A Tale of Two Offices

Physician practices that automate completion of credentialing applications

can gain staff efficiencies while improving their cash flow.

By James Aylward, CEO and president of Sy.Med, Inc., Brentwood, TN.

Contact him at jima@symed.com.

Historically, physicians have adopted—or at least explored—new medical technology fairly rapidly. On the back office or administrative side, most physician and group practices today also embrace at least a moderate level of automation with computerized scheduling, registration, coding, billing and payables/receivables functions.

But when it comes to credentialing—and specifically to the completion of credentialing applications by office staff—this might as well be the Middle Ages.

With the proliferation of managed healthcare throughout the 1990s, coupled with the consolidation of group practices, credentialing has become more laborious than ever. As physician practice management companies and hospitals have divested their ownership interest in physician groups, IPAs and PHOs, practice managers are under even more pressure to assure that all their physicians remain properly credentialed with all payors despite a change in ownership.

“Pre-Technology” Office

Picture walking into a group practice and seeing an administrator trying to align a framed medical school diploma on the photocopier. It’s the first of many headed for the copier.

Behind the administrator is a bare wall with nail holes where dozens of diplomas hung earlier. It’s the result of the administrator needing to complete credentialing applications for the practice’s 17 physicians and two nurse practitioners because photocopies of diplomas are an integral part of every credentialing application package.

Today, it’s not uncommon for a physician practice to conservatively complete 15 to 18 applications each year per physician, and often the quantity is far greater. Depending on the credentialing application (HMO, PPO, Medicare, Medicaid, healthcare facilities, specialty boards), credentialing forms can range from five pages to 25 pages in length. Multiply 26 applications by an average of 15 pages each by 32 physicians in the group practice, and you get thousands of pieces of paper—often handwritten, hand-assembled and snail-mailed, as Figure 1 (below) illustrates.

Figure 1

Several characteristics of the credentialing application completion process compound the matter. The first is that most of the information required on the applications is static or historical in nature, such as the physician’s undergraduate school, medical school, residencies and hospital staff privileges. The second is the fact that, on average, more than 90 percent of the information requested on each application is the same. United HealthCare may require 92 percent of the information that CIGNA Healthcare requires and 97 percent of the data that Prudential requires. More than 95 percent of the information collected and recorded last month for Health Plan A’s application will be recollected and re-recorded next month for Health Plan B’s application.

Of course, applications all look different and required data must be entered in different segments and portions—but the fundamental sameness of the information required by health plans and healthcare organizations is unmistakable.

In an unautomated credentialing department, it is common to find several full-time employees handwriting credentialing applications and hand-assembling packages to beat the deadline for a payor’s credentialing committee. What is the opportunity cost of having three, four or more employees handwriting applications including the same data elements that they have written hundreds of times before on other applications?

Three Common Problems

The unautomated credentialing function holds the potential for three common problems, all avoidable with automation.

Errors. Hand-completion of credentialing applications is not a challenging job. Locating, collecting, compiling, copying and handwriting the same information day after day is an error-event waiting to happen. 
When the credentialing entity receives the applications, staff must decipher the handwriting. Nearly all credentialing entities ask for eight-digit date entries as a means to eliminate “gaps” in service, yet it is a challenge for an administrator to remember and consistently record eight-digit graduation and residency dates for a dozen or more physicians. Opportunity for errors in completion, and misunderstanding in interpretation, is rampant.

Human resource expense. The manual completion of applications is a redundant, tedious and monotonous task. Another indirect cost that group practices risk with lack of automation is poor employee morale and high employee turnover. Getting physicians credentialed by health plans and healthcare organizations is a cornerstone requirement for physicians to treat covered patients and to be re- imbursed for the services they deliver. Yet time and again, the function is delegated to modestly paid clerical staff with a demonstrated track record of turnover.

Financial loss. A serious phenomenon that exists in this environment is “phantom receivables.” This term refers to receivables that appear on the practice’s accounts receivable ledger and seem to be past due from payors.

In reality, that provider was never credentialed with that payor. No provider ID number was assigned and the provider cannot be paid without one. Phantom receivables are very common within large practices when there is turnover and movement among physicians. As new physicians join a practice, it is difficult, if not impossible, to complete credentialing applications for a potential 30 health plans and hospitals within a week or even a month. Inevitably, a payor or two falls through the cracks, as illustrated in Figure 2 (below).

Figure 2

Number of new physicians joining practice	2
New office visits per month per physician	250
Revenue per office visit	$ 50.00
Lost revenue per month if physicians are not credentialed.	$25,000.00

As a result, newly added providers may not be fully credentialed, and hence may be treating patients for whom no reimbursement will come forth. This is not a coding or bundling issue; it is simply an issue of human error in a function left to manual manipulation.

Technology Driven Office

In an office with computerized application completion, diplomas and medical licenses are permanently attached to the walls. Diplomas, DEA certificates and CME certificates are scanned and stored in a software program and can be printed and mailed, e-mailed or faxed with a single point-and-click action.

A physician office that automates the application completion process can enter voluminous static but essential information about all practitioners into a Windows-based database that serves as the foundation for application completion. Credentialing applications forms are scanned into the system using an affordable flatbed scanner (approximately $150), and then information from the database is used to populate each application form. Anyone who knows how to use a keyboard, drop-down menus and a mouse can be taught in one day to produce an application in minutes.

Computerized application completion isn’t a six-figure investment. Typically, for a client-server product, the practice may want to acquire a new standalone PC, an off-the-shelf scanner and the software. The intangibles require about a day of training—plus commitment of office staff to abandon No. 2 pencils.

The system provides a comprehensive database function that can eliminate the need to continually update paper records. It can share database information with related departments and functions such as human resources, billing and accounting. Updating a provider’s information in the database automatically links to a newly updated CV for that provider, which can be printed, e-mailed or faxed. Also, the system automatically alerts the user via “pop-up” warnings when mission-critical documents are about to expire within 30-day, 60-day or 90-day timeframes, or the alerts can be set to the end user’s preferences (45 days, 100 days, etc.).

Cash Flow Benefits

Automating the application completion process can improve a practice’s cash flow in two ways. The first is by helping the practice meet payors’ submission deadlines.

Payors typically have a monthly or quarterly credentialing committee meeting where physicians are formally accepted into the panel or declined. Theoretically, a one- or two-day delay in the payor receiving an application could lead to a 30-day delay or even a 90-day delay in a provider being accepted into and credentialed by the payor’s health plan. Losing 30 days or 90 days of being able to treat patients in a given health plan represents a significant potential loss to the practice’s revenue base.

Similarly, practices can eliminate phantom receivables with automation. If three new physicians join a large practice, 40, 50 or 60 applications can be completed and submitted for the new physicians within days, not weeks or months. With staff vigilance, no payor need fall through the phantom cracks, and no provider need remain uncredentialed.

For example, one 78-physician primary care group spent several months negotiating with a managed care organization (MCO). When the two entities reached agreement, the practice was able to produce 78 credentialing applications in the week of the final contract execution—and received compliments from the MCO on how complete, accurate and legible their applications were.

Doing the Math

No group practice can afford a cast of thousands shuffling paper from file to desk to outgoing mail, when the entire process can be automated. In a tight economy, cash flow is king, and getting providers rapidly and comprehensively credentialed leads to faster reimbursement.

A by-product of automating the credentialing completion process is that the physician practice has powerful management information on each physician. Expiration reports can be quickly generated; updated CVs are always available; requirement documentation is easily transmitted.

Figure 3 (below) illustrates the financial potential for a typical, moderate size practice. A practice that is considering a $100,000 capital expenditure for new diagnostic equipment might want to first consider automating the credentialing completion process, improving its cash flow—and putting the savings toward the capital purchase.

Figure 3

© 2001 Nelson Publishing, Inc.