The Cost of Credentialing

Reference:

2004 MGMA Survey “Analyzing the Cost of Administrative Complexity in Group Practice”

2010 Merrit Hawkins Physician Inpatient/Outpatient Revenue Survey

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 date on the facility and health plan sides are not included and are the primary source 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

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Total Per Physician Internal Costs                       $1,097

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.

           Specialty Facility Revenue Physician Revenue
           Family Practice $860,830 $139,784
           OB/GYN $723,600 $215,112
           General Surgery $1,120,571 $259,756
            Neurosurgery $1,493,558 $462,064

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 leaves the control of the organizations that need it the most, hospitals and providers.

Notes

  • 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 (Oklahoma average closer to 30 payers rather than the 20 used in the survey)