Provider Credentialing: Steps to Limit Payer Denials & Improve Net Revenue

Is there anything worse than provider credentialing? 

Yes -  denial code 283.

That code reflects the second highest reason behind denials - provider disqualification.

It indicates the payer believes the provider who directed the patient's care didn’t have the credentials or experience to do so. A credentialing pitfall could originate from credentialing errors on either the provider or payer end. No matter who made the error, however, it’s the provider that doesn’t get paid. The claim is denied.  

Improper provider credentialing can result in substantial denials. In 2023, 54 percent of providers answering an MGMA Stat poll reported their number of provider-credential-related denials had risen. With payers denying 12 percent of all claims these days (and 17 percent in the Pacific Northwest), it’s no wonder healthcare revenue cycle teams consider denials their most pressing challenge. 

Here, you can dive into your best options for improving your provider credentialing processes so you can diminish denials and optimize your revenue. Explore whether getting the money coming to your organization will require bringing in an in-house credentialing specialist, using provider credentialing software, or outsourcing the whole process to a credentialing verification organization (CVO). No matter the method you choose, having a thorough understanding of proper provider credentialing helps cut down time-consuming, revenue-sapping denials. 

What is provider credentialing?

Provider credentialing is the process where insurers confirm that providers have completed and submitted all required education, training, residency, licenses, certification, and any additional qualifications. In addition to listing education and training information, credentialing also includes work history, malpractice insurance and claims, criminal background checks, sanctions, and disciplinary actions. For providers to be reimbursed by insurance companies for their services, they need to be credentialed with their insurers. The primary goal for both providers and payers is to confirm that the provider has the appropriate background to deliver quality, safe healthcare services.

Revenue healthcare organizations stand to lose

How much net revenue is at stake when a provider’s credentials don’t measure up?

Consider a 10-physician group where each physician brings in between the typical average of $1.3 million and $1.7 million in revenue annually. Using the above 12 percent denial rate, this 17-million-dollar organization stands to lose $2,040,000 through denials. These losses don’t look good on the balance sheet or EBITDA. In today’s high-scrutiny environment, every physician group looking to attract a buyer or capital investment must demonstrate the utmost financial integrity. 

If – as the Becker’s Hospital CFO Report linked above claims – provider credentialing issues cause 42 percent of the total denials, then $856,800 of this 10-physician group’s revenue is at risk. If it can improve provider credentialing and even cut this loss in half, it will capture another $428,400 in profit each year. That’s real money.  

Why provider credentialing is critical

Net revenue integrity

Healthcare leaders agree. Denials are the biggest challenge to the revenue cycle today. In addition to the initial costs and delays in the original denials, healthcare organizations have to absorb the additional cost of having staff rework claims, the price tag of which is $25 per claim for practices and $181 per claim for hospitals. Thorough provider credentialing protocol can head off a significant number of these denials before they occur. 

Delayed payments

As noted in a September MGMA Stat data story, a simple denial can take a biller two to eight minutes to work, and a complicated denial — which often involves prior authorization requirements — can take up to an hour, particularly when long on-hold times with payers are involved. And this is just when these denied payments are actually assigned to a staff member. Too often, they’re overlooked altogether, draining significant net revenue. 

Extended collection times become lagging accounts receivable, a risky consequence as the longer the account goes unpaid, the less likely the patient is to pay. By the time a bill goes longer than 120 days in accounts receivable, the average collection rate on it is just 10 cents for every dollar. You can avoid more of these denials in the first place by having your provider credentials completed with precision.

Compliance 

It’s not just the insurers who insist that physicians establish and maintain their training, experience, or any malpractice or disciplinary actions. Accrediting bodies such as the Joint Commission and the Centers for Medicare & Medicaid Services (CMS) as well as state and federal regulators are all watching that physicians maintain compliance with various regulatory and industry standards. The quality of care and patient safety depends on it, after all. A credentialing lag can be a red flag to these bodies, prompting time-consuming administrative burdens for staff. Staying on the right side of regulatory bodies wards off time and revenue drains.

In addition, proper credentialing mitigates the risk of fraud and malpractice suits, and other legal issues. Risk management is a key component of a compliance strategy, protecting your organization from legal challenges and financial penalties.

Proper provider credentialing helps healthcare organizations optimize revenue, speed and streamline cash flow, and avoid compliance hassles, all achievements that impress investors and potential partners or buyers. 

Two important credentialing players to know: CAQH, NCQA 

Get familiar with these two organizations in the provider credentialing space to help your credentialing processes run smoothly.   

CAQH

Most insurers (including Medicare) today require healthcare organizations to upload their providers’ credentials to the Council for Affordable Quality Healthcare (CAQH) ProView system. A non-profit alliance of health plans and trade associations, CAQH is not a private company or a government entity, but rather an organization that collaborates with various stakeholders in the healthcare industry to simplify healthcare, reduce costs, and standardize the collection of provider data. 

By creating and promoting widely adopted industry standards and solutions, CAQH aims to reduce the burden on providers, improve data accuracy, and facilitate more efficient healthcare delivery. 

CAQH does not charge providers to create their provider profiles. Insurers pay for this document-gathering and credentialing application process.  

CAQH does not submit applications to insurance companies or complete the credentialing process. Instead, once you’ve uploaded your credentials, along with your license, malpractice policy, DEA certificate, and other credentials, CAQH allows you to permit payers to access your file. 

Before the introduction of CAQH, providers were submitting the same credentialing information separately to each insurer. This time-consuming process also increased the chances of errors. CAQH's universal application system makes credentialing faster and more efficient for both providers and insurance companies.

There are only a few instances when a CAQH ProView account is not required. These include: 

• providers who will only bill out-of-network
• cash-based businesses like spas
• providers who are not recognized by insurance companies

Action step:  After initially uploading your credentials up to CAQH, remember to re-attest your file once every quarter. Even when no new changes are required, you should be prepared to add any newly acquired documents such as a license or malpractice certificate if anything on file with CAQH has expired. CAQH sends reminders to you to attest to your credentialing information every quarter. 

NCQA

Where the CAQH acts as a clearinghouse for credentials, the NCQA sets the standards for the credentials awarded to physicians and healthcare organizations. It is an independent non-profit organization with a mission to improve the quality of healthcare. 

Hospitals and health plans use NCQA's standards to credential physicians. NCQA determines whether the physician information provided meets their standards. It also sets the standards for quality improvement programs as well as physician education and training. 

Action step:  Watch for the NCQA name when pursuing any credential, as it’s an indication of quality. Credentials from organizations accredited by NCQA demonstrate to patients, payers, and other healthcare stakeholders your dedication to high standards of care.

Provider credentialing support

No matter how well-known and successful your new doctor is, if the payer declares a credential issue (denial code 283), you won’t be collecting the revenue from your big-earner’s patients. If getting this administrative task done during a healthcare staffing shortage feels impossible, you have some options. 

Smaller healthcare organizations with just a few physicians or clinicians can task all clinicians to keep up with their credentialing. As mentioned above, CAQH sends reminders as to when credentials are expiring.   

Credentialing specialists

Unlike smaller practices, larger healthcare organizations may find it cost-effective to hire their own credentialing specialist. In this way, their clinicians can focus on patient care. 

A dedicated credentialing specialist comes with some advantages. First, provider administration gets direct oversight of this individual. Should issues or changes in credentialing status arise, leaders can get the specialist to act quickly. This level of agility may be harder to achieve with an outsourced partner.

Secondly, having credentialing specialists within the organization fosters better communication and collaboration with medical staff, administration, and the revenue cycle management team. An in-house specialist is more directly accessible for consultations, updates, and strategic planning sessions. 

An in-house credentialing specialist’s salary can run from $30,000 to $40,000 for entry-level positions to $60,000 for more experienced professionals depending on the location. 

Credential verification organization (CVOs)

Credential verification organizations (CVOs) are outside businesses that verify providers' credentials. They utilize a combination of their own proprietary software solutions and specialists to make the provider credentialing process faster, more accurate, and more efficient. These services assert that, because they handle this administrative task, providers can focus on patient care. 

Some healthcare organizations find using a CVO ideal. First, provider credentialing is tedious and prone to errors. During a staffing shortage, managers don’t want to frustrate employees by overloading them with frustrating, menial work. These companies assert that, because they eliminate manual data entry, their software reduces errors and saves time. Their expertise in handling many credentialing permutations supports this claim.

Then, the solutions that include built-in checks to ensure compliance with regulatory requirements, such as state licensure and certifications, help providers avoid non-compliance and associated penalties. Finally, these companies strive to make using their solutions simple by including tools for direct communication between providers and the credentialing team, making verification more efficient.

Providers that benefit the most from using a CVO

Several types of healthcare organizations prefer using a CVO rather than an in-house credentialing specialist. These include: 

• Large Healthcare Systems: Organizations with a network of providers across multiple locations may prefer using a CVO due to the complexity and volume of credentialing. CVOs can handle high volumes of credentialing applications and re-credentialing processes efficiently, leveraging their technology and specialized expertise to ensure compliance and accuracy across the entire network.
  

• Organizations with Limited Administrative Resources: Smaller healthcare entities or those with limited administrative bandwidth might find it more cost-effective and efficient to outsource credentialing to a CVO. 
  

• Organizations Seeking to Improve Compliance and Minimize Risk: Healthcare organizations in highly regulated environments or have faced compliance challenges may turn to CVOs for their expertise in navigating complex regulatory requirements. CVOs stay meticulously up-to-date with changing accreditation standards and federal and state regulations, removing this burden from providers.
  

• Telehealth and Virtual Care Providers: With the rise of telehealth, providers that offer virtual care services across state lines face unique credentialing challenges. CVOs can expedite the credentialing process for these providers, ensuring they meet the licensure and credentialing requirements in multiple states, which can be a cumbersome process for in-house teams to manage.
  

• Organizations Looking to Scale: Healthcare organizations planning rapid expansion or those experiencing fluctuations in provider staffing levels might find a CVO better able to handle their fluctuating needs. CVOs can scale their services up or down based on the organization's requirements.
  

• Specialized Healthcare Facilities: Facilities that offer specialized medical services might prefer a CVO to ensure their providers are credentialed with specific expertise and certifications. CVOs can provide targeted credential verification services that align with the specialized nature of the care provided.

The choice between using a CVO and maintaining an in-house credentialing process should align with the organization's operational capabilities, growth plans, and the specifics of its delivery model. 

How does provider credentialing work? 

Knowing the steps involved in provider credentialing simplifies the process. 

Steps for the provider employed by a healthcare organization

Step 1: Preparation of documents: The process begins when a new provider joins a healthcare organization. The provider must prepare and collect all necessary documents, which include educational certificates, licenses, proof of residency, malpractice insurance documents, and any other certifications. The provider turns this information over to their organization’s credentialing specialist or whoever handles its CVO. 

Step 2: Primary Source Verification: The healthcare organization seeking to credential the provider carries out the verification. 

Step 3: Compliance Monitoring: Ongoing monitoring is essential to ensure that providers remain in good standing with federal, state, and local accrediting bodies. This includes checking for any disciplinary actions or complaints.

Step 4: CAQH ProView: Providers need to maintain their profiles on CAQH, keeping their personal and professional information up to date. This is crucial for expediting the acceptance process, as payers and employers can verify the provider's information directly from CAQH. 

Step 5: Submission of Credentials to Payers: The healthcare organization or the provider submits the credentialing application to various payers, including insurance companies and government programs, to be authorized to provide care to their members or beneficiaries.

Step 6: Monitoring and Maintenance: Credentialing is an ongoing process. Providers need to regularly update their credentials via classes and training (often NCQA accredited) to maintain their eligibility to provide services. Providers then update their credentials and re-submit them for verification. This is important due to payers’ changing requirements. 

Provider credentialing checklist for providers and credential specialists

Step 1: Gather necessary documents: Start by securing your CAQH ID or ensuring your CAQH profile is up to date with accurate information. It's crucial that CAQH has your current W9 and malpractice insurance certificate, as commercial payers will access these documents for your application.

Step 2: Submit a "join network" application:  Directly reach out to the insurer to confirm your application's progress, especially if the online process is unclear. Many insurers offer dedicated credentialing support lines, which can be found on their websites.

Step 3: Start the credentialing procedure: You’ll provide key details over the phone (like your CAQH ID, NPI, and practice's EIN) to facilitate the process. Ensure the EIN matches the one on your W9 filed with CAQH.

Step 4: Obtain a reference number: After your preliminary data submission, secure a reference or ticket number from the insurer. This number is vital for tracking your application. Insurers can misplace submissions. An initial review will prompt the insurer to send detailed application forms and contracts to the CAQH-listed credentialing contact.

Step 5: Follow-up regularly: Check in with the insurer to monitor your application's status. Insurers may not volunteer information on application issues; be persistent about hold-ups due to outdated or unclear documentation.

Step 6: Start the contract negotiation: Following successful credential verification, the negotiation for your contract begins. This stage is crucial as it determines your compensation. An insurer representative will draft your contract during this phase.

Step 7: Evaluate and negotiate fees: Approximately 90 days into contract drafting, the fee schedule is developed within 45 days. It's wise to periodically inquire about the progress with the insurer but maintain a balance to avoid any negative impact on the process.

Step 8: Contract review: Upon receiving the finalized contract from the insurer, carefully review it – especially the fee schedule. Insurers might initially propose less favorable terms. If the fee schedule is missing, request it. Also ask them to do a comprehensive review of your top 20 billing codes.

Step 9: Finalize the agreement: After thoroughly reviewing the contract, sign and return it to the insurer. The process of integrating the contract into their system could take up to 30 days, after which you'll receive a participation letter indicating your effective date and provider ID. Discuss the possibility of a retroactive start date with the insurer if you have time-sensitive claims.

Step 10: Confirm participation: Confirm your active participation with the insurer and keep a record of the confirmation letter or email. Update your billing system accordingly (including EDI enrollment) and commence claim submissions.

Provider credentialing v. provider enrollment 

Providers and revenue cycle team members can confuse provider credentialing and provider enrollment. 

Where credentialing verifies a provider’s clinical qualifications and competence, provider enrollment establishes the billing and payer reimbursement processes. The enrollment process is usually directed towards insurance companies and government payers, whereas credentialing is often a prerequisite for both employment within healthcare organizations and for enrollment with payers.

Provider enrollment specialists or coordinators are typically responsible for managing the enrollment process. Their role is crucial in navigating the complexities of payer requirements and ensuring that healthcare providers can bill for their services without interruption.

Both are provider enrollment and provider credentialing essential for a healthcare organization’s ability to practice medicine and receive reimbursement for services. 

Stop payer denials, underpayments, and unfair contract terms from ravaging your revenue

Proper provider credentialing can help reduce your denials, but while you’re making improvements, why not explore other spots in your revenue cycle where payers are getting the advantage? 

A study published in Becker’s Hospital Review found providers lose one to three percent of their net revenue annually due to the failure of commercial payers to pay the full rates according to the fee schedules listed in the contract. While one to three percent is an average, we find on a case-by-case basis that these underpayments can reduce our clients’ net revenue by five or even seven percent. 

Just as you win your best reimbursements when you enhance your provider credentialing, you improve net revenue when you hold your payers to their contracted rates and even proactively negotiate contract terms in the first place. 

MD Clarity’s RevFind makes it simple to execute net revenue improvement initiatives. RevFind ingests, digitizes, and analyzes contracts, comparing every payment to payer contract terms. It alerts staff to any discrepancies between amounts paid and contracted rates. You can read more about pursuing underpayments here. RevFind has helped healthcare organizations recover millions of dollars in cash and improve margins. Get a demo to see RevFind in action.

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