Managing the complexities of healthcare revenue cycle management (RCM) is crucial to profitability. Although each phase of RCM is important, the front-end process of eligibility and benefits verification is of great importance, especially for complex outfits like physiatrist practices.
In its simplest form, the eligibility verification process is confirming the patient’s active insurance coverage and gaining an understanding of the details of their plan. It includes determining the type of payer, coverage effective dates, coverage type, copays, deductibles, coinsurance, pre-authorization, and referral levels, and whether the proposed services are covered benefits under the plan.
Having a complete understanding of a patient’s insurance coverage prior to services being provided can be a powerful force in the financial well-being and operational effectiveness of a practice. This article discusses the cost-benefit of investing in strong eligibility and benefits verification services specifically designed to meet the requirements of physiatry practices.
The “Cost” of Ignoring Proper Verification
Neglect or rendering shallow benefits and eligibility and benefits verification may appear to save time in the short run, but the downstream expenses can be staggering and overwhelm any short-run apparent cost savings. Most directly impacted is increased claim denials. Denials due to problems such as ineligible coverage, non-compliance with regulations, non-covered services, no pre-authorization, or incorrect patient demographic data are direct consequences of poor front-end verification.
Every denied claim is lost revenue and increased administrative expense. Personnel time has to be spent determining the cause of the denial, appealing the decision, obtaining required documentation, and resubmitting the claim. Re-work is time-consuming, takes resources away from other critical work, and contributes to operating expenses without producing new revenue. In addition, there is no assurance that an appealed claim will be paid, and thus the initial service provided can never be reimbursed.
Along with the direct denial management expense, poor eligibility and benefits verification create delinquent payments and adversely affect cash flow. There are late cycle payments from denied claims to be reprocessed, and these cause risk and possible practice finance imbalances. It can become challenging for the practice to make investments in new equipment, staff, or growth.
For physiatrist practices in particular, failure to verify therapy limits or pre-authorization needs for long-term treatment plans can be particularly costly. Providing multiple sessions of therapy only to find retroactively that the patient’s plan included a limited number of visits or pre-authorization needs can result in massive write-offs of already provided services.
The “Benefit” of Investing in Strong Verification
On the other hand, investment in thorough eligibility and benefits verification reaps many tangible and intangible rewards that are good for a physiatrist practice’s bottom line and day-to-day efficiency.
The most valuable advantage is an enormous decrease in claim denials due to eligibility and benefits issues. By discovering and solving these issues before admitting the patient or providing services, practices avoid a vast majority of denials. This results in an increased first-pass claim resolution rate, i.e., a higher percentage of claims are paid appropriately on the initial submission.
A greater first-pass resolution rate directly translates into shorter payment cycles and better cash flow. When claims are processed and paid on time, the practice gets paid more consistently and reliably and is able to budget funds better and be stable.
Solid eligibility and benefits verification cuts the administrative drag of denial management considerably. Staff can be diverted from resubmitting and appealing fewer denials to apply to other crucial RCM duties like charge posting, payment posting, and following up on bona fide intricate claims. With this improvement in efficiency, operations are made less expensive and the practice is free to leverage its workforce.
Patient satisfaction also improves when the practice is knowledgeable of their patients’ insurance coverage. Patients may be appropriately educated by staff regarding their out-of-pocket obligations (copays, deductibles) at the time of service so that they don’t incur surprise bills and feel trusted. This creates a patient-focused experience and can improve patient retention and word-of-mouth recommendations.
Furthermore, a thorough verification process prevents errors and ensures payer-specific laws and regulations, lowering audit risk and related penalties.
Conducting the Cost-Benefit Analysis
To find out if investing in strong eligibility and benefits verification is worth it, physiatrist practices must conduct a cost-benefit analysis. This means putting a figure on the cost of the current verification process (or no process) and weighing this against the potential benefits of starting or enhancing the process.
On the cost side, count the costs of:
- Staff time devoted to manual verification (phone calls, website searches).
- Administrative expense of disallowed claims (personnel time, mailing).
- Lost revenue from uncollectible accounts as a result of eligibility problems.
- Sluggish cash flow.
On the benefits side, look at:
- Reduced administrative cost due to reduced denials and less rework.
- Increased revenue due to fewer write-offs and improved collection percentages.
- Faster cash flow and financial stability.
- Potential for employee time to be reallocated to more productive processes.
- Increased patient satisfaction.
Although proper verification, whether in-house or via an expert outsourced service, has an initial cost, the subsequent advantages of fewer denials, better cash flow, lower administrative expenses, added revenue, and improved patient satisfaction dwarf this expense.
A keen cost-benefit analysis shows that proper eligibility and benefits verification is not a cost but necessary for the financial health and operational efficiency of physiatrist practices in today’s complex healthcare environment. Making this front-end process a priority is the keystone of a healthy and prosperous practice.
