There are many factors that can affect your medical practice’s revenue cycle, including patient volume, coding and billing errors, and provider productivity. However, an often-overlooked component of the revenue cycle is provider credentialing. Without an effective action plan, credentialing issues can hurt your practice’s fiscal health, impact provider morale and potentially cause compliance issues.
The first step in provider employment, credentialing is a process of verifying and assessing a provider’s qualifications, including education, career history, training experience, residency and licenses in specialty certificates, and other qualifications. It’s also a way to determine if a provider has any pending medical violations.
Practices or external credentials verification organizations (CVOs) collect information from providers and other sources, and coordinate with government and commercial payers to ensure providers are qualified, which helps protect patients. Otherwise, providers will not be permitted to see most patients or provide care in a hospital. Moreover, the practice will not be able to receive payment from commercial payers, Medicare or Medicaid for claims, though retroactive billing can sometimes apply.
By the numbers
- 2: Years providers typically need to be re-credentialed
- 2: Years for renewal of physician privileges (except in Illinois, where it’s every 3 years)
- 90-180: Days it can take between submission of provider application and credential verification and approval
- $200: Average cost of credentialing each provider (incurred by practice or hospital)
- $250-$600: One-time enrollment fee per provider for outsourced credentialing
- $66-$129: Monthly fee per provider for outsourced credentialing
- $33,000-$50,000: Cost to hire an in-house credentialing specialist.
The importance of credentialing in revenue cycle management
Credentialing new providers can often be onerous, time consuming and frustrating for the medical practice team and providers. “Arguably, it’s one of the most important considerations of medical practice management today,” says Leslie Jebson, MHA, MBA, FACHE, FACMPE, executive director, clinical strategy and initiatives, Texas A&M Health, College Station, Texas, noting that practices would do well not to “underestimate what a poorly organized credentialing process” can do to its revenue cycle.
Credentialing can significantly contribute to claims denials, as reflected in an Aug. 24, 2021, MGMA Stat
poll in which more than half of medical practices reported denials related to provider credentialing increased in 2021.1
In that poll, practices noted that they had experienced denials for numerous reasons, including:
- Long delays in processing new provider applications
- Lack of communication from payers to medical practices
- Frequently changing and varying requirements
- Closed networks/issues with new plans
- Outright discrepancies.
Denials ultimately impact key performance indicators (KPIs), such as days in A/R, aging claims and clean claim rate, within revenue cycle management:
- Days in A/R — For practices, the goal from claim submission to close should be 30 days. However, if a provider is seeing patients and is not credentialed, that time will increase substantially with each denial, which may take a few weeks just to receive notification.
- Aging claims — Claims will continue to age the longer a provider goes without being credentialed. A/R aging can be controlled if practices address credentialing issues immediately and make certain that they renew credentials on time.
- Clean claim rate — Practices should strive for a 90% clean claim rate; however, denied claims due to credentialing issues will cut into that rate. If a new provider is having credentialing issues with a prominent payer, many claims will need to be reworked, resulting in significant time and effort by the billing and coding staff.
Given the prevalence of denials related to credentialing, it’s no wonder practices have become frustrated with payers. As Jebson points out, much of this has been caused by a credentialing process that has become increasingly complex and labor intensive, one that includes “changes and scopes of practice, and the ever-evolving requirements of payers, both government and commercial, and even organizational standards for accrediting bodies.” To help address some of these issues, practices need a sound plan for provider credentialing.