A common perception in healthcare is that most claim denials and rejections are caused by poor billing practices, procedural and diagnosis coding, deficient medical records, or uncovered services. However, data used in The Change Healthcare Revenue Denials Index (“Index”) surveying over 1,500 U.S. hospitals tell a much different story. According to the 2020 Index almost 27% of all claim denials could have largely been avoided during patient registration, appointment setting or just prior to check-in. Effectively, 1 out of 4 claim denials happen before the patient is roomed. The 2022 Index does offer a glimmer of hope as the patient insurance eligibility denial rate has dropped to 22%. While the patient eligibility denial rate has dropped considerably, it still leads all other claim denial reason categories.
Examples of avoidable claim eligibility denials commonly discovered at post claim adjudication:
Patient cannot be identified as our insured. As with prior authorization and pre-certification denials, the main reason claims get denied is because of clerical errors. Common Scenario: Practices don’t create a culture or establish a priority of performing eligibility verification. When these practices schedule a new or established patient appointment, their staff is not making sure the patient’s name, date of birth and member ID was entered correctly. Practice staff are simply entering what they thought they heard. Solution: Require intake staff taking calls to ask the patient to read back the information provided. This small step will correct simple mistakes and prevent the domino effect of using defective information when trying to get a claim paid.
Ineligible dependent. The relationship and status of a covered dependent can change at any time. For example, most employer sponsored plans don’t cover children dependents who reach age 26 or former stepchildren. Also, spouses and domestic partners who no longer meet the plans’ definition also become ineligible. Employers are actively conducting dependent audits and approximately 4%-6% of dependents are removed from employer plans annually.
Claim not covered by this payer. Patients are susceptible to changing their plans frequently because of changes in employment or Medicare beneficiaries who switch to Medicare Advantage plans. This denial is also common with Medicare aged patients who are planning on having office visits or scheduled surgeries entering into a new calendar year where they’ve elected to change their insurance to a Medicare Advantage plan.
Coverage not in effect at time of service. These denials are most common when a practice does not conduct eligibility verification three to four days in advance of services. However, these denials are sometimes unavoidable as employer coverage has recently termed or a dependent no longer meets the definition of an eligible dependent.
Patient eligibility presents a fluid challenge for medical practices when it comes to getting fully paid in a timely manner depending on the patient’s medical plan. While most, if not all, practice management systems allow for real-time eligibility verification and Advanced Eligibility Verification (“AEV”) with large payers. Smaller payers may have to be verified using other means which will most likely be a manual task.
Over the past century, the aviation industry has created a culture of safety by developing preflight checklists that must be followed before take-off and landing. Also, aircraft manufacturers have designed redundant systems just in case the primary system becomes inoperable. Here are some simple steps a practice can implement to avoid unanticipated revenue turbulence:
When a patient calls or requests an appointment, verify the patient and insurance demographics and check eligibility immediately.
Train front-desk staff members on how to interpret eligibility detail messages received from the large payers. This is especially important when setting an appointment for a Medicare beneficiary as most messages for these patients will tell you whether they are enrolled with another carrier.
Configure your system to trigger AEV three business days prior to visit. Also, staff should pull and review these reports and call on any patients where there is an error or coverage is no longer in effect. This is important for practices who schedule patients out several weeks or months in advance as they are more exposed to medical plan changes.
If a patient can not provide evidence of insurance coverage two to three days prior to the appointment, have a process in place to collect appropriate amounts at time of service where you’re not chasing reimbursement after services are performed.
When eligibility denials do occur during claim processing, have a solution provider who has a redundant system to perform patient insurance investigations to quickly identify active coverage. At Oasis, we utilize multiple investigative solutions and can find active coverage for approximately 24% of patients where there’s no coverage information provided by the practice or hospital. Also, we detect active coverage for 81% of patients who have documented insurance coverage but it’s no longer in effect.
Please note, implementing a procedure to have a patient provide their insurance card at every visit does not address patient eligibility denials when practice staff don’t verify eligibility.
Practice leadership must take charge by implementing procedures and provide guidance to address this financial threat. Monitor staff and review claim denial activity. Inquire with your internal billing or third-party billing company about their capability to obtain correct patient and insurance demographics. Develop agreed upon procedures on what should be done if a patient can’t or won’t provide evidence of coverage. Once you’ve created and implemented these controls then you can sit back, relax, and enjoy the reimbursement.