There are two costs associated with the credentialing category of the revenue cycle in the medical field. We will identify them as internal and external costs. It’s important to note the costs associated with verifying the credentialing effective date on the facility and health plan sides are not included and are one of the primary sources of delays.
Internal Costs are soft costs generally absorbed within a practice by either dedicated personnel or by personnel that are primarily dedicated to other tasks. Internal costs can be outsourced to a third party in part but still require provider interaction to some extent. Functions of the cost are primarily related to time spent populating applications, application review, tracking down data, tracking down documents, responding to follow up requests from credentialing bodies, signing paperwork, etc.
Physician ($163.96/hr) 3.4 hours $557
Support Staff ($18.37/hr) 29.4 hours $540
Total Per Physician Internal Costs $1,097 * 30% for taxes and insurance= $1,426.10
“We needed to make a number of assumptions in order to complete this analysis. The first is that the organization has a dedicated person responsible for the credentialing and that this person immediately starts working on credentialing the physician as soon as he/she signs a contract. We typically see a 20-40 day lag time before any real work occurs from the date of signing to the date the first application is completed. We also are assuming that the person doing the credentialing is familiar with all of the payers and their respective processes. Failure to thoroughly understand the process for each payer will inevitably lead to delays.”
External Costs are hard costs associated with lost revenue from not being able to bill for charges. Lost revenue is absorbed by both the facilities and the provider. In some cases, a facility based practice may pay the provider an “income guarantee” while credentialing is completed, effectively transferring the provider’s lost revenue to the facility. Below estimations are based on a 182 day average length to complete health plan enrollment, per survey. The average time to complete health plan enrollment for PPS measured from the date we receive the provider’s information, to the effective date at the plan, is 110 days. Medicare average is only 55 days due to our contacts within the different Medicare administrators.
|Specialty||Facility Revenue||Physician Revenue|
In conclusion, the cost of credentialing can be both elusive and excessive. In large groups, these costs can compound rapidly, adding to a “hassle factor” in tracking that adds to the costs. A dangerous result of the process is transferring some the risk to the patient in the form of “out of network” fee schedules. Perhaps the greatest issue facing credentialing today is that the process involves too many parties and is not predicated by the organizations that it affects the most. The time, expertise and focus required to do this right is one of the primary reasons we advocate outsourcing your credentialing needs. You can certainly do it in-house, but it requires you respecting the department and limiting what you add to their plate as they work on the credentialing. If you want to limit mistakes, you must treat them as if they’re surgeons where one error is too costly to risk.
- Does not include Medicare/Medicaid or Facility Applications
- Adjusted for inflation at 3%
- Regional pay scales may skew numbers
- Regional number of payers may skew numbers (Florida, Texas, Oklahoma and many more average closer to 30 payers rather than the 20 used in the survey)
2004 MGMA Survey “Analyzing the Cost of Administrative Complexity in Group Practice
2010 Merrit Hawkins Physician Inpatient/Outpatient Revenue Survey