrated eligibility & benefit verification process at scheduling and the day of the visit, prior authorization tracking, secondary insurance identification, and documentation of all elements, the claim will be settled based on verified and accurate insurance data.