How Credentialing Impacts Medical Billing and Revenue

Credentialing is the initial step that determines whether a healthcare provider receives payment from third-party payers based on how well the provider’s credentials have been verified. The failure to credential properly can lead to significant revenue loss by potentially losing 20 to 30% of total annual reimbursement. Additionally, it can negatively affect a healthcare organization’s cash flow and overall staff morale. It also has long-term effects on the sustainability of an organization. 

This blog will explore the credentialing impact on medical billing, the difference between medical credentialing and billing, discuss the various steps involved in the credentialing process, identify common obstacles and barriers encountered during the process, and provide insight into effective strategies to improve medical credentialing and billing,  ultimately maximizing revenue. 

What is Medical Credentialing? 

Medical credentialing is an extremely thorough process of verifying a medical provider’s credentials to ensure they have the proper licenses, certifications, and malpractice history, as well as hospital privileges to qualify them for participation on all insurance company and regulatory lists. All credentialing processes begin with primary-source verification (PSV), verifying whether the provider is qualified to participate in insurance company panel lists. 

The primary entities involved in primary-source verification are:  

• State Licensing Boards 

• National Practitioner Data Bank (NPDB) 

• AMA (American Medical Association) database  

The credentialing process usually begins when physicians complete their CAQH ProView Application. The CAQH ProView is a common credentialing database where 100-plus credentialing data elements (education, employment history, certifications, etc.) are collected and submitted by physician credentialing services to each insurance company (Medicare through CMS PECOS System, Medicaid, Blue Cross Blue Shield, commercial insurers, etc.). Groups may also use healthcare credentialing companies to credential their entire practice or group through facility accreditation from the Joint Commission. 

The primary cause of delays in insurance credentialing is a lack of documentation. For example, the failure to provide a DEA certification or an expired license will result in rejection of an application. CMS requires that providers be recredentialed on a 3-year cycle. Most commercial payers require that their participating physicians are credentialed every 1 to 2 years. HFMA reports that through credentialing, organizations can reduce administrative costs as much as 15 to 20% per provider, because they can streamline the credentialing process through standardized data collection.  

Panel participation is the most critical part of the insurance credentialing for physicians. Panel participation grants a physician, the participating provider, or an in-network provider status for contractual reimbursement rates. If a practice does not obtain panel participation status for all its physicians, it risks being unable to bill patients out-of-network. It may receive reduced payment amounts for services provided to patients who do not have the necessary coverage, and/or the practice may have claims denied. 

What is Medical Billing? 

Medical billing converts a healthcare provider’s interactions with patients into a financial transaction by translating clinical documentation into standardized billing codes that allow providers to be reimbursed by health insurers. For healthcare billing to occur, it must follow a standard eight-step process for each service rendered to a patient:  

• Registration 

• Insurance verification 

• Charge capture 

• Coding (diagnoses coded in ICD-10-CM; procedures coded in CPT and HCPCS) 

• Claim scrubbing 

• Claim submission 

• Claim payment posting 

• Claim denial management 

Physician billing enrollment services are essential prior to the start of the claims process to ensure that all providers have been identified by the health payer so that they may submit their claims. For example, Medicare requires physicians to register using PECOS to obtain an NPI-linked billing number, while commercial health insurers require matching credentials through the CAQH profile.  

Errors made during this process will result in denied claims, and those can be attributed to errors in code assignments, such as a charge exceeding the fee schedule or a non-covered charge. However, if credentialing lapses occur, then a large percentage of claims may be rejected due to missing contracts.  

How Credentialing Affects Insurance Claims  

Credentialing affects insurance claims the most in claims processing. For example, uncredentialed physicians can’t bill as in-network providers and experience 80 to 90% denied claims. Credentialization for insurance companies ensures that the physician has the correct credentials to be eligible for the insurance company’s panel, which allows for clean claims to be submitted at the negotiated rate. Typically, the negotiated rate is 120 to 150% of the Medicare rate for commercial insurance companies. 

Insurance panel credentialing for payer-specific applications can take 90 to 80 days. During the application process, providers cannot submit claims for services provided. Therefore, the credentialing services provided during the credentialing process create dark revenue (hidden or uncaptured income). Once the credentialing process is complete, the provider can retroactively file the claims. However, due to the time limits for filing (90 to 180 days), the provider may not recover the full amount of dark revenue.  

The common rejection reasons include:  

• Expired CAQH attestation  

• Mismatched NPDB information  

• CMS denies 15% of claims for issues related to enrollment. 

It is also important to note that claims appeals based upon credentialing denials are successful only 20 to 30% of the time.  

Credentialing Delays That Affect Revenue  

Credentialed physicians face significant financial consequences because of credentialing delays. Physician practices are significantly impacted financially by credentialing delays, which can average 120 days or more for initial enrollments and 60 to 90 days for recredentialing. 

Here are some of the delays affecting credentialing and medical practice revenue: 

• Payer backlogs: UnitedHealthcare is an example with 150-day timelines. 

• Documentation gaps: Incomplete applications without proper information.  

• Regulatory hurdles: Checks by OIG to determine whether the provider is excluded from participation. 

• Accounts Receivable (AR) impact: 22% of accounts receivable are greater than 90 days from lapse of enrollment.   

Impact of Credentialing on Revenue Cycle Management  

The two major components that make up a healthcare provider’s upstream RCM are credentialing and revenue cycle management. This is because how a patient enrolls in a service affects their downstream cash flow. Gaps in these areas can result in revenue leakage, with net revenue lost due to denial write-offs. 

However, CMS’s EPP (Every Provider Profile) and CAQH’s core platform allow for a provider’s credentials to be monitored in real-time and have been shown to reduce denied claims by 35%. Also, integrated RCM platforms provide 120-day advance notice when a provider’s credentials are about to expire, which can be synced with the billing workflow. 

Moreover, when a provider is required to recredential every 36 months, it creates an unstable RCM cycle. When credentialing is managed poorly, DSO increases from 40 to 70 days and impacts the provider’s margin significantly.  

Benefits of Outsourcing Credentialing 

The credentialing process is incredibly time-consuming and can seem extremely laborious when handled in-house. The benefit of outsourcing physician credentialing services is that it will help decrease timeframes and increase the efficiency of the entire process compared to performing every step by the provider themselves.  

Healthcare credentialing services such as Credex Healthcare specialize in healthcare credentialing and can significantly streamline the process and increase productivity by taking over the entire workflow. In addition to providing delegated authority to various payers, they can perform tasks that are required to update CAQH profiles, perform NPDB searches, complete CMS attestation documents, and other required paperwork from the beginning of the credentialing process through completion. 

Some of the benefits of outsourcing insurance credentialing for physicians include:  

• Quick processing: Professional services specializing in credentialing can quickly navigate the multiple requirements of each payer’s portal. They are less likely to experience delays due to staff turnover or manually completing information incorrectly.  

• Increased approval rates: The specialists at Credex Healthcare understand what documentation is needed and how it should be completed. This ensures a high rate of first-pass approvals. If an application is denied, they know why and can make corrections accordingly.  

• Reduced costs: Outsourcing credentialing eliminates the need for internal staff to spend time doing non-clinical activities. It also removes the necessity for hiring specialized credentialing personnel or purchasing expensive credentialing software for healthcare practice.   

• Full scope of services: Companies like Credex Healthcare can handle all aspects of credentialing, including enrolling new providers, recredentialing existing ones, multiple-panel enrollment (including both Medicare and commercial payers), and enrollment of difficult commercial payers.  

• Risk management: Credentialing companies have advanced systems that track renewal, sanction, and expiration dates in real time. These systems help prevent surprises and resulting claim denials.  

• Ability to scale: Credex Healthcare has the ability to add new providers or expand existing panels of payers without placing an undue burden on your existing staff.  

• Knowledge of regulatory compliance: Credentialing companies have built in audit processes and knowledge of changing regulations from the CMS, OIG, and payers. This helps keep your organization compliant and protects your revenue. 

• Revenue protection: Credentialing companies can transition the physicians’ applications to your billing department seamlessly, minimizing gaps that can prevent claim release and cash flow. 

Credex Healthcare sets itself apart with its provider credentialing services to insurance providers. The professional service provider does not just track timelines but offers proactive strategies to create revenue forecasts and compliance assurances.  

Through the process of outsourcing, medical practices convert their credentialing operations from an administrative burden on practice revenue into a competitive advantage, allowing them to concentrate on patient care as the experts manage the credentialing process.   

Best Practices for Credentialing and Billing 

A structured approach to credentialing and billing is an efficient way to build a process that will help reduce denials, speed up reimbursement, and support the credentialing and medical practice revenue cycles. These address the most encountered issues in both physician insurance credentialing and insurance company provider credentialing, as well as provide a seamless flow into providers’ revenue cycle. 

Here are some of the best practices for credentialing and billing: 

CAQH and RCM credentialing automation 

Track your credentialing status by using a CAQH dashboard and an automated RCM platform. In doing so, you will be able to set up renewal reminders prior to the expiration of medical licensure, CAQH attestation, etc., and avoid being surprised by the lapse of these credentials. When tied into practice management systems, this also allows for a single credentialing calendar that is accessible to both the billing team and the front office team. Therefore, there should never be a service rendered to a patient who has not been credentialed. 

Pre-scheduled service panel verification 

Verify the panel status on each and every payer portal accessed prior to each scheduled appointment. If enrollment is missing at the time of scheduling, it eliminates unbilled services. Your front desk personnel may access real-time eligibility reports that include credentialing status, NPI match, contract details, etc. 

Live documentation and standardization 

Always keep your CAQH ProView profile updated and enable auto-attestation. Designate a credentialing coordinator to update education, malpractice carrier information, work history, etc., in your CAQH ProView profile. Develop and use consistent templates for all payer applications to reduce errors and maintain a single master provider database that syncs with EHRs, billing software, and credentialing platforms. 

Staff training program 

Provide comprehensive training programs for all your staff, including billing, front office, and management teams, on the credentialing protocol and process required to obtain and maintain insurance panel participation. This should include information about the specific requirements of each payer, common reasons for denials, how to navigate CAQH, and workflow eligibility. Schedule refresher courses and cross-train staff members, so they continue to have the same level of knowledge when there are staffing changes. 

Regular AR audits and timely appeals 

Schedule regular reviews of your accounts receivable reports and focus on the number of claims being denied due to credentialing issues. Categorize them by payer and provider, and appeal the claim within the designated timeframe established by each payer. Review the trends and the reasons why these claims were denied so you can make improvements to your workflow to turn potential lost revenue into recovered revenue.  

Outsource complex multi-payer credentialing panels 

Use physician credentialing services to assist with difficult panels such as commercial payers and Medicaid managed care. The credentialing service will be responsible for obtaining delegated authority, completing parallel submissions, and following up on submitted credentials to expedite the approval process, rather than doing it internally. This is a good option for rapidly growing medical groups that are adding new physicians or expanding their networks. 

FAQs 

How does credentialing affect medical billing?  

Credentialing allows providers to file in-network claims. When a provider’s credentialing has lapsed, they can expect an increase of over 80 percent in denied claims. This delay can result in delayed payment for services rendered by 90-plus days. 

Can physicians bill insurance without credentialing?  

Yes, but rarely. Most often, the patient will pay out of pocket or self-pay, and some physicians may choose to see patients as out-of-network providers. Standard insurance claims will be denied. 

Why are insurance claims rejected due to credentialing?  

The claims will be denied if the physician is not on the insurance panel. That is, if the physician’s credentials have expired, or there is a mismatch between the information on file with the payor and the information provided on the claim.  

How does credentialing improve practice revenue? 

Denial rates can decrease by 25-40% for practices with proper credentialing. In addition, the time taken to collect accounts receivable decreases to approximately 30 days. Collections also increase by 10-15% for practices that have the right credentialing. 

Conclusion 

Medical credentialing and billing integration is crucial for all healthcare practices that seek to protect their revenue cycle from denials, delays, and administrative burdens. By adopting established best practices and maintaining ongoing monitoring of the credentialing process related to payer partnerships, a health care provider practice may turn a potentially troublesome credentialing process into a positive influence on revenue. 

When credentialing and revenue cycle management work together seamlessly, health care providers can enjoy financial stability, regulatory compliance, and the flexibility they require to thrive in the long term.