In this article we will look at what is credentialing in medical billing; how it affects your business financially and the different elements of the credentialing process. Additionally, we will discuss the cost of making errors during the credentialing process, and the differences between credentialing processes that you should know about to be able to get paid on time.
What Is Credentialing in Medical Billing?
Credentialing in medical billing is the formal, in-depth process of validating a healthcare provider's qualifications. This validation is mandatory for all healthcare providers from health care networks, insurance companies, hospitals, and governmental agencies. Credentialing is the gateway to being paid for your services.
This is not just submitting paperwork. It is an investigative review to verify a provider's:
- Education and medical degrees
- Training and residency
- Valid state licenses and board certifications
- Drug Enforcement Administration (DEA) registration
- Work and hospital affiliation history
- Malpractice insurance and claims history
There are two purposes to the credentialing process. First, it ensures that patients are treated by qualified, educated and competent practitioners to protect patient safety. Secondly, it is directly related to medical billing. According to the AMA, "credentialing is involved in physician health plan enrollment so that payment for services can be obtained."
Insurance companies, including CMS, require that a provider complete the credentialing process before they may enroll in Medicare or Medicaid and receive payments. In other words, a provider cannot submit bills for services performed unless they have completed the credentialing process.
Credentialing vs. Enrollment vs. Privileging: A Critical Distinction
Credentialing, Enrollment, and Privileging have been referred to as interchangeable terms; this is a common mistake that leads to possible costly delays in payments and/or reimbursement.
These three steps are sequential and have different purposes.
1. What is Credentialing? ("The Who")
Credentialing is the verification process. It answers the question, "Is this provider qualified, competent, and is he/she/they legitimate?" Credentialing includes a detailed background investigation and Primary Source Verification (PSV) of all credentials. The result of credentialing is a verified provider.
2. What is Enrollment? ("The How")
Enrollment is the registration and contracting phase. This occurs after the credentialing phase. Enrollment answers the question, "Is this verified provider now officially recognized as an in-network participating provider for this specific payer (such as Aetna, Blue Cross, etc.)?" Enrollment is a completely administrative process that allows the provider to link themselves to the payer (such as Aetna, Blue Cross, etc.), and then they will be able to submit claims for reimbursement. The result of enrollment is an in-network provider who is entitled to receive payment.
Ohio Department of Medicaid has provided a clear definition of these two terms under state regulation: All providers must be enrolled to receive payment, however, not all providers must be credentialed (for example, a supervised nurse does not need to be credentialed, whereas a self-employed nurse practitioner would).
3. What is Privileging? ("The What")
Privileging is a separate process than payer enrollment. Privileging is the process hospitals and other medical facilities use to allow a provider to perform a specific type of care within their facility. Privileging answers the question, "What types of services is this provider authorized to provide at this facility?"
Example: Even if a fully credentialed and enrolled surgeon is authorized to operate at a hospital, she/he/they still need to obtain privileges to utilize the operating room at that hospital.
| Term | Purpose | Performed By | Outcome |
|---|---|---|---|
| Credentialing | To verify a provider's qualifications, education, and competence. | Payer, Hospital, or CVO | A verified provider deemed qualified. |
| Enrollment | To register and contract a verified provider with a payer network. | Payer's administrative team | An in-network provider who can bill and be reimbursed. |
| Privileging | To authorize a provider to perform specific services at a facility. | Hospital or facility medical staff committee | A provider with clinical privileges (e.g., "authorized for surgery"). |
Understanding this sequence is the first step in managing your healthcare revenue cycle management services.
The High Cost of Errors: The Credentialing Revenue Domino Effect
Errors in credentialing are not small, insignificant administrative mistakes. Errors in credentialing can cause significant financial harm to your practice and may create a domino effect on the financial viability of your practice.
The "Revenue Domino Effect" begins with an improperly credentialed or enrolled provider.
1. Delayed Onboarding Leads to Delayed Billing:
Payors cannot accept billing until they have approved the provider who provided the service. Therefore, if your new physician is hired and is not properly credentialed within 90 days, you must continue paying his/her salary for 3 months without any income received for the services he/she has provided.
2. Automatic Claim Denial:
When a providers credentials expire (example: the provider did not complete the required re-credentialing), all subsequent claims submitted by the provider for services rendered during the time period the provider was not properly enrolled will be automatically denied by the payor.
3. Lost Income Forever:
The worst part about losing credentialing status is that, generally, no payment will ever be made for services rendered prior to the effective date of the provider's enrollment status. The loss of revenue from a credentialing gap is not just delayed, it is permanently lost.
The costs of lost credentialing status are staggering.
- According to a study by the Medical Group Management Association (MGMA), delays in the credentialing process can cause as much as 25% of a new physicians first year earnings to be lost.
- If a primary care physician loses their credentialing status, they can lose $2000 per day in revenue. Over a 30-day period, this equates to a loss of $40,000 in revenue due to a single avoidable mistake.
- The administrative costs associated with correcting errors caused by credentialing gaps are substantial. According to the MGMA, the average cost to rework and appeal each denied claim is $118.00 per claim.
As previously stated, the financial damage resulting from the failure to maintain proper credentialing status creates immediate financial harm to your practice and, therefore, is critical to maintaining good medical accounts receivable management services.
The Provider Credentialing Process: A Step-by-Step Guide
The credentialing process is extensive, time-consuming, and detail-oriented. While each payer has slight variations in its process, the overall workflow is similar as follows:
1. Step 1: Gather Your Document Checklist
Credentialing is initiated when the provider compiles a full package of documentation according to the American Academy of Family Physicians (AAFP), the American Medical Association (AMA), and other sources.
These documents include:
- Government-issued photo ID (Driver's License or Passport)
- Current Curriculum Vitae (CV) (This must explain any gaps in work history of 30 days or more)
- Medical School Diploma
- Residency and Fellowship Certificates
- All active State Medical Licenses
- Drug Enforcement Administration (DEA) Certificate
- Controlled and Dangerous Substances (CDS) Certificate
- National Provider Identifier (NPI) Confirmation Letter
- Malpractice Liability Insurance Certificate
- Board Certification(s)
- IRS Form W-9
2. Step 2: Create and Maintain Your CAQH Profile
This step is key in today's credentialing world. CAQH (council for affordable quality healthcare) is the industry-wide, centralized, secure database for provider information.
Over 2.5 million providers have created profiles in CAQH. The primary benefit of using CAQH is that providers only have to input their data once. Then, providers give permission to insurance companies to view their single profile, thus eliminating the need for providers to repeatedly complete paper applications for each payer.
This is typically the most common point of failure: providers must re-attest (or re-verify) their CAQH profile every 120 days. if a provider fails to do so, their profile becomes "out of date" and no new credentialing applications submitted to payers will be processed.
3. Step 3: Undergo Primary Source Verification (PSV)
This is the verification portion of the credentialing process. Payers and organizations are required to perform Primary Source Verification (PSV). In other words, they may not simply accept a copy of a provider document; they must verify the document directly with the original issuer of the document.
They will contact the state medical board to verify a license.
They will contact the medical school to verify a diploma.
They will contact the American board of medical specialties (ABMS) to verify board certification.
The joint commission is explicit about this standard. A hospital that only reviews a provider's copy of their license does not meet the standard. This step is a critical component of ensuring patient safety and compliance.
4. Step 4: Submit Payer Applications and Follow Up
Even though a provider has a complete CAQH profile, they must still submit an application to each payer they wish to join (i.e., aetna, cigna, united healthcare, medicare, and the state's medicaid plan).
This final step is where most in-office credentialing processes fall short. A recent MGMA survey showed that providers cited long delays and "no communication whatsoever from payers" as their top complaints. You cannot simply submit an application and sit back; the process requires ongoing, professional follow-through. You must continually call the payer, obtain a reference number, and ensure that the application is progressing.
At Human medical billing, we offer a medical credentialing services team that manages the entire process, from collecting and verifying documents to providing ongoing, professional follow-through to achieve approval.
Timelines, Costs, and Common Delays: Answering Your Top Questions
Credentialing is both slow and difficult. Below are answers to the most common questions asked by Practice Managers based on data.
1. How long does credentialing for doctors take in 2025?
Practice Managers need to understand that there will be lead times as long as the provider cannot see patients on their first day of employment and begin being paid.
Typically, the initial credentialing process will take 90 to 150 days to complete for a new provider. Credentialing for payers varies, and re-credentialing, which occurs every two to three years, is usually quicker, however, it still takes approximately 60 to 90 days.
| Payer/Process Type | Average Timeline |
|---|---|
| Initial Onboarding (Average) | 90 – 150 days |
| Commercial Payers (BCBS, Aetna, etc.) | 90 – 120 days |
| Medicare | 60 – 90 days |
| Medicaid (Varies by State) | 45 – 90 days |
| Re-credentialing (Every 2-3 years) | 60 – 90 days |
2. Why do credentialing applications get delayed or denied? What are the reasons for denial?
Denial is rarely due to major red flags. Most commonly, it is because of a minor administrative error.
- Applications were incomplete or inaccurate: Typos, incorrect information, or incorrect use of the National Provider Identifier (NPI) are all examples.
- The CAQH profile is outdated: The provider did not re-attest in a timely manner (120 days).
- There were unexplained gaps in work history: There was a 30+ day gap in the providers resume/CV that was not explained.
- The provider failed to respond: The payer requested additional information, but the provider did not respond to the request.
3. What does credentialing for physicians cost?
Practices have two options: Do credentialing in-house or outsource it.
- Option #1: In-House Costs. One study reported a direct in-house credentialing cost of $1660 per physician. These costs include staff time (the physicians time and administrative time), technology, and application fees. The study does not account for the lost revenue from delays caused by in-house credentialing.
- Option #2: Outsourced Costs. A third-party credentialing service will charge anywhere from $200 to $275 per plan, per provider.
The real cost of credentialing is not the administrative fee. The real cost of credentialing is the loss of revenue from delays. If you pay a little money to an expert who prevents your clinic from losing $40,000 in revenue due to credentialing mistakes/loses, it is a good investment.
A New Standard for Physician Well-being
Physician wellness and credentialing in medical billing are inextricably linked. Credentialing, a process of evolution, has transformed itself into a source of support for the entire health care community.
Over decades, credentialing applications have asked physicians invasive and “stigmatizing” questions about prior diagnoses and/or treatments for mental illness and substance abuse.
AMA and others found the inclusion of such questions in the credentialing process to be hazardous to physicians. The inclusion of such questions created an environment where physicians were reluctant to seek help with their own health due to the fear of losing their medical license or credentials.
Physicians reluctance to seek help for their own health issues is a significant contributor to physician suicides, according to the AMA and other research organizations.
Now there is a paradigm shift taking place in credentialing processes. The AMA and the Dr. Lorna Breen Heroes Foundation are at the forefront of this shift.
- The National Association of Medical Staff Services (NAMSS) removed the “stigmatizing” questions from their standard credentialing application.
- With this change came a “big win” for physician health. Massachusetts has become the first state in the nation in which all hospitals, health systems, and health plans agreed to remove the “stigmatizing” questions from the credentialing process.
As an endorsement of this new standard, the AMA now focuses on a provider’s current ability to perform their duties without impairment, rather than focusing on past diagnosis or treatment. The AMA endorses the revised credentialing question:
“Are you currently suffering from any condition for which you are not receiving adequate treatment that impairs your judgment…?”.
By reframing seeking treatment as a responsible and positive action, this change creates an opportunity for physicians to receive the help they need, without fear of consequences.
At Human Medical Billing, we feel that this is a positive change for the health of our provider partners. This is an important issue to us as part of our community.
You can find out more about our company’s values by visiting our About Us page.
Credentialing: The Foundation of Your Practice's Financial Health
So, what is credentialing in medical billing? Credentialing is the backbone of your revenue cycle. Credentialing is not merely an administrative task – it is a long-term process that determines if your practice receives payment for the services you provide to patients.
If a flaw exists in your credentialing process, it can create a ripple effect throughout your revenue cycle. Denial of payments for claims submitted will increase your outstanding patient accounts, causing delays in your accounts receivable and disrupting your cash flow.
Your ability to receive timely payments for services rendered to patients depends upon completing a flawless credentialing process. The credentialing process is a high-stakes, low-margin-for-error process. One application alone may require over ten hours of completion time per payer.
Human Medical Billing has the expertise to assist in establishing a solid credentialing foundation for your practice. Our full suite of medical billing services includes medical coding services, denial management services that utilize artificial intelligence tools to track renewal dates; however, we recognize that no matter how advanced the technology may be, it is only as effective as the accuracy of the underlying expert-verified data.
Don’t allow an administrative error to reduce your revenue by 25%. Schedule a complimentary consultation today. Visit our Success Stories and/or FAQs pages to discover why so many providers rely on Human Medical Billing to ensure timely payment for their professional services.
