How to Decide Between In-House and Outsourced Credentialing Services

If you are reading this, then you are probably trying to decide whether to keep (or hire a new) in-house credentialing or payor enrollment specialist or outsource the function to a professional credentialing services company.


You are very well aware of the critical role credentialing plays in ensuring a safe health care system. You know that accurate credentialing ensures the legitimacy of licensed medical professionals and contributes to reduced risk of medical errors, and contributes to patient safety.


Good credentialing can have a positive impact on patient trust and revenue generation. Bad credentialing can lead to compliance issues, lawsuits, and lost revenue. Love it or hate it, credentialing is an administrative task that every medical practice must perform and it must be done correctly, or else.


Health care practices can choose to handle credentialing and payor enrollment tasks internally or to outsource the work. There are pros and cons for each approach, and what works best will depend largely on your own needs and goals.


In this article, we present the upsides and downsides or credentialing in-house vs outsourcing to a service provider. Where possible, we will dispel any myths we have come across along the way.


The Benefits


In-House Credentialing

Understandably, the traditional method of a manager being able to see and interact with their employees every day provides a sense of control and confidence. You can inspect their work. You know what they are doing and how they are spending their time. You can communicate with them instantly. You can coach them to perform their work better and help them improve their skills.


This makes a lot of sense, but how your practice assigns this work makes a huge difference in your credentialing success.


Many smaller health care offices do not have enough staff to dedicate a Full Time Equivalent (FTE) employee to credentialing and payor enrollment. Often, the on-staff credentialing “expert” is actually an administrative assistant or office manager who is doing credentialing in addition to their actual job. Even the most hyper-organized and well-intentioned of those multiple hat wearers can make mistakes as well as be uninformed about the many intricacies of credentialing.


Practices can get away with this approach for a while. But the tell-tale sign of needing a dedicated credentialing expert is when claims begin being denied. Once the practice starts losing money, or paying out legal fees, your practice manager will focus a lot more attention on either hiring a dedicated credentialing specialist or outsourcing the work to a credentialing services company.


The best case scenario for on-staff credentialing expertise is to hire a credentialing and/or provider enrollment specialist, or at least have someone dedicated to the function full time. Practices who can dedicate an employee to credentialing and payor enrollment have a better chance of staying on top of the time-consuming, tedious and frustrating process of credential management.


Regardless of your practice’s choice, there are still plenty of things that can go wrong if great care is not taken in hiring for and managing credentialing.


Outsourced Credentialing


According to research conducted by Deloitte in 2020, cost reduction is the primary driver for outsourcing. “In the past, many players in the industry stated that cost reduction is an ancillary benefit to objectives like increasing agility or improving the quality of service. This year’s survey shows a sharp increase in the number of organizations giving priority to cost reduction.”


Outsourcing also provides cost-efficient ways to reduce overhead and gain efficiencies by having experts perform the work better and faster than in-house resources.


Because credentialing and provider enrollment can be a time and resource obstacle for many companies, outsourcing this work to a third-party service provider enables your practice to focus on its core competencies.


An additional benefit of outsourcing is agility. High performing outsourced credentialing services companies can offer software innovation, remote services, and rapid integration to help their clients scale growth. And any concerns with visibility into work performance can be eliminated with contractual Service Level Agreements (SLAs).


For practices looking for an outsourcing firm to serve as an extension of their internal team, companies like CredentialGenie can provide that level of support. With regularly scheduled meetings and real-time availability in all modes of communication, clients can interact with everyone involved in their credentialing and enrollment activities.


The Costs


In-House Credentialing: Salary

If you’re keeping credentialing in-house, then you need staff. Maintaining staff means, of course, cost to your business.


The average salary for credentialing specialists in the United States is “$41,174 as of December 28, 2020, but the range typically falls between $36,981 and $46,506. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have spent in your profession,” according to Salary.com.


There are other costs, too.


According to this article by the US Small Business Administration (SBA), “When you think about adding a new employee to your payroll, determine what the actual financial cost of doing so means to your business. This includes the dollars and cents over and above the basic wage or salary you agree to pay. There’s a rule of thumb that the cost is typically 1.25 to 1.4 times the salary, depending on certain variables. So, if you pay someone a salary of $35,000, your actual costs likely will range from $43,750 to $49,000. Some added employment costs are mandatory, while others are a little harder to pin down. Fortunately, there may be tax savings to offset some of the costs.”


The SBA sheds additional light on the costs your business will incur with internal credentialing resources. “Hiring an employee means considerable payroll tax costs, including:


  • Employer share of FICA (7.65% on compensation up to the annual wage base, which is $132,900 in 2019, plus 1.45% on compensation over the annual wage base).

  • Federal unemployment tax (FUTA) of $42 per employee. The FUTA tax rate is 6%, but most employers can take a FUTA credit of 5.4%, resulting in a mere 0.6%.

  • State unemployment tax, which varies with your state and your claims experience (the more claims made by former employees for unemployment benefits, the higher your state unemployment tax rate will be).”


Source: https://www.sba.gov/blog/how-much-does-employee-cost-you


Outsourced Credentialing: Monthly Fee instead of Salary

As described above, most businesses move to outsourcing because of the potential cost savings. Practices that outsource their credentialing are paying a predictable monthly amount and have contractual SLAs that confirm success or failure. These fees and performance criteria are negotiated in advance of a business relationship.


In-House Credentialing: Employee Benefits

If your practice offers health care insurance, you will carry additional costs for your credentialing or provider enrollment specialist. In this article by eHealth, the Kaiser Family Foundation reported in 2019 that “the average cost of employer-sponsored health insurance for annual premiums was $7,188 for single coverage and $20,576 for family coverage.”


Outsourced Credentialing: Employee Benefits

Your practice does not pay employee benefits to an outsourced credentialing service.


In-House Credentialing: Expertise

Expertise is not free. As described above, untrained personnel handling credentialing duties can pose serious risks to your practice’s revenue generation and compliance adherence.


A credentialing specialist with certification is the best option for a full-time employee. A Certified Provider Credentialing Specialists (CPCS) is trained to maintain compliance with regulatory and accrediting bodies. They participate in the development and implementation of credentialing processes and procedures. They perform the credentialing of physicians, allied health and other practitioners. A CPCS also oversees or participates in the development of governance bylaws, department rules and regulations, and policies pertaining to medical staff, the provider and the organization.


Similar to a credentialing expert, a specialist in payor enrollment ensures your practice can collect payments for their providers and facilities. A specialist with a Provider Enrollment Specialist Certificate (PESC) offers additional and critical expertise.


Outsourced Credentialing: Certified Expertise

Most credentialing services organizations assign certified resources to work on client projects. For example, CredentialGenie’s staff of credentialing specialists all have either CPCS or PESC certifications, or both. These certifications are either required as a condition of employment, or reimbursed upon successful completion for an existing employee.


Specialized expertise is a credentialing services company’s competitive advantage. You should not engage a provider that doesn’t offer such specialization.


In-House Credentialing: Turnover

Employee turnover is a fact of life, and retention for credentialing specialists is difficult to maintain. There are many cases where people who perform credentialing part-time, and are without training, will soon leave due to frustration and lack of work/life balance.


Beyond the cost of replacing credentialing personnel, there is “hidden” cost in the transition. Without clearly defined and documented processes there can be major confusion as to how credentialing should be accomplished at your practice. This is especially true in practices where there are disconnected silos of information like spreadsheets, Dropbox accounts, and physical file folders. Information can also be trapped in emails or in the minds of the departed credentialing employee.


There are numerous examples of practices scrambling after a credentialing specialist leaves, and asking questions like these: Where are our provider’s documents? Are any expiring soon? Who are our providers enrolled with? When do those enrollments expire? What’s the status of our claim requests? Why are our claims being denied? And many more.


Outsourced Credentialing: Turnover

Rather than turnover, CredentialGenie offers failover. Similar to a technology system that has a back-up when the first line fails, credentialing services companies hire teams of credentialing specialists to be able to accommodate fluctuating volumes of work for multiple clients. If there is turnover, another team member is already available to fill-in as needed. At CredentialGenie, our credentialing experts use our proprietary software to have visibility into all activities for any given client.


In-House Credentialing: Software

Practices that do a better job of implementing technology and process to avoid the nightmare scenario above will still incur a cost for that technology. Pricing for this kind of software can range from hundreds to thousands of dollars per month, and often carries multiple year contract requirements. The time required to procure new software can be a drain on personnel workload. Finally, implementing software can also carry additional costs related to the time required to train personnel and transition provider data and documents to the new system.


Outsourced Credentialing: Software

Not all credentialing services provide their own software, but the best ones use some kind of credentialing database to facilitate the process. At CredentialGenie, we use our proprietary software for every aspect of the credentialing process. From document storage and expirables management to automated insurance application completion and enrollment tracking, our team has everything they need in one cloud-based software solution to achieve our client’s business objectives.


The Final Analysis


Hiring and managing credentialing in-house is most beneficial for practices that have the budget to support and train those resources. If your practice, hospital or health plan fits this description, then in-house credentialing makes the most sense.


An organization with credentialing expertise on-staff may, however, wish to outsource credentialing responsibilities in overflow situations. These scenarios might include the acquisition of a new practice that drastically impacts the existing team’s available work hours.


CredentialGenie offers everything your practice needs to accomplish credentialing and provider enrollment. Contact us to learn more about how we can help your practice.