Understanding the Difference Between Contracting and Credentialing
As healthcare providers, we often encounter the terms “contracting” and “credentialing,” but understanding the difference between contracting and credentialing can be confusing. This blog post will provide a high-level overview of the distinctions between contracting and credentialing, shedding light on these essential aspects of the healthcare industry.
Credentialing: A Provider’s Approval Process
Credentialing is the initial step healthcare providers must go through before contracting with insurance companies. It involves an in-depth verification of the provider’s background, qualifications, and training to ensure they meet the insurance company’s standards. The credentialing process typically occurs every three years, which may vary depending on the insurance company.
During credentialing, providers are required to provide comprehensive information, including:
Personal and Contact Information: Full name, address, previous names, and other contact details.
Education and Training: Details of schools, fellowships, certifications, and boards completed by the provider.
Professional References: Names and contact information of references who can vouch for the provider’s skills and qualifications.
Background Check: Ensuring the provider’s background is clean and meets the insurance company’s requirements.
Continuing Medical Education (CME): Verification of completed CME credits.
Professional Liability Information: Sometimes, providers must submit their professional liability insurance details.
Credentialing gives insurance companies confidence that the provider is qualified, safe, and meets their criteria for participating in their network.
Contracting: Establishing Agreements with Insurance Companies
Conversely, contracting is creating formal agreements between healthcare providers and insurance companies. Once a provider has completed credentialing, they can proceed with contracting. In most cases, contracting cannot happen without prior completion of credentialing.
There are two types of contracts: Individual contracts and group contracts.
Individual Contracts: Providers who wish to bill insurance under their name would obtain individual contracts. They bill the insurance company directly for services rendered.
Group Contracts: Providers who operate as part of a group practice or organization can obtain a group contract. A group contract allows multiple providers to bill under a single tax identification number (TIN) and group National Provider Identifier (NPI). This simplifies the billing process for the organization.
The group contract is established by linking individual providers to the group’s TIN and NPI. This enables each provider within the group to operate under the group’s contract, streamlining administrative processes.
Credentialing is how insurance companies approve individual healthcare providers based on their qualifications and background. On the other hand, contracting involves formal agreements between providers and insurance companies, either individual or group contracts.
Understanding the distinction between contracting and credentialing is crucial for healthcare providers to navigate the complex process of joining insurance networks and ensuring smooth billing and reimbursement procedures.
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