What is the primary function of eligibility verification in the revenue cycle?

• A. To determine medical necessity for procedures
• B. To confirm patient coverage, benefits, and potential out-of-pocket costs before services are rendered
• C. To calculate physician work RVUs
• D. To assign DRGs/APCs

Answer: (B)

The primary function of eligibility verification is to confirm patient coverage, benefits, and potential out-of-pocket costs before services are rendered. This means checking that the patient’s insurance is active on the service date, what the plan covers, whether the provider is in-network, and what the patient’s cost share will be (copays, coinsurance, and deductibles). Real-time checks can also reveal any required preauthorizations and an estimated amount the patient may owe, which helps with upfront financial counseling and reduces the risk of unexpected charges or claim denials later. By focusing on what the payer will cover in advance, this step supports smooth cash flow and more accurate patient billing.

Medical necessity decisions are clinical judgments about whether a service is appropriate for a patient, not about whether the payer will cover it. Calculating physician work RVUs relates to how physician services are valued for reimbursement, which occurs in coding and pricing. Assigning DRGs or APCs involves categorizing a completed encounter for payment based on diagnoses and procedures, which happens after coding and discharge data are available.