Published: Apr 14, 2023
Revenue Cycle Management

Real-time Insurance Eligibility Verification: Advantages & Best Solutions

Rex H.
Rex H.
8 minute read
Blog Hero Background GraphicBlog Hero Background Graphic

Shifting to real-time insurance eligibility verification is a simple way to improve your revenue cycle. With the right software, you can reduce manual work and denials and cut costs. Here’s what to know about the advantages of real-time verification and the best solutions on the market.


What Is Real-time Insurance Eligibility Verification?

Real-time insurance eligibility verification is the process of confirming benefits coverage using software instead of manual methods. You submit patient information directly to insurance providers or through a clearinghouse and gain immediate access to insurance details, including coverage, copay, and coverage dates.

Why You Should Verify Eligibility in Real Time

According to the Becker Hospital Review, the leading cause of denied claims is eligibility problems. Of the $3 trillion in claims submitted by hospitals in 2016, roughly $262 billion, or 9%, were denied on the first attempt.

The average hospital or health system lost 3.3% of net patient revenue due to denials, equal to an average of $4.9 million per hospital. On top of that, each appeal for a denied claim costs an average of $118.

Denial rates are also going up. From 2016 to 2020, denials increased by 9% at the start of 2020 and by 11% at the end of the year. The reports state that 86% of those denials were avoidable, and staff could’ve taken steps to prevent them.

Verifying eligibility in real-time has become a critical component of denial management. It simplifies a key part of your revenue cycle, preventing gaps in revenue, denials, and high costs that eat into already thin profit margins.

Advantages of Real-time Insurance Eligibility Verification

Real-time insurance verification has many advantages, ranging from cost and time savings to higher patient satisfaction.

Cost savings with streamlined administrative processes

Electronic eligibility verification automatically checks for coverage and eligibility, eliminating significant manual work. Modern automated solutions allow you to streamline your workflow and reduce repetitive tasks, reducing manual rekeying and data checks.

In fact, a 2022 CAQH Index report found that electronic verification produces an average time savings opportunity of 14 minutes per transaction for medical practices. The same report found a total cost savings of $12.8 billion for the medical industry.  

Improved patient experience

Electronic, real-time verification offers your patients a seamless and stress-free experience. With faster confirmation, patients see fewer procedure delays and can better prepare for the cost, reducing barriers to care.

Patients know whether insurance covers multiple visits, benefit limits, copay, deductible, and out-of-pocket expenses in advance. Patients receive estimates and can make a payment plan, reducing surprise medical bills and frustration with their healthcare experience.

Faster reimbursement and reduced denials

Billing, coding, insurance details, and claims denials are a huge burden for healthcare administration departments. Automated real-time verification eliminates much of this manual processing and helps submit clean claims on the first attempt.

Clinics have seen substantial improvements in reimbursements, denial rates, and revenue cycle time using verification software. Watauga Orthopaedics, a private orthopedic surgery practice in Tennessee, switched to electronic verification and reduced its denial rate from 11% to 4%. Its revenue cycle also improved, with the days in accounts receivable improving from 45 days down to 26.

Enhanced financial performance

Delaying verification places financial strain on clinics. The longer it takes to complete the claim, the more costs your clinic has to carry. In the case of delayed denials, it also means shouldering the burden of payment collection from patients, sometimes long after service delivery.

With faster reimbursements, lower denials, and fewer costs, real-time verification can provide practices with better cash flow and financial stability. You reduce the risk of bad debt, improve operations and efficiency, and increase revenue.

How Real-time Insurance Eligibility Verification Works

Real-time benefits verification gathers patient details, automatically clears the data through predefined rules, and sends it to the payer’s system. The payer cross-checks the data and returns a confirmation of benefits.

The software analyzes and translates the data. Then it provides an estimate of reimbursements to the provider and costs for the patient. While it sounds simple, it involves several complex components and layers of security.

The role of electronic data interchange (EDI)

EDI is the exchange of data between patients, clinics, and insurance providers. Data flows directly between parties or through a clearinghouse or intermediary biller as a third-party relay. It includes:

EDI is central to eligibility verification since the entire process depends on sharing data between parties. However, HIPAA laws mean that patients are entitled to privacy and assurance that only those who need to see the information will access it.

Verification software is secure and HIPAA-compliant and integrates with the eligibility transaction systems of different payers. The payers only release the necessary information to confirm benefits coverage and eligibility.

The insurance eligibility verification process flow

The process starts with a data capture from the patient. You collect demographics, insurance details, plan numbers, and payment methods. Depending on the software, you can gather this information through a patient portal or integrate your verification software with your EMR system.

Once you have that information, automated workflows will identify the patient, connect with insurance providers, and confirm coverage. You’ll receive an accurate estimate of reimbursements available with your contracted payers, copays and deductibles due, and whether the patient is eligible for coverage.

Next, calculate any costs for the patients and auto-send estimates. Patients can make deposits on services, pay in full, or set up a payment plan.

The final steps are the actual appointment and claim submission and approval. Once the claim is processed, you’ll receive payment, and the cycle repeats.

Data requirements for real-time insurance eligibility verification

EDI technology is mature but is still used because it processes large amounts of raw data. By HIPAA law, known as the EDI Rule, all healthcare parties who submit electronically must use a uniform set of transactions. There are roughly 300 to 400 sets, but only 10 are currently in use.

The healthcare eligibility EDI transactions are known as:

  • 270 — Eligibility Benefit Inquiry
  • 271 — Eligibility Response

Additionally, these transaction sets must use the ASC X12 structure when sending documents and data. It is the only acceptable format under HIPAA. However, the data can be submitted through secure communication protocols like MLLP, AS2, and SFTP.

Data must convert into computer language before it reaches the receiver, ensuring data can be processed and remain secure. Once it passes through, the raw data is retranslated and presented in a readable format.  

To access payers’ systems or clearinghouses, your clinic needs software with the correct specifications and protocols. Beyond technology, policies and procedures for the safe use and exchange of data are other essential requirements. You may need a HIPAA officer, additional cybersecurity, risk analyses, and privileged access management.

Selecting the Right Real-time Insurance Eligibility Verification Solution

The right insurance verification software depends on your specific needs. The best options are user-friendly and streamline your verification process with automated workflows.

Real-time eligibility software

Off-the-shelf insurance verification software focuses on eligibility verification and revenue cycle management. Many options have automated batch workflows, auto preauthorization requests, code error detection, and estimates. These solutions have the required specifications, integrate with your EMR or practice management software, and often include payment collection options.

MD Clarity’s Clarity Flow

Clarity Flow by MD Clarity is a cloud-based eligibility verification software. It analyzes patient and payer data and provides accurate estimates for patients and providers.

With automated batch workflows, you can confirm coverage, identify copays and deductibles, and auto-send estimates to patients via email, text, or letter. Clarity Flow also provides payment options where patients can make deposits or choose a payment plan directly from the estimate.

Real-time insurance eligibility verification APIs

API stands for an application programming interface. These solutions help two programs communicate and parse data. Your EMR or EHR software uses EDI 270/271 transactions but doesn’t translate or convert the data. You can insert these API products into your existing system and build a comprehensive stack.

Change Healthcare Eligibility API

The Change Healthcare API uses X12 standards and HTTP requests. It complies with HIPAA requirements and uses uniform transactions like most other software.

Change Healthcare offers a suite of products in one platform that uses artificial intelligence, machine learning, and the eligibility API solution as an add-on. The API solution provides front-end management for claims and reimbursements.

Eligible API

Eligible API provides a collection of API products to startup healthcare companies. The goal is to help practices, clinics, or health centers bootstrap a system with the scale of large enterprises. You can build Eligible’s myriad APIs into your existing programs and stack them with multiple products.

The eligibility tool is much like other API software, using the same EDI transaction sets, standards, and automated functions. Eligible API has all the security, privacy, and compliance certifications you want but comes with bare-bones support.

pVerify API

The pVerify eligibility API uses artificial intelligence to analyze data and provide insurance coverage details. It integrates with EMRs, practice management software, mobile applications, and more. You can capture copays and coinsurance for multiple visits in one transaction.

The API also includes reporting, an eligibility widget, and a dashboard to review front- and back-end reports and patient history. The company claims to have the largest payer list in the industry.  

Best Practices for Effective Real-time Insurance Eligibility Verification

Best practices are guidelines or ideas for the most efficient way to carry out tasks. These often include ethics that steer you toward compliance and integrity. These are the best practices to implement in real-time verification.

Establish clear communication channels

You can’t exchange data with payers unless you can access the system and the patient’s information. By law, you must have contracts and enrollment forms that grant access and ensure you have the appropriate safeguards.  

Patient consent to collect and use data is also essential. Explain how you will use and protect data and how they can address any concerns. Creating these healthy communication channels fosters safety, trust, and transparency and improves the patient experience.

Ensure accurate data collection and entry

Verifying eligibility depends on accurate patient data. Seamless data collection can help streamline the process and ensure error-free entry.

Set triggers with automated workflows and rules that prevent errors. That way, forms with missing information won’t submit until you fill each block, and you can avoid rekeying patient information. Some solutions include identity theft and duplicate entry detection features, preventing fraud and data overlap.

Monitor and analyze performance metrics

One of the perks of modern solutions, especially those with machine learning functions, is that you have access to data about your practice performance. Machine learning software leverages that data to improve the tasks you give it. However, you can use that data to learn about workflow bottlenecks and process efficiency.

For example, monitoring your clean claims rate as a core KPI can show you how well your eligibility verification process works. Generally, a denial rate of 5% or less is considered a healthy range and shows your verification process is working well.

Continuously updating and adapting to industry changes

Technologies and industry regulations change at a dizzying speed, from simple product updates to correct software bugs to sweeping legislation changes to healthcare delivery. Practices that don’t adapt to trends and changes struggle to maintain agility.

Practices should continually monitor software for updates and stay on top of tech trends, proposed regulatory changes, and hot-button issues that could affect operations.

Automate Benefits Eligibility in Real-time With Clarity Flow

Insurance eligibility is a critical component of healthcare delivery. However, an inefficient process can quickly cause high denials, lengthy revenue cycles, and bad debt, leading to financial strain and instability. An automated process with real-time verification is a simple solution with the potential for widespread impact in your practice.

Clarity Flow by MD Clarity is one such solution. Its advanced automated solutions streamline your benefits workflow and project out-of-pocket expenses for patients. Not only do you remain compliant with the No Surprises Act, but you also provide transparent healthcare and boost the patient experience.

Learn how to drive real-time efficiency with Clarity Flow. Get a demo today.

Accelerate your revenue cycle

Boost patient experience and your bottom line by automating patient cost estimates, payer underpayment detection, and contract optimization in one place.

Get a Demo

Improve your financial performance while providing a more transparent patient experience

Full Page Background