What Is Know Your Patient (KYP) and How Does It Work?

Last updated: August 2025

Last month, I sat with a CTO of a growing telehealth platform who shared a troubling story: His company had just lost $400,000 to a sophisticated fraud scheme involving stolen patient identities. “We had all the standard checks in place,” he said, shaking his head. “But somehow, they still got through.”

This conversation stuck with me because it highlights a reality we see daily at Momentum: Even the smartest HealthTech companies can struggle with patient verification. And while tech headlines buzz about AI and machine learning, the foundation of healthcare security often comes down to something more basic - really knowing who your patients are.

That’s where KYP (Know Your Patient) comes in. It’s not just another healthcare acronym or compliance checkbox. For the teams we work with, it’s the difference between confidently scaling their platforms and lying awake at night worrying about the next potential fraud attempt. The numbers are sobering: Healthcare fraud drains over $150 billion annually from the American healthcare system, with individual companies often bearing devastating losses.

At its core, KYP is about verifying patient identity, protecting sensitive data, and ensuring regulatory compliance. KYP systems rely on the ability to accurately match data elements such as address and date of birth to ensure correct patient identification. It is also crucial to confirm patient account details during the verification process to prevent unauthorized access and improve security.

But here’s what’s interesting - the most effective KYP implementations we’ve seen aren’t necessarily the most complex ones. They’re the ones that thoughtfully balance security with the practical realities of running a healthcare business. Read on to learn how this works.

Introduction to KYP

Know Your Patient (KYP) is a foundational element of patient identity management in modern healthcare. At its core, KYP is the process of verifying the identity of patients to ensure that their electronic health records (EHRs) and other sensitive data are accurate, secure, and accessible only to authorized individuals. As patient data is increasingly shared across a wide network of healthcare providers, payers, and other stakeholders, the need for robust identity management has never been greater. KYP helps protect patient privacy, prevent data breaches, and maintain the integrity of health records, all while supporting compliance with regulatory requirements such as the Health Insurance Portability and Accountability Act (HIPAA). By confirming patient identities at every point of care, healthcare organizations can safeguard sensitive data, reduce the risk of fraud, and ensure that each patient receives the right care at the right time.

The Scale of Healthcare Fraud in America

The American healthcare system’s complexity, combined with high costs and inconsistent accessibility, has created fertile ground for fraud. Manual verification processes in healthcare administration can be time consuming and prone to error, further increasing the risk of fraudulent activities. According to the National Health Care Anti-Fraud Association (NHCAA), even conservative estimates put losses at 3% of total healthcare spending - around $45 billion annually. More aggressive estimates from law enforcement agencies suggest the figure could be as high as 10% of annual healthcare expenditure.

Common Types of Provider Fraud

In our work with healthcare organizations, we regularly encounter several sophisticated fraud schemes:

1. Phantom Billing

  - Billing for services never provided   - Using stolen patient information to create fake claims   - Adding charges to legitimate claims for non-performed procedures

• Billing for services never provided
• Using stolen patient information to create fake claims
• Adding charges to legitimate claims for non-performed procedures

2. Upcoding Schemes   - Billing for more expensive services than performed   - Inflating diagnosis codes to match costlier procedures   - Manipulating service descriptions to maximize reimbursement

3. Unnecessary Services   - Performing medically unnecessary procedures for insurance payments   - Common in diagnostic testing programs   - Particularly prevalent in nerve conduction and genetic testing

4. Insurance Misrepresentation   - Presenting non-covered treatments as medically necessary   - Common in cosmetic surgery (e.g., billing rhinoplasty as septum repair)   - Manipulating procedure codes to ensure coverage

5. Documentation Fraud   - Falsifying medical records to justify unnecessary procedures   - Creating fake diagnoses to support billing   - Altering dates or service descriptions

6. Financial Schemes   - Unbundling services to charge separately   - Overcharging copayments   - Accepting kickbacks for patient referrals   - Manipulating Medicare copayment requirements

Individual and Organized Crime

The fraud landscape isn’t limited to provider misconduct. According to the Medical Identity Theft Alliance (MIFA), over 2 million Americans have fallen victim to medical identity theft. Stolen identities can be used to access healthcare systems from unauthorized devices, allowing fraudsters to bypass security measures. Unauthorized users may exploit system vulnerabilities to commit fraud, putting both patient data and healthcare organizations at risk. The consequences are far-reaching:

• Victims receive improper medical care - Life insurance eligibility is compromised - False diagnoses appear in medical records - Employment medical screenings are affected by incorrect health records

Even more concerning is the rise of organized crime in healthcare fraud. The FBI’s 2018 investigation uncovered 812 operations run by 207 criminal organizations, with law enforcement noting a migration from drug trafficking to healthcare fraud due to its lucrative nature.

Benefits of KYP

Implementing a strong KYP program brings a host of benefits to healthcare organizations, providers, and patients alike. First and foremost, accurate patient identity verification leads to better patient outcomes by ensuring that care is delivered to the correct person, reducing the risk of medical errors. Enhanced data security is another major advantage, as KYP helps protect patient information from unauthorized access and potential data breaches. By eliminating duplicate records and minimizing administrative errors, KYP also drives down operational costs and streamlines billing processes. Healthcare providers benefit from increased efficiency, as automated verification processes reduce the time spent on manual checks and allow staff to focus on patient care. Ultimately, KYP supports a safer, more reliable healthcare system where both patient information and organizational resources are managed with greater accuracy and confidence.

The Four Pillars of KYP Implementation

To combat these threats, KYP systems rely on four essential components. Specialized software solutions help manage patient records and support the relationship between healthcare practices and their patients by ensuring accurate data linkage, secure information exchange, and effective oversight of patient identities.

1. Know Your Customer (KYC) Verification

• Identity document authentication – Incorporates device recognition to ensure that only trusted hardware is used for access, enhancing security beyond traditional methods.
• Authorization validation – Utilizes password alternatives such as biometrics, reducing reliance on passwords and minimizing human error in authentication processes.
• Remote verification capabilities (increasingly critical since 2020) – Leverages secure device assessment and passwordless authentication to streamline account recovery and improve user experience.

2. Eligibility Checks

• Insurance coverage verification
• Service coverage validation
• Benefit eligibility confirmation
• Real-time status monitoring
• Connecting with health plans to verify patient benefits during eligibility checks

3. Pre-Authorization

• Medical necessity validation
• Coverage determination
• Treatment plan verification
• Emergency exception handling
• Validating prescriptions as part of the pre-authorization process

4. Service Delivery and Claims Processing

• Accurate service documentation
• Claims submission and tracking
• Payment verification
• Verifying the pay status of claims to ensure accurate reimbursement
• Audit trail maintenance

Digital Infrastructure Requirements

Modern KYP systems rely on several key technological components: To ensure a seamless and secure patient experience, these systems must support secure access from multiple devices, allowing patients to interact with healthcare technology across various digital platforms.

Electronic Health Records (EHR)

• Comprehensive medical histories
• Test results and diagnoses
• Treatment information
• Vaccination records
• Care coordination data
• Standardized data elements, such as demographic information, to improve the accuracy and reliability of patient identification

Electronic Medical Records (EMR)

• Disease histories
• Diagnostic information
• Procedure records
• Clinical results
• Patient progress tracking
• Date of birth recording as a critical data attribute for accurate patient identification and record linkage

Patient Matching Systems

Advanced systems that:

• Compare patient data across sources
• Compare address information as part of demographic data to improve patient matching accuracy
• Ensure accurate identification
• Prevent data duplication
• Improve information accuracy

Technical Standards and Frameworks

Health Level 7 (HL7)

HL7 provides the foundation for healthcare data exchange through: - International standardization - System interoperability protocols - Data integration guidelines - Information sharing standards

HL7 Da Vinci Project

This initiative focuses on: - Accelerating FHIR adoption - Streamlining payer-provider data exchange - Improving administrative processes - Enhancing clinical workflows

Technical Testing Tools

Touchstone provides:
- FHIR compliance testing
- Interoperability verification - Integration validation - Standard conformance checking

Additional Standards

- X12 for document exchange
- SMART on FHIR implementation
- PDEX frameworks - CDS Hooks integration
- USCDI compliance requirements

The 2027 API Mandate

The Centers for Medicare & Medicaid Services (CMS) has mandated five crucial APIs by January 2027. Healthcare organizations need to begin preparations immediately to ensure they meet the requirements of the 2027 API mandate.

1. Patient Access API

Healthcare providers must provide APIs allowing patients to: - Access complete medical documentation - View test results - See insurance decisions - Check authorization status - Connect through mobile applications

2. Provider Directory API

Insurers must expose APIs enabling: - Patient insurance verification - Spending tracking - Coverage validation - Service eligibility checks

3. Payer-to-Payer API

Facilitating: - Inter-insurer data exchange - Standardized information sharing - Coordinated coverage details

4. Prior Authorization API

Supporting: - Streamlined authorization processes - Medical necessity validation - Coverage confirmation

5. Provider Directory Services

Offering: - Network provider information - Service availability data - Appointment scheduling - Pricing transparency

All APIs must comply with: - HL7 FHIR Release 4.0.1 - Da Vinci PDex IG STU 2.0.0 - SMART App Launch IG 2.0.0 - USCDI standards

Patient Privacy in KYP

Patient privacy is at the heart of every effective KYP program. Because KYP involves collecting and verifying sensitive patient data, healthcare organizations must implement robust identity management systems to protect this information at every stage. This means using advanced security measures such as encryption, strict access controls, and comprehensive audit trails to ensure that only authorized personnel can access patient information. By prioritizing patient privacy, healthcare providers not only comply with regulatory requirements but also build trust with their patients, reassuring them that their data is handled with the utmost care. A strong commitment to privacy within KYP programs helps healthcare organizations maintain the integrity of their systems and fosters a culture of respect for patient rights and confidentiality.

Market Opportunities and Implementation Timeline

The healthcare API market is projected to reach $336 million by 2027. There is growing interest among healthcare organizations in adopting KYP solutions to enhance patient identification and streamline data access. Many industry leaders are interested in leveraging KYP for compliance and operational efficiency. Early adopters like CommonSpirit Health, HCA Healthcare, and Trinity Health are already implementing these standards, but the majority of implementation activity is expected in 2025-2026.

Market Size and Potential

- 32,000 clinics in the US - 6,000 hospitals - Growing demand for integration services - Increasing focus on compliance

Implementation Phases

Current Phase (2024-2025) - Early adoption by industry leaders - Framework establishment - Initial implementation testing

Mass Implementation (2025-2026) - Widespread adoption - Integration development - Compliance verification

Best Practices for Implementation

Based on our experience helping healthcare organizations implement KYP systems, we recommend:

Collecting accurate information from new patients during the onboarding process is essential. This ensures that insurance details and patient identification are properly verified from the start, streamlining future interactions and improving overall efficiency.

1. Strong Identity Verification

• Multi-factor authentication
• Document validation
• Biometric verification options
• Remote verification capabilities
• Confirm patient identity through multiple verification methods

2. Automated Eligibility Processing

• Real-time insurance verification
• Coverage validation
• Benefit confirmation
• Status monitoring
• Verifying patient account information during eligibility processing

3. Streamlined Workflows

• Intuitive user interfaces
• Efficient data entry
• Automated validation
• Clear process flows
• Workflows designed to be intuitive and efficient for users

4. Comprehensive Documentation

- Detailed audit trails - Compliance records - Process documentation - Regular updates

5. Regular System Maintenance

- Security patches - Compliance updates - Feature enhancements - Performance optimization

Measuring Success in KYP Programs

To ensure that KYP programs are delivering real value, healthcare organizations need to measure their effectiveness using clear, actionable metrics. Key indicators include verification successful waiting times, which reflect how quickly and accurately patient identities are confirmed, as well as patient satisfaction rates and reductions in administrative errors. By analyzing patient data and tracking these metrics, organizations can identify areas for improvement and make informed decisions to enhance their KYP processes. Leveraging data analytics also allows healthcare providers to spot trends and patterns, leading to better patient outcomes and a more streamlined patient experience. Regularly measuring and refining KYP programs ensures that they remain efficient, secure, and responsive to the evolving needs of both patients and providers.

Case Studies: KYP in Action

Real-world examples highlight the transformative impact of KYP programs in healthcare. For instance, a major hospital system implemented a real-time identity management solution that dramatically reduced duplicate records and incorrect billing, leading to higher patient satisfaction and improved data security. In another case, a health insurance provider adopted advanced KYP technology to verify policyholder identities, resulting in a significant drop in fraudulent claims and more efficient claims processing. These success stories demonstrate how effective KYP programs can enhance patient outcomes, protect sensitive data, and streamline operations. By prioritizing patient privacy and leveraging the latest identity management technology, healthcare organizations can achieve greater efficiency, security, and trust across their systems.

Looking Forward: The Future of KYP

As healthcare technology continues to evolve, KYP systems must adapt while maintaining their core security functions. The focus should be on creating systems that:

• Support both in-person and virtual care delivery
• Integrate seamlessly with existing workflows
• Maintain compliance with evolving regulations
• Provide clear audit trails
• Scale efficiently with organizational growth

The implementation of these new API requirements represents both a challenge and an opportunity for healthcare organizations. While the 2027 deadline may seem distant, the complexity of these systems means that organizations should begin planning their implementations now.

At Momentum, we help healthcare organizations navigate these changes while building robust, secure, and efficient KYP systems. Whether you’re just starting your KYP journey or looking to enhance your existing systems, we’d love to discuss how we can help you protect your organization while improving patient care. Providing a seamless experience for customers seeking secure access to healthcare services is essential for enhancing engagement and satisfaction.

Want to learn more about building or improving your KYP system? Let’s talk about your specific needs and how we can help you prepare for the upcoming regulatory changes. Please contact us for more information about our KYP solutions and how we can support your organization.