What Is the Difference Between Credentialing and Contracting With an Insurer?

Credentialing and contracting are two processes that healthcare providers undergo in order to work with insurance companies. While the two terms are related, there are several key differences between credentialing and contracting. Here is a simple explanation of what distinguishes insurance credentialing and contracting and how they are connected:

What Is Insurance Credentialing?

Credentialing is the process of evaluating and approving healthcare providers to operate in an insurance company’s network. This process is also sometimes referred to as provider enrollment or provider registration.

The main purpose of credentialing is to confirm that healthcare providers meet certain standards of quality and professionalism. During the insurance credentialing process, insurance companies typically require healthcare providers to submit a variety of documents and information. These often include proof of licensure and documentation of education, training, and certifications.

Other types of information that may be required during credentialing are background checks or proof of compliance with regulations. This information allows insurance companies to screen prospective providers to bring only qualified and ethical providers into their networks. Insurers often have different credentialing processes, which is why Physician Practice Specialists (PPS) has emerged to help providers navigate them.

Once a healthcare provider has been credentialed, they become eligible to provide services to patients covered by that insurance company. Credentialing does not guarantee that the healthcare provider will be reimbursed for their services. This is where insurance contracting comes into play.

What Is Insurance Contracting?

Contracting is the process by which healthcare providers negotiate and agree to terms and conditions with an insurance company in order to be reimbursed for their services. This process is often referred to as provider contracting or network contracting.

The goal of contracting is to reach an agreement that benefits both the healthcare provider and the insurance company. The contracting process is fundamentally a negotiation. Healthcare providers and insurance companies discuss terms for factors such as payment rates, reimbursement policies, and terms of service.

The terms of the contract may vary depending on the insurance company and the type of healthcare provider. A primary care physician will likely have a different contract than a specialist or a hospital. There are certain common factors that are typically included in a provider contract, like payment rates and billing procedures. Negotiation also determines the scope of services that the healthcare provider is authorized to provide. This process can be challenging for healthcare providers, but PPS can assist with negotiation as well, helping secure fair compensation.

Navigating the Difference Between Credentialing and Contracting

The simplest way to think about credentialing is as a way of deciding which provider is worth working with. Contracting is about establishing compensation once insurance credentialing is done. The two are connected but distinct. The confusion that sometimes arises around these is one reason that we established PPS. We understand the workings of both credentialing and contract negotiation, providing support so healthcare providers can focus on their work. If you are a healthcare provider looking to undergo credentialing or negotiate a contract, PPS can help. Contact us today to learn more about both processes or schedule a consultation.