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Best Practices for Optimizing Revenue Cycle Management: Why credentialing matters


Taking a proactive approach to credentialing is vital to the fiscal health of your practice.

money bag cycle illustration

The coronavirus pandemic has stretched practices to their limit, with increased patient demand and extra precautions putting even more strain on busy providers and their staff. While the primary focus remains on keeping patients healthy and safe, today’s providers are continually challenged with attending to the business side of their practice, too.

For many practices, improving their billing and collections procedures, and ensuring they get paid properly for their services, has remained top of mind this year, particularly as the industry evolves to value-based care. But credentialing–one of the fundamental aspects of revenue cycle management (RCM)–is often overlooked. If practices and providers are not credentialed by government and private payers, or they neglect to renew their credentials, RCM is stopped in its tracks. Without credentials, they cannot legally bill patients for services or collect revenue. It can take months to recover that revenue stream, with a very real risk of losing substantial income in the process.

RCM Credentialing: A Labor- and Time-Consuming Process

Credentialing—or the process of contracting with insurance companies and obtaining hospital and facility privileges–can take anywhere from 90 to 120 days; COVID-19 is putting more pressure on the process. Due to the pandemic, healthcare organizations have had to rapidly scale their provider networks to handle spikes in demand—but until they’re credentialed, those providers cannot start treating patients or submitting claims.

Most practices typically do not dedicate sufficient staff to this complex legal and regulatory process. The work required to manage this is considerable: each individual provider may need credentials for 25 or more payers, each of which has different requirements and renewal schedules. What’s worse, many practices may not even realize there’s a problem until denials come pouring in. Certain Remittance Advice Remark Codes (RARCs) and Claim Adjustment Reason Codes (CARCs) can signal that there are credentialing issues. Then, it’s up to the staff to dig deeper with each payer to see if it’s a simple problem, such as an error in the provider’s identification code, or worse—lapsed or no credentials—and try to fix it quickly so claims can be approved and payments can be made.

Maintaining Key Performance Indicators for RCM

Lack of credentialing not only adds work for the staff, but it also negatively impacts practice key performance indicators (KPIs), such as:

  • Days in Accounts Receivable (AR) – The goal for time from submission to closing of a claim should be thirty days. But without proper credentials, this time can increase significantly. It could take up to 21 days just to get notification of claim denial, and during this time that provider could have seen hundreds more patients insured by this payer, whose claims will also be denied. Not only will it take more time to fix the denial, but several months could also pass before the provider is properly credentialed, resulting in the need to write off all the claims in question.

  • Aging Claims – Ideally, practices will want to ensure at least 75% of all claims are completed within 60 days. Trying to correct credentialing issues can take much longer, with claims continuing to age during that time. By identifying credentialing issues early, and ensuring that renewal timeframes are met, practices can keep their claim aging KPI in check.

  • Clean Claim Rate – The goal of every practice should be to obtain reimbursement upon the first claim submission, since denied claims mean no revenue. Claims denied for credentialing are not clean. Ideally a practice strives to maintain a 90% or higher clean claim rate. But consider if your practice has credentialing issues with a major payer -- a significant number of claims will lead to additional work simply because credentialing was not up to date.

Staying Ahead of the Credentialing Process

Taking a proactive approach to credentialing is vital to the fiscal health of your practice, whether it’s reviewing new providers who were added to help with pandemic-related demand, or ensuring existing providers are still eligible to be reimbursed for the services they provide.

For new providers, make sure to take the appropriate steps to get them credentialed, which includes collecting information about contracting with desired government and private payer insurance companies and obtaining national provider identifier (NPI) numbers for the practice and clinicians. When the applications are completed, review the terms and rates of the contract, and negotiate any objectionable conditions.

Once they have been credentialed, it’s up to both the provider and your practice to ensure there are no lapses. Reminders should be set, using Outlook, Office 365 or other calendaring apps to complete recredentialing or revalidation in a timely manner. Most insurance companies will require these updates every few years. They can be very strict, not allowing for retroactive reauthorization, which could put claims at risk of non-payment.

Outsourcing Can Keep Credentialing on Track

Given the complexity and time demands associated with credentialing and managing claims, many small practices do not have the staff to keep up. In these cases, outsourcing these efforts to a third-party vendor can alleviate much of the burden.

These vendors can provide a variety of services from software to track the credentialing process to a holistic offering that includes helping practices obtain and maintain credentialing for all providers. Working with a third party that has expertise in the credentialing process can save significant time—condensing the process from 90 days to as few as 15. And it can save your practice money by having staff ready to handle the paperwork and claims denials, and ensuring that revenue streams continue uninterrupted.

In times like today’s global health crisis, it’s vital to ensure that providers’ credentials are up to date so they can continue providing the best care available to patients while maintaining the viability of the practice.

About the Author

At Greenway Health, a leading health information technology and services provider, Marvin Luz serves as senior director, Greenway Revenue Services. With more than 13 years of experience in the ambulatory EHR and practice management market, he oversees the daily billing operations of revenue services for customers, ensuring compliance with divisional established policies and protocols, adherence to government and insurance payer policies and assurance of customer conflict resolution. In addition to his daily responsibilities, he also leads the Patient Call Center and Patient Accounts Receivable teams at Greenway. 

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