In today’s competitive market, more health plans are re-examining their provider credentialing options. Plans struggling to manage the pace and volume of their credentialing work may face hidden costs, lost business and even penalties.

According to Tim Poehling, senior vice president of Operations at Ingenix, health plans may not realize that the true costs of performing this function in-house can far exceed plan estimates. “It’s a huge effort to chase down and verify provider information,” Poehling said. “Companies can perform these tasks on their own, but they are part of a non-differentiated, redundant and costly process that is not a primary business objective. In this economy, plans need to explore more efficient ways of maintaining a solid provider database.” Outsourcing the provider verification process can offer both a strategic and a cost-effective solution.

Credentialing challenges include scope, deadlines and costs

Credentialing is an industry standard that has become expected by a majority of employers and is required by accreditation bodies such as the National Committee for Quality Assurance (NCQA), URAC and The Joint Commission, as well as many states.*

Because of its importance, many plans are reluctant to cede control of the process to a third party. Poehling pointed out that plans devoting significant resources to tasks that are not among their core competencies likely have not explored the benefits of outsourcing, which have been demonstrated for other business operations.

“Much of the work in the credentialing process falls into the same category as shipping packages and cutting payroll checks,” he explained. “Companies hire UPS and ADP because there is no compelling business need for them to own those functions. Outsourcing credentialing enables health plans to obtain the information they need to control the decision-making process regarding providers, without having to perform the actual data collection and verification.”

Currently, many plans house entire departments to mount comprehensive fact-checking campaigns that include primary source verification, provider outreach and compilation of results that can be easily utilized by the plan’s committee when it is deciding which providers meet plan criteria.

“Administering this internally is significantly more costly than many plans believe,” Poehling said. “Plans may estimate their spending as a simple calculation – dividing personnel salaries by the total number of providers being credentialed annually,” he indicated. “But this fails to account for the total costs related to credentialing tasks.”

Such costs include query fees; document handling expenses (e.g., application mailing, printing and document storage fees); communications and follow-up expenses such as letters, faxes and phone calls; and general office supply expenditures, Poehling explained. Plans also may not factor in the cost of carrying a full staff on payroll during slow periods and of extending overtime wages during high-volume periods.

Further, in addition to the increasing expense of handling the credentialing process on their own, plans must contend with shorter state credentialing turnaround times – from 90 days to 30 days – that have left them scrambling to accelerate their timelines. If a plan misses the mark, he said, they may face state penalties that can reach $5,000 per provider in extreme cases.

Penalties aside, Poehling estimates that the average cost of a plan conducting its own verification runs upwards of $140 per provider. “With advanced technology, more efficient processes and the economies of scale offered by credential verification organizations, this figure can be reduced by 30 percent to 50 percent,” he said.

Outsourcing drives efficiencies

Ingenix Primary Source Verification streamlines the credentialing process by applying sophisticated technologies that help plans protect their members and their business while satisfying accreditation body standards and meeting or exceeding state credentialing requirements, all at a lower price point, according to Poehling.

Ingenix credentialing solutions include automated reports that minimize the time required to prepare files for committee, electronically scanned and maintained source documents that reduce storage hassles and costs and promote disaster recovery, and performance guarantees with clearly defined service metrics. 

“We have spent more than $15 million to create systems that can do the job faster and more cheaply than plans could accomplish on their own,” Poehling noted. “With the economy driving organizations to cut unnecessary costs, we have seen a large spike in plans that are considering this transition.”

To underscore his point, Poehling described several scenarios in which Ingenix delivered favorable results for primary source verification clients facing varied credentialing problems. In one case, a large national HMO was experiencing non-responder rates in excess of 26 percent, which substantially increased staff workload. Ingenix initiated provider outreach campaigns, conducted phone and mail drives and converted the health plan to a paperless application process.

“Within two years, the plan’s non-responder rate dropped to from 26 percent to 5 percent and improved their turnaround time by more than 30 days,” Poehling reported.

Another scenario involved two mid-sized health plans that had merged, leaving them with three network databases but no internal resources to merge the data and phase out duplicative credentialing expenses. Ingenix implemented a system to align provider credentialing cycles, and eliminated unnecessary expenses by analyzing recredentialing dates for the same providers and scheduling verification for the latest possible date.

“We found that roughly one-third of the providers – 23,000 out of 64,000 – from the three databases were overlapping,” Poehling explained. “Our analysis saved the plans over $1.1 million in unnecessary credentialing expenses. Moreover, we completed the analysis in two days instead of the three-month time frame the health plans estimated for performing the task internally.”

Ingenix also helped a health plan that was at risk of losing NCQA accreditation due to the results of a state audit showing that it was out of compliance with provider recredentialing requirements. The company did not have a sense of the scope of the work needing to be done, nor did it have the resources to achieve compliance by its NCQA audit date, according to Poehling.

“Ingenix conducted an on-site review in one day to determine which network files needed updating, created an action plan, and assembled a dedicated team to get the plan into compliance before the NCQA audit,” he said. “The work was completed on time, the NCQA approved their process and granted certification, and the new process achieved a 30 percent cost savings for the plan.”

More outsourcing benefits to come

Health plans can, of course, invest in streamlining their own credentialing processes. However, doing so lies outside their core capabilities, and “outsourcing partners like Ingenix are already offering best practices and continually taking them to the next level,” Poehling said. Ingenix is developing new approaches to credentialing and primary source verification that integrate an organization’s credentialing process with its overall provider data strategy, he noted.

“We can maximize the value of the credentialing process by eliminating those providers already contacted for credentialing purposes from annual provider phone verification efforts. By using the information collected to verify alternative sets of data about a provider, we can minimize outreach efforts,” he explained, adding that this strategy of “perpetual” credentialing could save plans millions of dollars over time.

“We can help plans meet credentialing challenges by making the process better, faster and cheaper, whatever their situation,” Poehling concluded. “With Ingenix Primary Source Verification, plans will see obvious results.”

* The National Committee for Quality Assurance (NCQA) is an independent, not-for-profit organization dedicated to assessing and reporting on the quality of managed care plans, managed behavioral organizations, practitioner organizations and credentials verification organizations. Ingenix verification services are fully certified for nine out of nine elements by NCQA, accredited by URAC, and compliant with JCAHO verification standards.

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