Physician credentialing is a low-profile function within healthcare management. Credentialing is perceived as routine, and FTEs devoted to this work are seen as an overhead expense. But while credentialing plays a minor role in healthcare administration, poor execution can cause problems. Everyone is aware that credentialing lapses can expose a healthcare organization to malpractice suits and accreditation problems. More commonly, credentialing mistakes lead to financial losses on provider services. Even in organizations that avoid major problems, inefficient credentialing needlessly increases administrative costs. Worst of all, poor credentialing processes create friction with physicians.
The solution to all these problems is centralization of the credentialing function. Leading healthcare organizations have reduced costs and improved outcomes by creating a consolidated team to manage credentialing across the entire enterprise.
Problems with the Status Quo
Provider credentialing is straightforward but detail intensive. It includes applying for and obtaining network participation with payers (Federal and commercial) and securing hospital privileges. The basic workflow is cyclical: capture physician information (degrees, residency information, licenses, references, etc.), submit applications, and manage periodic renewals.
Credentialing staff must also coordinate several related items, including jurisprudence exams and specs tests. Specific requirements can vary by state. In most medical groups, the credentialing function is located in the billing department or the administrative office. Typically, credentialing work is a secondary responsibility for several staff members. Even when someone is hired specifically to handle credentialing, it often happens that he or she is gradually handed additional tasks that dilute the focus of the position.
Credentialing staff typically use a variety of “homegrown” methods and tools, including spreadsheets, personal checklists, and a variety of reminder systems. Many organizations have a long-tenured credentialing employee who does a good job using these tools. One problem with this type of system is dependence upon the expertise of one staff member. Without the credentialing point person on hand, the whole process comes to a standstill. Another problem is that makeshift tools do not scale well. Significant growth in credentialing volume or complexity can easily outstrip the capabilities of the system.
Diluted staff focus and poor tools can lead to problems with efficiency and accuracy. The biggest problem, however, is that they create a reactive environment. Work is driven by impending deadlines, not proactive planning. Physicians often bear the brunt—as when a physician has to spend two full weekends taking CME classes because he or she was informed at the last minute about an impending loss of hospital privileges.
Complicating the situation is the fact that in many larger organizations, credentialing responsibilities are distributed among several different departments and facility locations. As a result, physicians are approached by multiple individuals for the same information.
Recent developments in health care are exposing the weaknesses of traditional approaches to credentialing. As consolidation drives the formation of larger medical groups, administrative staffers are struggling to keep up with the demands of physician onboarding. Also, growth in physician employment by hospitals is rapidly expanding the volume of credentialing work handled by staffers who are comfortable with privileging work but are unfamiliar with the requirements and processes of payer credentialing.
The growing pressure on traditional credentialing systems is creating greater financial risk. If an organization fails to properly credential a physician with Medicare and other payers, the doctor cannot bill for services. is means lost revenue for the group (in the context of employment) and/or the provider.
Unfortunately, the margin of error recently became thinner. A 2009 change in Medicare regulations reduced the service backdating window from 27 months to only 30 days. The problem is not just theoretical. In 2009 a practice management company was forced to pay more than $250,000 to compensate a client for lost revenue stemming from a credentialing lapse.
The key to addressing all these problems—inefficiency, service shortfalls, financial risk—is to recognize the limitations of traditional, fragmented approaches to credentialing, which do not take advantage of opportunities to standardize and streamline processes. They should be replaced by a strategy of consolidation: creating a professional, centralized unit that handles all credentialing, privileging, and related tasks. Healthcare organizations that have converted to centralized credentialing have realized several benefits in efficiency and outcomes:
- Staffing cost reduction. In 2009 a national hospitalist group consolidated its credentialing function, reducing total credentialing staff from 20 to 10 and cutting total credentialing FTEs by approximately one-third.
- Service improvement. Centralizing staff and processes leads to better service to physicians. Consolidation avoids duplicate requests to physicians for information, and working proactively helps eliminate deadline crises.
- Revenue cycle optimization. In my experience, a well-designed credentialing unit can reduce credentialing-related billing problems to essentially zero.
Healthcare organizations can achieve all these benefits through the right mix of organization, staff skills, processes, and tools. Based on our company's (Health Directions) experience consulting with several provider organizations, we have found several factors are important to building a high-performing credentialing function. These factors include:
Manage Each Physician as a Single Account
As noted previously, when credentialing staff are dispersed throughout an organization, physicians receive poor service. In a typical scenario, a physician might be contacted by an employee responsible for government credentialing, another person responsible for PHO credentialing, plus privileging staffers from five separate hospitals. Each person needs basically the same information.
In contrast, centralized credentialing enables staff to treat each physician as a single, coordinated account. Team members identify all the information and documentation needed for an entire credentialing/ privileging panel and contact each physician once per year.
In larger credentialing teams, single-account management will be facilitated by choosing the right way to divide the work. There are two basic approaches:
- Divide the work by function. For example, one team member will handle hospital privileging, another will manage credentialing with government payers, a third will be responsible for commercial HMOs, etc.
- Assign accounts by specialty. Under this system, individual team members handle all the credentialing for physicians in designated specialties. One staffer might be responsible for cardiologists, urologists, and family practitioners; another would take care of physicians in neurology, nephrology, and gastroenterology; and so on.
Both systems can work, but the second approach enables greater individualized attention to physicians. Dividing the work by specialty allows credentialing team members to master specialty specific requirements. For example, the team member responsible for anesthesiology will develop an in-depth understanding of hospital sedation privileges. Under this system, each physician account is “owned” by one credentialing team member, providing further assurance that critical details do not slip through the cracks.
Credentialing is not just paperwork. It is a “high touch” discipline that relies on cooperation and input from multiple stakeholders. Effective credentialing teams focus on building strong individual relationships with payer representatives, government contacts, medical staff liaisons, and many others.
Personal relationships are often the key to resolving credentialing problems quickly. The ability to call a known contact (as opposed to the unknown person answering an 800 number) can mean the difference between overcoming a process snag in minutes rather than in days. A strong relationship can even head off a problem before it develops. Let’s say a health plan credentialing application is missing a minor piece of information. A payer representative who knows the credentialing team member is likely to call up and simply request the missing information. When there is no relationship, the entire application is likely to be returned as incomplete, causing a significant delay.
For this reason, developing a credentialing team should focus on fostering strong relationship-building skills. In addition, compensation packages should be designed to minimize turnover.
Maintain Positive Relationships with Physicians
Medical group leaders seeking new administrative efficiencies should not overlook the opportunity to streamline credentialing staff and processes. Centralized credentialing can also be an important element of physician relations. As the provider consolidation trend continues, leaders can expect more points of friction to develop between physicians and administration. A professional credentialing unit can help minimize avoidable problems and support positive working relations among all parties.