99MGMT Blog

Provider Credentialing Costs: In-House vs. Outsourcing Options

Posted by 99 MGMT on Nov 21, 2024 12:15:00 AM

credentialing-1

Credentialing is a critical process for healthcare practices, ensuring that providers meet industry standards, maintain compliance, and are authorized to bill insurance companies. However, for many, the costs associated with provider credentialing can be unclear and daunting. 

In this guide, we’ll break down the various factors influencing credentialing costs, compare in-house and outsourced options, and provide actionable tips for maximizing value while managing expenses.

Whether you’re handling provider credentialing for physicians, advanced practice providers, nurses, or other healthcare professionals, understanding these factors will help your practice make an informed decision.

The Costs of In-House Credentialing: Are You Wasting Money?

The credentialing process is essential to a healthcare practice’s financial health. When done accurately and on time, it opens doors to new patients and increased revenue. However, in-house physician credentialing can quickly become tedious, troublesome, and costly if not managed efficiently.

The True Cost of In-House Credentialing

Let’s break down the costs:

  • Base Cost of Credentialing Staff: Employing staff to handle physician credentialing can be costly, with salaries, benefits, and training adding up quickly. Assuming a rate of $100 per hour, credentialing work for one physician can cost around $20,000 per year. But that’s just the beginning.

  • Additional Staffing Expenses: The time and resources spent by office staff on follow-up, compliance checks, and document management add up. The total investment increases with benefits, taxes, and other associated costs.

  • Software and Tools: Credentialing requires specialized software for tracking provider credentials, renewal dates, and compliance requirements.

  • Fees for Verification Services: Primary source verification is critical, often requiring payments to state boards and other institutions.

  • Mistakes and Rework: Errors and incomplete applications often result in additional processing fees and re-submission costs, increasing time and financial expenditures.

Lost Revenue Opportunities

Beyond direct costs, handling credentialing in-house can impact revenue generation:

  • Time Spent on Credentialing vs. Patient Care: Time invested in managing credentialing is time away from seeing patients, directly affecting revenue.

  • Resolving Credentialing Issues: Any application delays or errors require follow-up, taking attention away from other revenue-generating activities.

  • Managing and Monitoring the Process: Overseeing credentialing takes significant time and attention from practice managers and administrative staff.

The bottom line: Realistically, in-house physician credentialing costs often exceed $20,000 annually. How does this compare to outsourced credentialing? 

Practice Analysis

 

Outsourced Credentialing Cost Breakdown

Outsourcing credentialing requires understanding costs upfront. Here’s a quick look at common expenses, from setup to monthly fees, to help you choose the right fit for your practice:

  • Current credentialing status

  • Number of physicians you want to add

  • How quickly you grow your practice

  • Changes in insurance contracts and/or providers

  • Other services you contract from your credentialing provider

Typically, physician credentialing costs range from $2,000 to $3,000 annually. Here’s a closer look at typical cost components:

  • Setup Fees: Some companies charge an initial setup fee for new clients, ranging from a few hundred to several thousand dollars, depending on the number of providers.

  • Individual Physician Credentialing: $100–$200 per provider per month, with re-credentialing at a similar rate, generally on a two-year cycle.

  • CAQH Database: The initial setup costs $200–$500, with basic management averaging $50–$100/month.

  • Insurance Panel Applications: Around $100 per application, sometimes higher depending on complexity.

credentialing-2

ROI of Outsourcing Provider Credentialing

Outsourcing credentialing can lead to substantial cost savings, freeing up resources for patient care and practice management. Here’s how it can offer a positive return on investment (ROI):

  1. Reduction in Staff Time and Error Rates: Credentialing requires precise attention to detail, and errors can lead to delays in reimbursement. Credentialing firms have specialized expertise, which can reduce mistakes.

  2. Faster Turnaround: With professional services, the credentialing process often moves faster, reducing the time it takes for new providers to start billing insurance.

  3. Enhanced Compliance: Reputable credentialing services stay up-to-date on regulatory changes, reducing the risk of compliance issues that could affect reimbursement.

Step-by-Step Guide to the Credentialing Process

A clear understanding of the credentialing process can help practices budget effectively and see where costs are allocated. Here are the main steps:

  1. Data collection: Gathering all relevant information about the provider, including licensure, education, work history, and references.

  2. Primary source verification: Verifying credentials with primary sources (e.g., state licensing boards, schools).

  3. Insurance enrollment: Submitting necessary documents and applications to each insurance panel the provider will bill.

  4. Ongoing maintenance: Updating records regularly and managing re-credentialing, usually every two to three years.

Each of these steps may involve specific costs, especially if handled in-house. By understanding the full scope of the credentialing process, you can make a more informed choice between in-house management and outsourcing.

New call-to-action


Tips for Choosing a Credentialing Vendor

Choosing the right credentialing vendor can make all the difference between smooth, efficient operations and costly delays. Here’s what to ask to ensure you find a trusted provider.

  • What’s included in your pricing? Be clear on whether verification, setup, re-credentialing, and software costs are covered.

  • How quickly do you typically process credentialing applications? Ask for average timelines to gauge efficiency.

  • What are your primary quality control methods? Quality control can reduce error rates, so it’s worth asking about their methods.

  • Can you handle multiple types of providers and specialties? Practices with diverse teams may need credentialing for different provider types.

  • Do you have references or testimonials? A reputable firm should have satisfied clients willing to share their experiences.

Choosing a credentialing vendor that prioritizes transparency, speed, and efficiency will help avoid hidden fees and improve the experience for you and your providers.

Ready to Simplify Your Provider Credentialing Process?

Outsourcing your credentialing process can transform an administrative burden into an efficient, cost-effective solution. While it involves initial investment, outsourcing typically costs far less than managing credentialing in-house. Even the cost of top-end credentialing services pales when compared to managing it in-house for $20,000 or more.

Plus, it allows your team to focus on what truly matters—caring for patients.

Interested in learning more? Click the button below to connect with our 99MGMT Credentialing Team for a customized estimate and see how streamlined credentialing could benefit your practice.

New call-to-action

 

(This article was originally published in December 2017 and was updated in November 2024.)

 

Leave a Comment

iStock-163751742-1

Subscribe to Email Updates

  • There are no suggestions because the search field is empty.

Recent Posts