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The Hidden Costs of Inaccurate Insurance Verification in Healthcare Practices

Team Fuse
Team Fuse

Despite increasingly powerful automation capabilities, many healthcare practices still rely on outdated manual processes for insurance eligibility verification. If your practice is one of them, you're likely bleeding revenue without realizing it.

Insurance verification costs for the medical industry amount to $42 billion annually, with 98 percent of that figure spent by healthcare providers and organizations. It may come as a surprise, but a significant portion of the annual spend on insurance verification in healthcare comes down to errors. In one survey, approximately 56 percent of respondents said that denied insurance claims resulted from mistakes during the intake and insurance verification processes.

With every mistake comes hours of work, increased administrative burden and tons of hidden costs. In the end, practices spend up to $118 reworking denied claims. Needless to say, that figure adds up and seriously impacts healthcare revenue cycle management.

In this guide, you'll learn about how healthcare billing errors and a poorly optimized insurance verification process can harm your practice's bottom line, and discover ways to change that.

How Healthcare Revenue Cycle Management Suffers From Eligibility Errors

When eligibility checks fail, the ripple effect is substantial. Mistakes often lead to initial claims being denied, resulting in severe frustration for patients. In addition to potential service delays, patients may encounter unexpected bills and additional costs. That all erodes trust and creates an awful experience for patients.

From a practice's standpoint, poor eligibility checks create hours of additional work. Staff must spend time identifying and correcting errors, as well as reworking claims. Additionally, practices suffer from unpredictable cash flow. Mistakes can extend accounts/receivable timelines by weeks. Each denied claim isn't just a missed reimbursement; it's additional labor costs associated with correcting the problem.

Many mistakes can occur during insurance verification. On the simpler side, human error during data entry is reportedly the cause for 60 percent of first-submission rejections. Meanwhile, missing prior authorizations account for 11.6 percent of denials. Service coverage problems account for over 10 percent, while eligibility problems make up over 26 percent.

The True Financial Impact of Coverage Check Problems

Poor insurance verification costs practices more than most realize. As mentioned earlier, reworking a single denied claim can cost anywhere from $25 to $118. Considering that denial rates sit at around 15 percent for hospitals and practices, that's a significant sum. Say that your practice has 500 denied claims in a single year and must spend $50 reworking them. That's $25,000 in administrative costs.

If that sounds far-fetched, consider this: In 2023 alone, providers spent over $25 billion contesting and reworking claims. For hospitals, denied claims cost about five percent of patient revenue. One study found that billing staff spent up to 60 percent of their time reworking denials rather than focusing on actual revenue-generating tasks. But that's not all.

The unnecessary costs incurred for insurance eligibility verification can hinder your practice's ability to grow. You spend more resources correcting mistakes, all while dealing with delayed reimbursements and cash flow that's far too unpredictable to make meaningful investments in the practice.

Common Insurance Verification Mistakes That Drain Practice Revenue

Several recurring errors can quietly drain your practice's revenue potential.

Outdated Patient Information: Incorrect ID numbers, names or demographic information can trigger automatic denials. Practices like yours must confirm those details during every visit to prevent reworks and resubmissions.

Missing Prior Authorizations: Failing to identify prior authorizations will result in complete denial or significant delays. Comprehensive insurance eligibility verification to the CPT code level will help prevent missed requirements.

Incorrect Benefit Details: Missing data about copays, deductibles, coverage tiers and other relevant details can result in denied claims or underbilling. Practices should perform real-time checks before a patient's scheduled service to fully understand costs.

Timing Issues: Late verification or failure to update coverage data increases the risk of denied claims. Your practice should verify coverage before each visit and update regularly to keep data current.

Patient Eligibility Check Process Failures

The insurance eligibility verification process can break down at many points. 

Manual verification workflows often create delays. Staff must spend time calling payers, manually checking portals, managing paperwork and more. Those manual processes can take up to 20 minutes per patient, resulting in bottlenecks and delays.

Meanwhile, inadequately trained staff can misinterpret plan data or miss specific details, such as prior authorizations or secondary coverage. Poor training can harm practice efficiency and create countless issues that ultimately lead to denials.

Finally, a lack of real-time coverage tools can prevent teams from quickly confirming benefits, leading to costly mistakes.

Those are just a few potential points of failure for insurance eligibility. There are many ways to improve eligibility checks, but automated solutions are among the most effective in preventing these mistakes and others.

Coverage Timing Problems That Cost Practices Money

Timing matters for insurance verification in healthcare. Because policies can change frequently, poor timing can increase financial risks. Perform those checks too early, and coverage could change. Perform them too late, and you might render the services before realizing a patient's policy won't cover it. Revenue cycle optimization is all about running checks at the right time.

The optimal window is roughly 24 to 72 hours before a patient's visit. Real-time insurance verification software and automated tools can also help you ensure you're working with the most current data.

Transform Your Practice Revenue With Accurate Verification Solutions

Healthcare billing errors and poor insurance verification processes don't have to cost your practice. Fuse is the ultimate solution for fast, easy and accurate insurance eligibility verification. With Fuse, your practice can reduce verification time by 90 percent.

Fuse streamlines the process from start to finish, dramatically reducing the risk of errors while freeing up your staff's time to focus on patients. Protect your practice's bottom line and revenue potential while enhancing the patient experience.

Request your consultation and Fuse demo today and see how much improving your insurance verification processes can transform your practice.

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FAQs

What percentage of healthcare revenue is lost due to inaccurate insurance verification?

Inaccurate insurance verification costs the healthcare industry billions annually. According to one study, claims denials and billing errors cost hospitals throughout the country as much as $262 billion a year. An estimated 15 to 20 percent of all claims are initially denied due to eligibility and coverage issues, which practices and organizations can avoid with more effective verification processes.

How can automated insurance verification reduce practice administrative costs?

Automated insurance verification reduces administrative costs by eliminating much of the manual labor involved. Automation handles the heavy lifting, cutting admin times by up to 95 percent. Automated software also significantly reduces the risk of error, thereby decreasing the need for rework and resubmissions.

What are the most common insurance verification mistakes that cause claim denials?

Some of the most common insurance verification mistakes include outdated patient information, missing prior authorizations, incorrect data about benefits and poor timing. Insurance verification automation, using platforms like Fuse, can eliminate these issues and more.

How long should the insurance verification process take for optimal revenue cycle management?

A well-optimized verification process should take no longer than a few minutes. Currently, most practices spend up to 20 minutes, if not more, for more complicated cases. That extra time results in added administrative costs and a greater potential for delays.

Questions?

If you're a patient seeking clarity on the cost of care, a provider looking to automate practice admin and offer transparent billing, or looking to see how your rates compare with peers, we're here to help.
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