Credentialing refers to an essential process that medical practitioners are required to undergo in order to become members of insurance plans, to have their credentials verified, and to be compensated on time for the services being offered. Most healthcare providers pay much attention to the apparent credentialing cost that includes application payer charges and the necessity to use particular platforms, including CAQH; however, the actual cost of credentialing is much broader.
It entails costs that are not easily quantifiable, like administrative labour, time expenditure, chances of claims being declined, and recipient recredentializing. Such hidden costs can have a significant influence on the operations and financial aspects of a practice.
This blog provides the costs of credentialing in more comprehensive detail, including not only the apparent expenses of credentialing but also the implicit costs that may impact healthcare professionals. It further addresses the cost-benefit of outsourcing and credentialing services and how the benefit may be calculated in terms of gaining the return on investment (ROI) by simplifying the credentialing processes. Knowing these aspects allows healthcare organisations to control credentialing costs and remain in compliance, and maximise income.
What is Credentialing Cost?
Credentialing cost is all the costs related to the checking of qualifications and the maintenance of the healthcare provider’s qualifications, licensure and certifications, and insurance enrollment. The cost of credentialing is an important topic that needs to be estimated accurately by healthcare facilities and individual practices because it affects cash flow, reimbursement cycle, and regulatory requirements. These costs are Key to correctly estimating their impact:
- Cash flow (delays may slow down revenue receivership)
- Regulatory compliance (error or lapse bears punishment), and
- Operation efficiency (unwarranted redundancy of duties adds up to costs).
The holistic approach of credentialing helps the practices to act so as to strike a balance in cost management, quality, and compliance costs.
Components of Credentialing Fees
However, credentialing charges can be further divided into various parts, which compose in totality to form the cost of credentialing healthcare providers. The knowledge of these elements assists organisations in budgeting well and preventing unforeseen expenses. Credentialing fees consist of the most common factors:
- Application Fees: These include the upfront administrative fees of the insurance payers or networks to receive provider applications. Application fees are usually between 100 and 500 in a payer premium and are considered variable with the insurer and the specialty of the provider. Such are generally non-refundable and have to be paid whenever a provider applies to enter the panel of one of the payers.
- State Medical Board Fees: These include licensing and renewals, as well as exams. As an example, the cost of medical board applications is between 750-800 dollars, competency exams and oral examinations may require between 1400 and 2000 dollars, respectively.
- CAQH ProView Fees: Organisations and groups that are dealing with numerous providers may pay CAQH enrollment fees depending on extra documents or bulk verification. The costs involved in maintenance typically vary between 200 and 300.
- Hospital Privileging Fees: Hospital privileging and credentialing of hospitals is often free of charge; however, in even hospitals, hospitals might impose a fee that a physician provider of services exceeding several hundred dollars up to a thousand dollars to access hospital privileging and credentialing.
- Delegated Credentialing Fees: The organisations that delegate or outsource credentialing services can be charged separately depending on the contract. This may include per-provider charges or collection-based percentage charges and is usually in the form of hundreds to thousands of dollars yearly, depending on the involved spectrum.
Typical Credentialing Fees by Payers
Credentialing fees can vary widely across insurance payers and government programs:
Payer Type | Credentialing Fee Range | Notes |
Private Insurers | $200 – $500 per application | Varies by insurer and provider specialty |
Free but requires enrollment and revalidation | Cost lies in administrative effort | |
Usually free, but some states charge | State-dependent policies | |
$200 – $300 per year for maintenance | Centralised data reduces redundancy |
MSO Agreement in Physician Practice Management
The Cost of CAQH Credentialing
CAQH ProView can be perceived as an industry standard that seeks to lower the redundancy of having provider credentials stored in only one place. But its expenses are not necessarily evident.
- Initial Set Up: Although several providers will allow businesspeople to make the profiles free, external consultants could charge for set-up support.
- Annual Maintenance: Providers should update CAQH every 120 days, and this may attract third-party expenses.
- Indirect Costs: Faults or improper profiles may slow down the process of payers, which translates to slow reimbursements.
Hidden Costs of Credentialing
In addition to the fact that there are obvious costs (the applications and primary source verifications to obtain a credential), any healthcare provider bears numerous unknown expenses that can have a significant adverse effect on the bottom line. The complexity and administrative load of the credentialing process are a cause of these usually unexpected costs. Key hidden fees include:
- Administrative Personnel Time: Credentialing activities demand intense staffing of administrative staff, such as the creation of documentation, payer follow-ups, and resubmission. Such work can average 20 hours or more of labour per provider application, which is in the form of high salary expenses that are not necessarily covered in the first place.
- Delayed Revenue: Credentialing delays may slow enrollment of providers by weeks or months, which has the effect of hurting revenues and causing cash flow problems. Delays can cost up to $6,000 to $8,000 on average losses in prospective revenue per provider every month, as they will have delays in credentialing pending.
- Recredentialing Effort and Costs: Providers are required to re-credential themselves after 2-3 years and go through much of the documentation and testing process again. This activity is expending repetitive administrative functions and costs.
- Errors and Rejections: Partially complete or inaccurate applications provoke the denial or demand of further information, work overload, slowness, and can lead to penalties or compliance risks.
- Opportunity Costs: Waiting on the corresponding list: Providers that cannot serve patients because of related Credentialing background lose patients and can even have damaged credibility.
- Technology and Software Costs: Maintenance and adhering to credentialing software or practice CAQH fees can be a guise of the costs as well.
Cost to Outsource Credentialing
Several healthcare providers and their organisations find it cheaper to outsource their credentialing procedures to professional companies. Outsourcing may also transfer the organisational administrative load, but comes at a direct service charge:
- Standard Outsourcing Fees: Credentialing service firms can be charged on a flat or per-provider basis or by payment rate compared to revenue.
- Fee Range: The outsourcing cost can vary between 500 and 2000 per provider per year, often subject to alteration depending on the extent of the services involved, which may differ as primary source checks, payer follow-ups, or recredentialing.
- Benefits: External Outsourcing helps decrease internal workload and accelerate the processing of applications, as well as leverage vendor experience to reduce errors and decline.
- Disadvantages: It may be expensive and involve a certain amount of loss to have direct control over credentialing timelines and relationships with payers.
Benefits of Credentialing: Calculating ROI
Considering credentialing exclusively as a cost overlooks the critical ROI perspective. Through appropriate credentialing, providers will be in a position to:
- Receive Payer Reimbursements: Billing and insurance company payments. Billing and insurance company payments, including credentialing, are the primary source of revenue.
- Optimised Revenue Cycle: Well-coordinated credentialing will minimise claim denials and uphold cash flow speed.
- Platform: Credentialing protects the providers against penalties caused by failure to comply with payer and regulatory requirements.
- Develop Provider Reputation: Credentialing is a reflection of established qualifications that are thought to help developing providers build trust in themselves and assurance in patients.
Strategies to Optimise Credentialing Costs
Organisations ought to take into account the following best practices to meet maximum returns on credentialing investment:
- Centralise Credentialing Documentation: Maintain all verifiable credentials, licenses, and insurances in a single access location to minimise multiple submissions.
- Usage: Credentialing management software and the CAQH ProView can automate the reminders, reduce errors, and simplify submissions.
- Negotiate Fees and Terms with Payors: Some specific payers can have no application fees or lower application fees based on big provider groups.
- Regular Audits and Updates: It is economical to control the documents expiring arbitrarily before they start spending additional money to file their validations that are rejected.
Conclusion
Credentialing cost is far more than CAQH fees or payments made to payers. It incorporates unnoticed administrative expenses, delay possibilities, and maintenance expenses. The impact of outsourcing credentialing functions should be viewed in terms of its overall financial impact on the healthcare providers. Finally, properly executed credentialing is an investment that allows providers to be eligible to bill, reimbursements are faster, practitioners have fewer denials, and practitioners experience growth; this can be calculated accordingly.
Through knowledge of all the cost components and strategies of effective management, healthcare organisations can effectively manage credentialing costs and, at the same time, maintain compliance and financial viability in a dynamic healthcare billing landscape.
FAQ - People Also Asks
What does MSO mean in healthcare?
MSO is an acronym that is used quite frequently in healthcare and its definition stands for Managed Service Organization. MSO in a healthcare setting is a form of business that offers specialized and central management and support services, including billing, human resources, compliance, and information technology to other healthcare-related businesses.
What is the MSO agreement?
An MSO Agreement is a legal document that deals with a healthcare provider and an MSO, where their relationship concerning the agreed services, payment, work distribution, and other aspects of the business are specified.
What is the difference between an MSO and an MSA?
An MSO is defined as an organization that concentrates on the administration and operation of an organization, on the other hand, an MSA is a legal contract that outlines policies and procedures for the provision of clinical service between different healthcare entities and physicians.
What is the largest MSO in healthcare?
The biggest Medical Incubation business can perhaps be the Mednax, one of the leading healthcare service providers in form of physicians in various fields like neonatal, maternal and pediatric care.