Provider Credentialing vs. Medical Licensing: Key Differences You Should Know

Credentialing and licensing are often confused by healthcare professionals due to having almost similar processes and weight in significance to achieve recognition for the service being provided. When talking about provider credentialing vs medical licensing, having a distinction spares providers from facing financial and legal consequences. Both processes need to be accomplished by healthcare providers. Medical licensing grants legal authority to practice healthcare and medicine. Meanwhile, provider credentialing verifies qualifications for providers to participate in insurance networks and be granted privileges to perform medical procedures in a specific jurisdiction. These processes go together in ensuring that the interests of patients and clients are protected by having a medical professional verified and authorized to practice their profession. 

What is Provider Credentialing? 

Before engaging with specific insurance companies and payer networks, a healthcare worker and their aspirations to receive reimbursement from a patient base begin with undergoing a provider credentialing process. Provider credentialing involves verifying a provider’s qualifications, including their educational background, board certifications, and employment history. Even licenses are included in the credentials reviewed. Institutions, such as hospitals, healthcare networks, and other practices, require credentialing to determine whether providers pass the basic standard for delivering high-quality care to their patients. 

The provider credentialing process also ensures that risks associated with malpractice and fraud do not occur amid care that affects the interests of patients and clients. Before onboarding, the credentials of healthcare providers and allied medical professionals are properly and thoroughly reviewed and validated in accordance with institutional requirements and standards. 

Key Components of Credentialing 

The credentialing process follows a comprehensive procedure that determines the validity and authenticity of the following credentials: 

Educational background 

An eligible provider must meet the following educational requirements required to practice medicine. 

• 4-year medical school attendance and graduation, as attested by their diploma 

• Academic standing and records, as attested by a duly certified marksheet 

• Accreditation status of the university where the provider graduated (LCME or WDMS) 

Training background 

An eligible provider must prove that they underwent a comprehensive postgraduate medical training to attest to clinical competency. This background may include internship, residency, and fellowship training. Specialty-specific clinical training is also required for providers who have finished their fellowship training. 

Board certification 

An eligible provider must demonstrate that they have successfully completed a specialty certification given by a recognized certifying board. This certification must provide an accurate outline of the specialty and subspecialty credentials, certification dates, and recertification. 

Employment history 

More than training, providers can demonstrate their clinical competence and specialty preparation by being duly affiliated with a professional healthcare facility. A provider must detail their previous employers and corresponding clinical responsibilities. If there are any employment gaps, the provider must be able to document the rationale behind them. 

Insurance Credentialing & Payer Enrollment 

When talking about credentialing, insurance credentialing and payer enrollment are two distinct processes that always come to mind. Insurance credentialing involves verifying a provider’s qualifications in preparation for admission to a payer network. Provider enrollment, on the other hand, occurs when the provider is admitted to the payer network and included in the carrier’s reimbursement system. Both phases are included in a larger provider credentialing process. 

Providers undergo credentialing and enrollment to participate in various network types, which are further divided into commercial payers and government insurers. Commercial payer credentialing involves subjecting providers to distinct requirements, documentation standards, and credentialing timelines of major and regional commercial payers. Government payer credentialing, which includes Medicare and Medicaid credentialing, allows providers to participate in the federal and state-administered healthcare programs, respectively. 

Hospital Credentialing & Privileging 

Credentialing in major healthcare institutions, such as hospitals, is often associated with privileging. While credentialing verifies a provider’s set of qualifications to be eligible for payer network participation, privileging determines the specific responsibilities and services a provider may perform as the provider is onboarded at a hospital.  

Medical staff committees review and verify requirements for credentialing, as previously mentioned. Clinical privileges, on the other hand, define the scope of medical services offered by a provider. This includes the number and type of patients admitted under the provider’s care, types of surgeries (baseline or specialized) performed, and treatment plans provided by the healthcare professional.  

What is Medical Licensing? 

Medical licensing is a process where a provider is given legal authority to practice medicine within a defined jurisdiction. Just like provider credentialing, medical licensing follows a set of requirements that vary by state and a renewal obligation that must be done within a particular timeline to continue being verified and providing safe and standardized care for patients. To be duly licensed, a provider must meet the basic requirements, such as medical school graduation, residency completion, and licensing examinations. A state medical board is the governing body that will then review the documentation submitted by a provider. Once the state medical license is issued, the provider has the responsibility to undergo licensing verification and healthcare compliance throughout their career. This primarily includes completing CME units, payment of licensing renewal fees, and compliance with physician licensing requirements for renewal. 

Provider Credentialing vs. Medical Licensing: Major Differences 

The table below captures the distinctions between provider credentialing and medical licensing: 

Why Both Processes are Important 

Provider credentialing and medical licensing may serve distinct functions, but both are important in ensuring that providers can practice within the standards of safe and risk-free healthcare as mandated by both payers and state medical boards.  

Legal Compliance: Medical licensing follows a legal jurisdiction to practice medicine, while credentialing establishes a clear framework for qualifications as mandated by payers and government programs. 

Insurance Reimbursement: Before receiving revenue from a service provided, providers must fulfill the requirements set by payers, which include credentialing and licensing. 

Patient Safety and Risk Management: Being able to be credentialed and licensed demonstrates that you satisfy the competency standards required to provide healthcare to patients. 

Provider Credentialing Process Explained 

Obtaining NPI 

A provider must be issued with a National Provider Identifier (NPI), which is required for availing medical licensing services, claims submission, government program (Medicare and Medicaid) participation, and provider enrollment activities. 

Completing CAQH Profile 

Commercial payers use the CAQH profile as a database for eligible providers. A provider must accomplish a dedicated CAQH profile for them to be recognized and verified by these insurance carriers. Payer credentialing will only proceed once their CAQH profiles are accurate and foolproof. 

Primary Source Verification (PSV) 

Credentialing specialists conduct PSV to ensure that provided credentials are accurate, valid, and compliant with payer requirements. Credentialing timeline varies, but typically ranges from 60-180 days. 

Medical Licensing Process Explained 

Medical Education Verification 

State medical boards conduct verification of providers’ educational credentials, which includes medical school transcripts, degree confirmation, and accreditation review, among others, to confirm that they completed their program at an accredited university. 

Licensure Examination 

Most states require providers and allied healthcare professionals to pass national licensing examinations as a major component of physician licensing requirements, each with its respective passing threshold and allowed number of attempts. 

Background Check 

After a formal licensing application, a comprehensive background review is conducted, in which fingerprinting, criminal check, and disciplinary history assessment are included. 

Common Challenges Providers Face 

State medical board reviews depend on an established calendar. As such, reviews can face delays either from the end of the medical board or the provider due to incomplete documentation or additional requirements. 

Incomplete credentialing documentation, on the other hand, remains one of the common causes of delays. Data discrepancies in a provider’s CAQH profile also delay review, as payers or state boards may request clarifications on some information. 

Commercial payers often need to review credentials over extended periods due to high network participation. Lastly, hospital credentialing backlogs happen due to delayed approval from their committees. 

How Credentialing and Licensing Affect Revenue 

Delayed Reimbursements: A provider must credential and obtain a state license or two to receive reimbursement from insurance carriers. 

Inability to Bill Insurance: A provider who may have a valid medical license must still complete the credentialing process to submit claims. 

Lost Patient Opportunities: A provider risks not meeting large patient bases and referrals if they are not participating in insurance networks. 

Unscaled Practice Growth: A practice will not benefit from provider onboarding and revenue upturn if credentialing is not being focused on.  

How Credex Healthcare Can Help 

Credex Healthcare helps providers and healthcare professionals with comprehensive credentialing services and medical licensing services. Our expertise and experience in provider credentialing oversee every stage of the process, from initial credentialing applications to recredentialing and status monitoring. With our industry-graded credentialing workflows, we provide physicians and healthcare professionals with an edge to gain network participation in no time.  

Our medical licensing services include CAQH enrollment services and management, payer enrollment support, and ongoing compliance monitoring to ensure that providers fast-track the lengthy process of verification and review for medical licensing. 

Conclusion 

Credentialing and medical licensing may be distinct, but both are essential to providers, healthcare organizations, and insurance payers. Managing both credentials and licenses may cost a provider time, money, and effort, but its benefits outweigh the challenges that they face. To enjoy the perks of being credentialed and licensed, Credex Healthcare can help simplify both processes and keep providers compliant and on track. 

Frequently Asked Questions 

What is the difference between credentialing and medical licensing? 

Credentialing involves the verification of credentials or information essential to provide care in a specific insurance network, while medical licensing involves legal authorization to practice medicine in a specific state. 

Do providers need both credentialing and licensing? 

Yes. Credentialing is needed to receive reimbursement from insurance networks where a provider is admitted, while licensing provides a legal authority to a provider to safely provide medical services to a specific patient base. 

Which process takes longer? 

Credentialing timeline varies per payer, but the ballpark range is 60-180 days. Licensing, on the other hand, depends on the calendars of state medical boards, but may last from several weeks to months. 

Can doctors practice without credentialing? 

A physician may be licensed to practice the medical profession, but without proper credentialing, they cannot receive reimbursement from payers and obtain hospital privileges. 

Is licensing required before credentialing? 

Yes. A physician or healthcare professional must undergo the proper licensing process before beginning the credentialing timeline. They must first be legally authorized to practice medicine before undergoing payer enrollment, which is typically managed by commercial and government insurers.