What's the Difference Between Credentialing and Contracting?

Healthcare experts face numerous challenges when establishing or maintaining an effective practice. Among the critical factors in this journey are the credentialing and contracting processes. These two components play vital roles in a provider’s professional path, and understanding their complexities is essential for sustainable success. This article explores the significance of the credentialing process and contracting, helping navigate the intricate landscape of provider enrollment for hospitals and healthcare systems.

What is Credentialing?

Credentialing, often referred to as primary source verification, involves thoroughly validating a provider’s educational background, professional experience, and training. Despite its apparent simplicity, this process is often intricate.

The 52-Step Credentialing Process

Traditional credentialing, like other aspects of provider enrollment, is complex. The application process usually involves executing 52 distinct actions to establish a provider’s profile. These actions include:

• Transmitting, monitoring, and gathering the provider’s application package.
• Obtaining the provider’s consent.
• Acquiring honor forms.
• Assessing the disclosure questions and responses.
• Verifying medical school internships, residencies, fellowships, and affiliations.
• Investigating gaps in timelines and case histories.
• Reviewing the history of medical malpractice claims.
• Researching disciplinary actions concerning primary and out-of-state licenses.
• Obtaining a copy of the provider’s current insurance certificate.
• Confirming the absence of sanctions or exclusions from Medicare and Medicaid.
• Conducting a 10-year criminal background check.
• Querying the National Practitioner Data Bank.

Why is Credentialing Important?

Credentialing protects patients and practices by reducing the risk of medical errors due to incompetent providers. It also enhances the reputation and credibility of practices and healthcare entities within the medical community. Proper credentialing enables insurance companies to reimburse providers for their services, ensuring compensation for rendered services.

Consequences of Incorrect Credentialing

Failure to perform accurate credentialing can lead to several adverse outcomes:

• Legal and Regulatory Implications: Inadequate credentialing can lead to non-compliance with legal and regulatory requirements, exposing providers and organizations to potential legal repercussions and penalties.
• Safety Concerns: Incorrect credentialing increases the likelihood of incompetent providers delivering substandard care, endangering patient safety and potentially triggering medical malpractice cases.
• Billing Issues: Insurance companies may deny payment for services provided by uncredentialed providers, resulting in financial losses for healthcare organizations.
• Reputational Damage: Faulty credentialing can undermine the reputation and credibility of healthcare providers and organizations, eroding patient trust and affecting overall reputation.

What is Healthcare Contracting?

Following credentialing, the contracting phase begins when payors send contracts to providers for review and signing. Upon the provider’s acceptance and signature, the contract becomes official. Completion of the contracting process initiates the loading process, establishing a start date for the provider to begin accepting covered patients and billing. This process is repeated for each payor, including Medicare and Medicaid, ensuring comprehensive contractual agreements with each entity.

Why is Healthcare Contracting Important?

Contracting is crucial for healthcare providers seeking accurate and timely compensation.

The Consequences of Incorrect Contracting

Flawed contracting can result in several undesirable outcomes:

• Payment Delays or Denials: Insurance companies may delay or deny payments due to incorrect contracting, disrupting the provider’s cash flow and financial stability.
• Inadequate Reimbursement Rates: Failure to negotiate appropriate reimbursement rates during the contracting process can lead to reduced payments for services, affecting the provider’s revenue and profitability.
• Compliance Issues: Improper contracting may lead to non-compliance with contractual and regulatory requirements, exposing the provider to the risk of legal disputes, penalties, or contract breaches.
• Limited Network Participation: Poorly executed contracts can result in limited network participation or exclusion from specific health plans, restricting the provider’s access to a broader patient population and hindering patient acquisition efforts.
• Administrative Burdens: Contracting errors require management and administration to handle tasks such as contract amendments, clarifications, or disputes, consuming valuable time and resources.

The Difference Between Credentialing and Contracting

Credentialing involves the meticulous verification of qualifications to ensure competence and capability. In contrast, contracting is the process of pursuing and securing participation agreements with insurance plans, facilitating seamless reimbursement.

Integrating Credentialing and Contracting in Provider Enrollment

Providers engage in provider enrollment or payor enrollment by applying for and contracting with health plans, networks, and Medicare and Medicaid. Successful completion of the enrollment process makes providers eligible for payment for medical services. Credentialing and contracting represent the initial and final phases of this process.

The 3 Stages of Provider Enrollment

A quick overview shows that provider enrollment consists of three stages, including credentialing and contracting:

1. Credentialing: As previously discussed, this step involves verifying educational background, legal authorization, and medical practice competence.
2. Payor Application: Once credentialed, providers can submit applications to payors along with the required documentation. The specifics of this process vary depending on the health plan or organization.
3. Contracting: Upon application approval, providers can negotiate reimbursement rates, review contractual terms, and approve commitments. Negotiations may occur if reimbursement rates do not meet expectations. Once the provider signs and returns the credentialing agreement, a provider number and an effective date are issued, marking the start of billing within the plan and receiving in-network reimbursement for claims.

Enhancing Provider Enrollment Through Delegated Credentialing

Delegated credentialing streamlines the provider enrollment process by involving agreements between health plans and organizations. This approach simplifies provider enrollment, making the process more efficient and enabling expedited billing.

Three Advantages of Delegated Credentialing

1. Reduced Errors and Risks: Provider enrollment requires meticulous attention to detail, with even minor mistakes potentially impacting a provider’s efficiency and reputation. Delegated credentialing experts can manage the process effectively, minimizing risk.
2. Reduced Staff Burden: Office staff often shoulder the responsibility of credentialing, diverting their attention from essential tasks and potentially affecting patient care. Delegating credentialing to experts allows staff to focus on critical areas, potentially reducing overhead costs.
3. Improved Assurance: Delegated credentialing instills confidence in providers and practices. With experienced professionals overseeing the process, staff can concentrate on their core competencies, ensuring enrollment is in capable hands.

Credentialing and Contracting FAQs

Is privileging the same as credentialing?

No, privileging and credentialing are distinct. Privileging pertains to authorizing healthcare workers to provide specific patient care services based on their credentials and performance. Credentialing is a prerequisite for granting privileges.

How can I determine if I am already credentialed?

Contact your insurance company to find out your credentialed status under a group or individual contract.

What distinguishes group and individual contracts?

Group contracts involve agreements with multiple providers, while individual contracts involve a single provider. In group contracts, the contract stays with the group even if a specific provider leaves. In contrast, individual contract providers retain their contract after leaving a group.

Is re-credentialing necessary after joining a new practice?

Yes, new practices require providers to undergo the complete credentialing process. Maintaining a list of past insurance and health plan credentialing can expedite the process.

What is a CVO (Credentials Verification Organization)?

CVOs assist healthcare organizations in verifying the credentials of both new and existing providers. CVOs promote consistency in standards and expedite the verification process.

Should I use a CVO?

Engaging a CVO offers various benefits, including cost savings, access to expertise, and a reduction in non-revenue-generating activities. Three advantages of using a CVO include:

1. Cost Savings: Proper credentialing can help providers enroll in health plans and networks faster, leading to more billing opportunities. Outsourcing credentialing to a CVO can save providers and their organizations money. Healthcare organizations can improve their financial performance by reducing expenses and generating more revenue.
2. Access to Experts: A highly efficient credentialing team can reduce errors and increase patient safety by identifying and addressing potential issues before they arise. For example, they can ensure that providers have the necessary licenses and certifications and are not subject to sanctions.
3. Less Non-Revenue-Generating Activities: The 52-step credentialing process can be time-consuming and labor-intensive, diverting practice staff from other essential tasks. Credentialed providers can generate revenue, but unexpected credentialing delays can result in lost revenue and billing opportunities. A CVO can help free up office staff to focus on other revenue-generating activities.

What information is typically found in a contract?

• Charged service rates and related costs
• Deadline for submitting reimbursement claims
• Payor’s timeframe for reimbursing providers upon claim receipt
• Covered services
• Details about regulatory requirements and necessary regulations
• Dispute process for claim denials by the provider
• Medical necessity criteria and prerequisites for eligible services
• Notice period for contract termination by either party
• Provider networks and participation requirements

When does a contract end?

Contracts should explicitly state the expiration date and the provisions for early termination by either party.

Credentialing and Healthcare Contracting with PayrHealth

Navigating the intricate landscape of credentialing and contracting presents significant challenges. However, this article has provided essential insights for providers. While these insights are comprehensive, individual providers may face unique challenges. Seeking expert assistance can alleviate difficulties and streamline the provider enrollment journey. Enlisting the expertise of enrollment professionals allows providers to focus on patient care while ensuring optimal billing for services rendered.

Contact PayrHealth today to learn more.

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