If a medical practice fails to receive payment from a health plan for services rendered to a plan enrollee, usually it is because the practice believes the patient to be an eligible beneficiary of a health plan when he or she actually is not.

When this happens, practices are forced to act as bill collectors and track down payments from their patients, provided the applicable contract permits such collection.

Certainly, keeping track of coverage eligibility for all of your patients who are enrolled in one type of health care plan or another is difficult. There is no denying the obvious "hassle factor." And, the more plans in which your practice participates, the bigger the problem.

However, in contrast, every time a payor rejects a claim, your practice is not only inconvenienced, but also short-changed. Dealing with rejected health plan claims for payment is costlier than you might imagine. Take a look at your practice’s actual numbers for the past three years; ask the following: How much time has your practice staff spent sending out delinquent letters, making delinquent phone calls and processing bad-debt information? Also consider how much your practice paid out in collection agency fees and how much bad debt you have written off.

How Does It Happen?

For your practice to receive notification of a change in a health plan enrollee’s eligibility status, the enrollee’s employer must notify the HMO or health plan which, in turn, must notify you. Some employers may not notify their health plans of benefit status changes for weeks, until the "regular" reporting date. In turn, a health plan may not notify your office until weeks after receiving this information, again adhering to a schedule. Further, some people who change jobs or health plans will neglect to inform your staff. Thus, your practice could provide substantial amounts of medical services to plan beneficiaries who are no longer eligible to receive health plan benefits, but still appear to be eligible to your practice. Only later will you learn that these recipients are ineligible to receive health plan benefits, when the plan refuses to pay you.

Deal With Problems in Advance

The best way to deal with this type of situation is to address it effectively in advance. Make sure that each health plan contract you sign clearly states that the HMO or other payor is responsible for absorbing these types of losses or, at very least, will share this responsibility with you. Also review your current contracts and situations, to prepare for contract renewal time. Then, make sure you always do everything in your power to verify eligibility in every case. Know that, in some cases, no matter what, you will have to go after the ineligible patient to collect the debt, as the payor will not. Understand that it is possible to be contractually obligated to provide service to HMO patients for a period of time after an HMO declares bankruptcy. Most states will hold you, the physician, responsible for patient care, and may not allow you to bill the patient.

Practical Steps

Do everything you can to prevent your practice from providing services to ineligible health plan enrollees. Educate your staff and make sure they are on top of eligibility verification. Consider the following practical steps for your staff to take:

Copy cards. Make a copy of every enrollee’s insurance card on every visit, not just new patient visits. Always update enrollee insurance information. If yours is a primary care practice, check to see that your name is on the card as the enrollee’s primary care physician.

Talk with patients. When patients call to make appointments or your practice calls to confirm their appointments, ask them about their insurance coverage. If there has been a change in health plan status, be sure you are aware of it in advance.

Review lists. Always check HMO capitation lists for enrollee names that have been added or removed. Impress upon your staff that it is vital for them to check the patient rosters as they receive these lists. Remind your staff that, while checking capitation lists is a necessity, it is not the be-all and end-all of verification. If you find useful information—such as the name of a new enrollee—use it, but remember that many patient rosters are posted monthly or bi-monthly. These lists are not always reliable. Remember that new members are not included immediately and that disenrolled members’ names may remain on patient rosters for months. If the patient’s name does not appear on the patient roster, you must verify coverage through some other method.

Make internal updates. Diligently checking health plan cards and capitation lists will provide you with valuable information. Make sure it is integrated effectively into your practice’s billing and appointment scheduling systems. Work out effective communication routines among your front-desk personnel, billing staff, appointment schedulers, data input personnel and other office staff members. You can also use these data to track patients who select you as their provider, but whose names do not appear on the rosters. Check with each payor to verify that you are entitled to retroactively receive capitation payments for those patients.

Take advantage of technology. Technology is constantly changing, which may make patient eligibility verification easier. Check with each payor to see what advancements are available. Examples of technological advancements in enrollee verification include the following:

• Automated voice response systems, which your practice can use to verify eligibility directly with the plan, via the telephone. In the typical system, the practice keys in the patient’s health plan ID number and receives the appropriate voice response. The system requires a touch tone telephone. These units also can be used to check referral authorizations or claims status, and these systems usually are in operation after "normal" business hours.

• Swipe terminals for enrollee health plan cards, which provide your practice with a virtually instant response to an eligibility inquiry. These work the same way credit card swipe terminals work, and also are in operation after "normal" business hours.

• Internet-based eligibility check systems use software programs to connect providers’ personal computers with the health plan’s computers via the Internet. Internet inquiries provide real-time information about their patient’s eligibility and benefit information.

Checking patient eligibility takes substantial employee time and effort. But remember that not doing a thorough job verifying enrollee eligibility is potentially far more costly, time-consuming and aggravating, as it tends to place a far greater work load on your entire office.

Technological advancements are making verification of patient eligibility easier and faster for some practices, but not all managed care companies offer such services/devices. Further, there is little uniformity among systems. Nevertheless, your practice should be taking advantage of these services whenever they are offered and request that payors improve their patient eligibility verification systems.

Your practice must do whatever is necessary to check enrollee eligibility—and also make claim status inquiries and receive referral authorizations—as efficiently and accurately as possible. Inadequate enrollee verification only creates a delay in payment which, in turn, harms your practice’s cash flow. Take whatever measures you can to prevent such losses.