• Industry News
  • Access and Reimbursement
  • Law & Malpractice
  • Coding & Documentation
  • Practice Management
  • Finance
  • Technology
  • Patient Engagement & Communications
  • Billing & Collections
  • Staffing & Salary

Practice Management Lab: Verifying Eligibility


Here's some help for strengthening your methods of verifying patient eligibility - and some startling data on why you shouldn't overlook this practice.

In last month's Management Lab, we focused on the previsit as one of the most critical phases of patient interaction regarding payment collection. That's because claim problems get more expensive and less likely to be resolved the longer they linger. The earlier you can detect and address such problems the better. And of course, preventing them altogether is the best solution of all. One aspect of pre-visits we glossed over last month to examine more in depth in this issue is eligibility.

You really can't overstate the importance of having a good system for verifying patient eligibility. Coverage-related denials are extremely costly, but they are also highly preventable. And verification is a critical part of determining apatient's financial responsibility - increasingly important as the boom in "consumer-directed" insurance plans continues to add to the frequency and variety of copays.

After taking a closer look at the importance of eligibility and how some of the numbers break down, we offer some insights into strategies for assessing your own payer mix in terms of eligibility and for prioritizing your eligibility efforts.


Coverage-related (or eligibility) denials cost your practice more than any other type of denial because they typically occur more frequently than other denials, and they affect an entire claim as opposed to specific charges within a claim. Figure 1 shows a breakdown of the percentage of claims denied for coverage among the four major payer types.

As you can see, in our experience at athenahealth, Medicaid and Medicaid HMOs are the worst offenders, with eligibility-related denials occurring as much as five times as often as with commercial and BCBS plans, and almost 10 times as often as with Medicare.

Medicare has historically denied at a relatively low rate - basically because a patient is either over 65 or not, and therefore is qualified or not. But this has been changing in recent months. Lately, Medicare systems have begun requiring that a patient's name, date of birth, and member ID match their files exactly for the claim to be eligible for payment. Of course, many of these eligibility denials are for patients who are, in fact, eligible. But if a patient has a new member ID, some element of his demographic information isn't matching up, or his payer will only cover him when billed as a secondary, he gets rejected by the system.


Eligibility-related denials are not only relatively frequent, but when they happen they take longer to resolve than other types of denials. Figure 2 illustrates how long it takes athenahealth by payer to get payment on a claim that has been denied for eligibility reasons. Keep in mind that we have call centers full of experts who do nothing but work appeals with specific payers all day, so your mileage will probably vary from ours. But the ratios should hold true. We find that, overall, coverage-related denials take two to three times longer to pay than non-denied claims and about 30 percent to 40 percent longer to pay than claims denied for other reasons.

You're probably not surprised to see that Medicaid plans have the longest cycle time. One of the main reasons for this is that Medicaid balances are often transferred to the patient and go through time-consuming collections processes. Medicare does best because those denials usually only require a simple correction to demographic data and are handled relatively easily.


In addition to being fascinating to the stat geeks among us, this data also dictates a specific strategy for prioritizing your eligibility verification efforts. Because each payer type has a different eligibility denial frequency and days to payment, they can be classified by risk level:

  • High Risk: Medicaid

  • Medium Risk: Commercial, BCBS

  • Low Risk: Medicare

Your specific payer mix may be different from this national sample, but if you have this type of data for your region, you too can do this classification based on your own payer mix. Eligibility verification should always be performed in advance of service delivery, and your staff should always do their checking in order of decreasing risk, that is, checking patients with the riskiest payers first and the least risky last.

One added benefit of performing eligibility verification is that it can help prevent other types of denials. Often an eligibility check will reveal additional applicable payers, allowing you to avoid "bill another carrier" denials. Payers will also sometimes indicate certain referral or authorization requirements for particular types of services. You may also uncover service limitations for specific payers or plans, such as allowed visits, PCP requirements, and frequency limitations.

The eligibility check is often the first opportunity you will have to determine a patient's payment responsibility, and with high patient responsibility plans becoming increasingly common, it critical for you to keep your collections at a reasonable level.

Payers will indicate specific copays for the types of service rendered, which can vary between specialists and non-specialists. They may also specify certain co-insurance rates that can be used in conjunction with the provider's allowable schedule to calculate the patient's co-insurance liability.

Payers are also beginning to provide deductible information (sometimes even including the deductible remaining) as part of the eligibility verification they provide. In conjunction with your contracted allowable schedule, that deductible data can help you accurately estimate the balance that will be transferred to a patient and give you the opportunity collect it up front.

JoRel Martirosov is the eligibility program manager for athenahealth, a revenue cycle management company for medical practices whose database of billing information is the statistical basis for this series. She can be reached via

This article originally appeared in the April 2006 issue of Physicians Practice.

Related Videos
© 2024 MJH Life Sciences

All rights reserved.