Insurers received around 425 million medical claims in 2023, of which 73 million were denied – a 19% claims denial rate. Incomplete or incorrect patient information, billing errors, code-related discrepancies in medical bills, and a lack of pre-authorization are some of the top reasons for medical claim denials, which result in higher administrative costs for healthcare providers. 

Therefore, patient eligibility and benefits verification are the first checkpoints or a fundamental step required to minimize claim denials. This is not only important for securing pre-authorization, but also crucial for verifying patient information and the specific services that are covered. 

This article examines the connection between eligibility and the benefits verification process and claim denials, and why medical practices must prioritize ‘clean claims’ to improve their bottom line. 

What is a Clean Claim?

A clean claim is an error-free medical bill that has accurate and up-to-date patient information and is duly submitted within the insurer’s stipulated timeframe. 

A clean claim typically includes all insurance details, accurate and complete patient information, and all supporting documents that justify the cost of the medical services, and adheres to billing and coding guidelines. 

What is a Clean Claim Ratio?

Clean claim ratio, also commonly referred to as Clean Claim Rate (CCCR), is the percentage of accurate medical claims processed in the first attempt without any issues or rejections. 

The formula to calculate CCR is:

CCR = Total number of accurate and clean claims/Total number of claims submitted x 100

For example, out of 1000, 650 claims were processed in one go, and the CCR is

650/1000 x 100 = 65%

Establishing the Relationship Between Benefits Verification and Clean Claim Ratios

The verification and eligibility process plays a key role in improving CCR, aiding healthcare providers in enhancing their revenue cycle management (RCM). 

Here’s how benefits verification can help increase a healthcare provider’s CCR. 

1. Benefits Verification Ensures Accurate Patient Data Collection

An Experian Health survey revealed that around 77% of respondents (healthcare staff) believe that medical claim denials have increased between 2022 and 2024. The top reasons? Inaccurate and missing patient or policy-related information on the claim submission form. 

Healthcare providers receive an OC-16 code when the claim includes incorrect information, such as CLIA (Clinical Laboratory Improvement Amendments) numbers, Social Security numbers, demographic data, etc. 

The provider is responsible for creating a standard data collection procedure and identifying potential gaps in the process. 

Accurate and complete information enables healthcare providers to resubmit claims in case they are rejected. 

2. Benefits Verification Ensures Coverage Analysis 

Benefits verification is crucial in identifying whether the insurance policy covers a particular treatment or medical procedure in question. If the treatment is not covered, the healthcare provider is given a CO-167 code, indicating that the claim is denied due to non-coverage of the treatment. 

Healthcare providers can prevent this by verifying the diagnosis codes and documenting all clinical procedures accurately before claim submission. This also ensures all the healthcare services fall under the patient’s coverage terms, minimizing claim denials. 

3. Eligibility and Benefits Verification Ensures Seamless Pre-authorization

Eligibility and benefits verification addresses one of the key challenges in the medical insurance sphere: pre-authorization. This step cross-checks whether a specific service or procedure requires pre-authorization. 

If healthcare providers are unable to secure the necessary approvals, it typically results in claim denials, hurting the CCR. The eligibility and benefits verification process notifies healthcare providers about the different services that require prior authorization, enabling them to obtain the necessary approvals and secure higher CCR.

4. Patient Payment Preparedness

The initial eligibility and benefits verification step aids patients in understanding their financial liabilities, out-of-pocket expenses, co-pays, and other deductibles upfront, depending on their coverage terms, to avoid surprise bills. 

Healthcare providers can leverage the learning from the verification process and discuss various payment options and payment policies with patients to help them make the necessary financial arrangements and stay clear of unexpected financial burdens and billing disputes. 

Parting Words

In the increasingly competitive medical landscape, healthcare providers cannot afford to sideline or neglect eligibility and benefits verification. The process also plays a key role in improving the healthcare provider’s CCR and providing a transparent and seamless experience for patients. 

At its core, the benefits verification and eligibility process serves as an important checkpoint to verify whether patients receive the right medical service or treatment, and healthcare providers are reimbursed without hassles. 

HOM offers end-to-end services that empower healthcare providers to make informed decisions pre-service, during service, and post-service. The eligibility and benefits verification services are designed to improve CCR, foresee, and tackle all the potential reimbursement-related issues. 

Write to us at partnerships@homrcm.com to request a free audit and learn how your healthcare practice can maintain healthy clean claim ratios.