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Different Paths, One Destination

September 1, 1998
by Lindsay Smith
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Managed care administrators know that credentialing is the first step in selecting appropriate healthcare professionals for their networks. The real decision is whether to do the work in house or to outsource.

There are no easy solutions for determining the best way to verify healthcare professionals’ background, licensing and schooling. In almost every situation, the best credentialing procedure depends on the organization going through the process. You can perform in-house credentialing with an internally developed database program or off-the-shelf credentialing software. Or you can outsource the entire process to a credentialing verification organization (CVO).

But don’t make your decision in haste. First, consider: whether your organization is staffed to handle credentialing in-house; the advantages and disadvantages to using a CVO; how technology is changing the credentialing process; and how much this decision will cost.

Given that credentialing is a necessity, there’s a lot riding on your decision. But here’s the good news: There may not be a wrong direction. Paths diverge, opinions vary. What’s right for your organization might not be right for another organization.

"Whether you choose to handle any part of a business inside or outsource it, there are two main criteria: quality of the service and expense," observes Scott Simpson, president of First Credentialing Quality Assurance, a credentialing organization in Phoenix. "It’s been my perception that managed care organizations and hospitals are going back and forth. Some of them are working internally and the next year they’re outsourcing. And vice versa."

Just as the National Committee for Quality Assurance (NCQA) has put increasing pressure on managed care organizations to conform to industry standards, this group also has put more demands on CVOs. "Some managed care organizations have experienced problems when they’ve outsourced to a CVO in getting the credentialing done in a timely enough manner to conform to NCQA guidelines," Simpson says. "That’s the main reason, in this market certainly, entities that did outsource have pulled it back inside." A timely manner, according to NCQA, means completing each round of credentialing within a 120-day window.

Simpson believes competition will improve the efficiency of CVOs. "As more CVOs enter into different marketplaces, the competitive forces that will be brought to bear will force them to be more efficient," he says. "That being the case, I think that you will see more outsourcing as the cycle swings back. Once organizations can see the CVOs performing accurately and in a timely manner, there will be more of a movement to outsourcing again."

Scott Stillman, director of marketing for Computer Technology Corp., a software provider in Prairie Village, Kan., also believes that managed care organizations move between in-house credentialing and outsourcing--but for different reasons. "I think a lot of hasty decisions are made as far as outsourcing, and a lot of big managed care players are reevaluating," Stillman says. "A decision made two or three years ago to outsource is now being looked at again and [administrators] are asking, ’What are we paying now for this and what can we do this for in-house?’ I would contend that most CVOs are not as efficient as a well-run managed care organization is in using [software]."

Stillman further points out that data needs continue even after the initial credentialing is completed. "Once all the credentialing has been done, organizations still need to be able to produce directories and reports, keep up on license expirations, malpractice insurance expirations and so many other things that fall outside of what people call credentialing or verifications," he says. "They’ll usually end up with a product like ours anyway."

Technology changes
Technology becomes more and more important as CVOs, managed care organizations and hospitals go about the credentialing process. As Simpson notes, "A CVO cannot charge a lot of money to verify the credentials via primary source verification. It’s not a big-ticket item. In order for CVOs to make money, there’s an increasing reliance on technology."

For example, CVOs can query the National Practitioner Data Bank online and, in more and more cases, can do the same thing with medical, osteopathic and chiropractic boards. "You’ll continue to see more and more of that," Simpson says. "And it’s not just online technology to access the information. There’s a lot of technology being applied to actually managing the information within the CVO itself through credentialing software."

Credentialing software is an area Stillman knows well. "The last few years have seen a lot of things really take off," he says, pointing to Health Care Credentials Online (HCOL) as an example of revolutionary technology that’s aiding his customers. Before Equifax left healthcare, the company created HCOL, which was subsequently sold to MMI in Chicago.

"HCOL has verification data online that we hook up to with our product, so it’s like a CVO in that regard," Stillman says. HCOL has information on all the physicians in the country, including where the physicians went to medical school; whether they are board-certified; and whether they have their drug enforcement agency licenses, state licenses and Medicare/Medicaid sanctions.

"Through CACTUS (Computer Technology’s product), our customers can actually communicate with HCOL, so they just punch in some basic information about the physician, and the data are downloaded directly," Stillman says, "so (1) they don’t have to do data entry and (2) it’s already primary-source verified. It’s pretty dramatic and relatively inexpensive. It’s about $15 to $20 a doctor, relative to a traditional CVO where you might be paying anywhere from $75 to $150--maybe more--per doctor. These are the only pieces that you can really get cleanly, electronically."

Quality check
You won’t get far exploring credentialing before you encounter these letters: NCQA. In April 1996, NCQA began reviewing and accrediting credentialing organizations for their compliance with specific standards. These standards--developed with the assistance of representatives from the CVO industry, as well as managed care organizations--are demanding. Accreditation is awarded to organizations based on each of the 10 individual elements addressed by NCQA: licensure, hospital privileges, drug enforcement agency registration, medical education and/or board certification, malpractice insurance, liability claims history, National Practitioner Data Bank queries, medical board sanctions, Medicare/Medicaid sanctions and provider applications.

NCQA accreditation means a lot to credentialing organizations. In fact, Simpson believes that it is almost essential. "There are CVOs out there that are not accredited that probably do just as good a job as accredited CVOs. We were in that position when we were new. However, given the pressure and liability issues that insurance companies have to deal with, I think [managed care administrators] just need to know that their CVO is functioning to a certain level of quality and has been accredited--just to mitigate their own liability."

Alice Murray, president and CEO of HealthCheck, a software provider in Sacramento, Calif., now a subsidiary of Object Products, notes that stringent requirements from the Joint Commission on Accreditation of Healthcare Organizations and, more recently, from NCQA have changed the credentialing process. "The growth of managed care has affected credentialing because every plan requires credentialing of the applicant in order to meet NCQA standards," she says.

Diane MacDougall, director of marketing for Horizon Health Systems, a software provider in Alpharetta, Ga., agrees. "It’s a very big deal--doing credentialing properly. You have different levels of credentialing done in different ways by different types of organizations."

MacDougall adds a caveat about the process: "Credentialing itself is not a straight-line process. It requires individual care and handling. It takes a great deal of training to understand how to do it properly because the bottom line is that if a practitioner’s verification of credentials is not properly done, then somebody is responsible. If there’s an outcome that’s unpleasant for a patient, somebody is held accountable. Is it the physician, the hospital or the managed care organization? The verification of credentials becomes an important issue.

"This is my personal opinion, it’s not fact," she continues. "I think that fewer than one-third of the large managed care organizations are currently tracking practitioner information effectively."

Another standards organization that is beginning to accredit credentialing organizations is the American Accreditation HealthCare Commission/URAC. On April 29, the URAC Board of Directors unanimously approved standards for CVOs. These new standards establish guidelines to ensure that credentialing organizations thoroughly check the professional qualifications of providers in managed care networks and include guidelines for site visits of practitioner offices.

Guy D’Andrea, vice president of policy for URAC, explains that his group’s accreditation programs focus primarily on PPOs and similar, non-HMO types of networks. "That’s the major difference and hopefully our standards reflect some of those operational differences in the marketplace," he says. "The main purpose of the CVO accreditation we’ve just approved is to allow companies to outsource credentialing and still get credit for it in their accreditation review."

Choosing the direction
Once administrators have resolved the concerns of timeliness, technology and quality, the key credentialing issue drops right to the bottom line. One industry estimate put a healthcare organization’s costs at about $400 per provider just to process an initial application.

For some of the larger companies with fairly complicated beauracracies and a lot of overhead and critical mass, it’s difficult to compete with a CVO as far as costs are concerned, Simpson says. "It’s my impression that no organization can credential as cost-effectively internally as they can if they outsource--just from a dollars and cents perspective."

But software vendors have a different perspective.

"A lot of times, managed care organizations may get confused when they’re doing this analysis," Stillman says. "They’ll say, ’OK, if I spend this money on [software] and hire all these people, what’s it going to cost me if outsourcing costs x?’ But if they pick the outsourcing method, I don’t think they’re really looking at all the costs because eventually they’re probably going to end up with an in-house system like CACTUS anyway. Plus, most of the CVOs out there really can’t do it much more efficiently than we’re doing with our product. From a pure cost standpoint, it’s a tough question."

Although outsourcing the credentialing process is simple in theory, according to Simpson, it is complicated to go through. First, he recommends going with a CVO that is accredited. He also suggests getting a quote on hard cost per file from the CVO. There should be penalties if the CVO does not perform to certain performance criteria.

"[Managed care administrators] need to compare the CVO with their own internal costs to perform the same function," Simpson says. "Assuming they can get their performance criteria all right, then it becomes just an issue of cost."

Simpson concludes by saying, "The CEOs that are running these regional health plans are under a lot of pressure to restore profitability to their companies. Provider credentialing is one of the things they’re going to be looking at pretty hard and they’ll start getting a better handle on their costs. That being the case, I think you’re going to see more outsourcing…not only credentialing but some other functions in the organization as well."

MacDougall agrees. "Credentialing has gotten so big and so important that I don’t think in-house developed systems are the way to go any more," she says, referring to the databases managed care organizations and others develop themselves.

But because regulations and technology are changing so quickly, MacDougall believes it is a very poor investment of their resources. "The big HMOs have incredible nightmares trying to maintain these big databases. We’ve ramped up to the point where even with larger organizations, putting their own staff to work to create these systems is more and more going to become a thing of the past."

But for organizations leaning toward in-house credentialing, Stillman suggests that the length of time a vendor has been in the market is one important factor when deciding which product to use.

Technology is important, too. "What’s the system designed for? Some organizations require a higher level of technology depending on how they’re going to deploy the system. If big players are going to run [a network] nationwide, for example, they’re going to need client/server technology."

A third point is flexibility. "Functionally, is the software flexible enough to handle specific needs?" he asks. "Although there are some basics in credentialing that are very similar (those spelled out by the Joint Commission or NCQA), everyone deploys a little different system.

Adaptability is the key to choosing credentialing software, according to MacDougall, whose company produces a family of credentialing software called Vision 2000. "The number one thing has got to be adaptability to the unique needs of each managed care organization," she says.


Staying In House

THINKING ABOUT HANDLING YOUR credentialing within your organization? Here are reasons to consider this path:

  • You can ensure adherence to your own quality and timeliness standards.
  • You can maintain full control over the credentialing process and the people handling the various functions.
  • Sophisticated credentialing software is available to help in-house users.
  • In-house staff may have more training/expertise than CVO credentialing staff.
  • With the right combination of software and people, in-house credentialing may be more cost-effective.

Going Outside

CONSIDERING OUTSOURCING YOUR Credentialing requirements to a credentialing verification organization (CVO)? Here are reasons to consider this path:

  • You eliminate the duplication of applications and other paperwork.
  • You save time and staff work on a tedious and paper-intensive verification process.
  • You do not need to train/update staff on an admittedly detailed process.
  • You can use your staff resources elsewhere.
  • CVOs may be more cost-effective when all overhead costs are considered.

Web sites of interest

www.ncqa.org: The National Committee for Quality Assurance (NCQA) reviews and accredits credentialing verification organizations for their compliance with NCQA’s Standards for Certification of CVOs and its Credentialing Standards for Managed Care Organizations. The site contains the current CVO Certification Status List, showing all CVOs that have been certified, are awaiting a status decision or have a review scheduled.

www.urac.org: The American Accreditation HealthCare Commission/URAC is a private, not-for-profit entity founded to establish accreditation standards and programs for managed healthcare organizations. Currently, URAC is among the premier accrediting organizations for PPO and POS offerings.

www.npdb.com: The National Practitioner Data Bank site contains information about the organization.

www.mscvoa.org: The Medical Society Credential Verifications Organizations of America (MSCVOA) is a national organization of medical society-centralized credentialing verification organizations.


Lindsay Smith is a healthcare writer in Littleton, Colo.



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