Navigating the Pitfalls of Insurance Issues: Credentialing, Eligibility, and Audits

The healthcare billing landscape is complex, and even small administrative oversights can lead to major financial setbacks for both providers and patients. Three of the most common and problematic insurance issues are improper credentialing, failure to verify patient eligibility, and billing practices that can trigger audits. In this blog, we’ll break down each issue, its consequences, and how providers can proactively avoid them.

1. Improper Credentialing: The Cost of Jumping the Gun

What Is Credentialing?

Credentialing is the process by which insurance companies verify a provider’s qualifications, including licensure, education, training, and experience, to ensure they meet the standards required to join a health plan’s network. This process is mandatory before a provider can legally render services to patients under that plan and be reimbursed for them.

The Issue

One of the most frequent credentialing-related errors is billing for services before the provider is fully credentialed. This often happens when practices onboard a new provider and assume their application will be retroactively approved—or misunderstand the effective date of credentialing. Unfortunately, most insurance companies do not backdate credentialing, especially commercial payers, and this leads to denials for every claim submitted during the uncredentialed period.

Consequences

• Denied Claims: Services rendered before credentialing is complete are often not reimbursed.

• Revenue Loss: Thousands of dollars can be lost if multiple claims are affected.

• Compliance Risks: Repeated billing without proper credentialing may be seen as fraudulent.

• Patient Frustration: Patients may be left responsible for the cost of care.

  
  

Prevention Tips

• Start Early: Credentialing can take 60–180 days depending on the payer, so begin the process as soon as a provider is hired.

• Verify Completion: Do not submit claims until you receive formal approval and an effective date.

• Track Applications: Use a credentialing checklist and follow up regularly with payers to ensure timely processing.

  
  

2. Failure to Verify Eligibility: A Costly Assumption

What Does Eligibility Verification Involve?

Eligibility verification is the process of checking a patient’s insurance coverage and benefits before the date of service. This includes confirming plan details, deductible status, copays, referral or authorization requirements, and whether the provider is in-network.

The Issue

Failing to verify a patient's insurance eligibility and benefits prior to service is a surprisingly common error, particularly in busy practices. Providers may rely on outdated information or assume coverage is unchanged from a previous visit. In reality, patients may have switched plans, lost coverage, or require a referral—leading to claim denials and unexpected out-of-pocket costs.

Consequences

• Claim Denials: Services rendered to ineligible patients or without required authorizations are often denied.

• Patient Dissatisfaction: Patients may receive large, unanticipated bills.

• Delayed Payments: Time is lost when staff must rework denied claims.

• Increased A/R: Accounts receivable can balloon if eligibility issues are widespread.

  
  

Prevention Tips

• Use Real-Time Tools: Many clearinghouses and payer portals offer instant eligibility checks.

• Verify Each Visit: Insurance can change at any time—always confirm coverage before every appointment.

• Document Everything: Keep a record of verification details in the patient’s chart, including call reference numbers if verification is done by phone.

  
  

3. Audits: When Red Flags Attract Unwanted Attention

What Triggers an Audit?

Insurance audits—especially from Medicare and other government payers—can be triggered by a variety of billing patterns. Common audit triggers include:

• Overuse of high-level Evaluation & Management (E/M) codes

• Billing for non-medically necessary services

• Incorrect use of modifiers

• Excessive use of specific CPT codes without supporting documentation

  
  

The Issue

Using high-level codes, like 99214 or 99215, on a consistent basis without sufficient medical documentation is one of the biggest red flags. While these codes represent complex visits, they must be justified by both medical necessity and time or complexity of decision-making. Similarly, services that are not medically necessary, as determined by payer guidelines, may be denied and flagged for review.

Consequences

• Recoupment Requests: Payers may demand repayment for claims they determine were billed improperly.

• Prepayment Reviews: Future claims may be held for manual review, causing delays.

• Legal Liability: In severe cases, improper billing can result in penalties or exclusion from payer networks.

• Audit Fatigue: The administrative burden of responding to audits can drain time and resources.

  
  

Prevention Tips

• Stay Educated: Keep current with coding updates and payer-specific guidelines.

• Audit Internally: Conduct regular internal chart reviews to ensure code accuracy.

• Document Thoroughly: Ensure that the medical record supports the code billed—if it’s not documented, it didn’t happen.

• Use Coding Tools: Leverage software and certified coders to minimize errors.

  
  

Final Thoughts

In the world of medical billing, small missteps can have large consequences. Improper credentialing, failure to verify insurance eligibility, and audit-triggering billing patterns not only hurt your bottom line—they can damage patient trust and lead to long-term operational headaches.

By building strong administrative processes, training staff thoroughly, and leveraging available technology, practices can stay ahead of these common insurance pitfalls. The result? Smoother claim processing, better cash flow, and fewer compliance concerns.

Want help auditing your billing processes or navigating credentialing timelines? Drop your questions in the comments or reach out to us or your billing partner. Prevention is always cheaper than correction!