The Must-Have Credentialing and Enrollment Checklist for Opening a New Medical Practice

By: Jennifer Jinzo-Chavez, CPCS, PESC


It’s a new year (good riddance 2020!), and maybe you have plans to open a new practice. Or maybe you’re opening a new location for an existing practice. Whether you’re a sole proprietor or a well established organization, you may run into issues when it comes to credentialing and insurance enrollment and contracting.


We put together this checklist of things you need to know to make sure credentialing and provider enrollment goes as smoothly as possible.

  1. Business Name

  2. Business Legal Structure

  3. Tax ID

  4. Office Location

  5. Office Phone

  6. Type 2 NPI

  7. Bank Accounts

  8. EFT Accounts

  9. Contracting and Enrollment

  10. Submitting Claims

  11. Claim Reimbursements

  12. Growing Your Practice

  13. How do you know when you need a Pro?

Business Name

What’s in a name? Everything, of course. This is how everyone knows you and your business, so it’s an important step to get right.


As a sole proprietor, by default the legal name of your business is your personal name. But you can choose a business name to operate under in place of your personal name. If you choose to use your personal name as your legal business name, you can also choose to use a “doing business as” (DBA) name. Different states may use different words for DBA, such as Fictitious Business Names, or Trade Name, but they’re all referring to the same thing. Check your state to see if you need to file an application for your DBA.


If you’re going to go with a business name, make sure it's available and not already trademarked by someone else. You can search the United States Patent and Trademark Office (USPTO) to see if the name is available. If it is, you may want to consider applying online to trademark your new business name.


If you’re in need of a creative spark to come up with new business names, check out this healthcare business name generator. You may also want to read this helpful Do’s and Don'ts from healthcare marketing expert Stewart Gandolf.


Business Legal Structure

There are a variety of business structures you can choose for your practice, including sole proprietorship, general partnership, limited partnership, C corporation, S corporation, limited liability company (LLC) and limited liability partnership (LLP).


Many of our small business clients chose between sole proprietorships and LLCs. There are benefits to both, and this article offers some great insight on how to choose between a sole proprietorship vs LLC.

As a licensed professional, you may want to consider the liability protection that an LLC affords.

But some states require licensed professionals to form a professional limited liability company (PLLC). Make sure to check with your legal representative. You can also read this article for useful information on learning the differences between LLCs vs PLLCs.


Tax ID

Over the life of your practice, you will send thousands of documents that contain either your Taxpayer Identification Number (TIN) or Social Security Number (SSN). If you are filing insurance, this information will be on every claim form or in every electronic transmission you send to file a claim. Even if you don’t file insurance, you will need to provide your patients with a statement of services that includes your tax identification number, and there are many other situations in which you will need to include it in correspondence.


For more information on the tax identification methods, as well as instructions on how to apply for one, can be found at the IRS website.


We can also advise you what to do regarding Tax IDs. At CredentialGenie, we advise our clients to never use their personal Social Security Number as their primary identifier, and instead to establish a Tax ID. In fact, this is a requirement when establishing an LLC, and more and more insurance carriers are requiring Tax IDs as well.

At CredentialGenie, we advise our clients to never use their personal Social Security Number as their primary identifier, and instead to establish a Tax ID.

Simply put, using an individual SSN is too risky. According to the Social Security Administration (SSA), “An organization's collection and use of SSNs can increase the risk of identity theft and fraud. Each time an individual divulges his or her SSN, the potential for a thief to illegitimately gain access to bank accounts, credit cards, driving records, tax and employment histories and other private information increases.”


Office Location

A physical business location, other than a home address or PO Box, is strongly suggested for our credentialing clients. Increasingly health plans will not recognize PO Boxes. And even for providers who intend to provide telehealth and telemedicine services from their homes, we recommend using a separate business address for enrollment contracts.


The practice address will be listed in patient directories, and patients could potentially show up at your home, which would create its own unique risks, particularly for mental health providers.


While establishing an office location can be an obstacle for a start-up practice, there are alternatives. Sharing space, or even renting space one day per month in a clinical setting, can allow you to use a separate physical address for your business.


According to Noam Sadovnik, CEO of Clinicube, “Collaborative work environments are one of the biggest trends in office space. A coworking space can help medical professionals reduce their costs while also allowing flexibility to meet their specific demands and increasing their efficiency.” Medical coworking spaces may be a great alternative for start-up practices.


Office Phone

This may seem obvious, but having a dedicated business phone and fax, and not using a personal cell phone, is a best practice we recommend.


A dedicated phone not only indicates professionalism on your part, but also provides a better patient experience. Furthermore, to ensure their patients are receiving the best possible care and service, health plans often verify that your practice can easily and consistently be contacted.


We recommend having a professional voice recording and an on-call answering service for off hours call handling. Fortunately today there are numerous low-cost solutions available to start-up practices, from live call answering services to virtual receptionist software or call routing technology. Google Voice offers free telephone service that provides call forwarding and voicemail services, voice and text messaging. At CredentialGenie, we use Grasshopper as our virtual phone system, but websites like this one offer lists of call answering services.


Type 2 NPI

As a licensed provider, you should already have an NPI number. This is a Type 1 NPI, and it is a 10-digit number that is used to identify you to your health care partners, including all payers, in all HIPAA standard transactions.


Your practice also requires an unique NPI, which is identified as a Type 2 NPI for your organization. If you have not done this already, we can help you or you can also do it yourself.


Bank Accounts

Money makes the world go, so let’s talk about bank accounts.


Making sure that you have a bank account set up in the legal business name as indicated on your IRS letter is absolutely critical. The name has to be an identical match, especially if you're going to be enrolling with government plans such as Medicaid or Medicare, because an error will cause the application to be rejected automatically.


EFT Accounts

Once you’re ready to receive payments, you’ll need to establish an Electronic Funds Transfer (EFT) account or some form of remittance. EFT transactions allow payments to be transferred electronically from one banking institution to another.


According to The BluePrint, “EFT payments are a good way to eliminate the need to print and mail paper checks to vendors, and can also provide your customers with a quick, easy way to pay their invoice. No matter what type of accounting your business uses, you can take advantage of EFT payments.” This article provides a great overview of EFT and Automated Clearing House (ACH) payments and how they work.


As you prepare to create you EFT account, you will need the following information:

  • The name of the bank receiving funds

  • The type of account receiving funds (e.g., checking or savings)

  • The bank’s ABA routing number

  • The recipient’s account number


Contracting and Enrollment

Establishing contracts with insurance companies (also referred to here as carriers, networks or payers) is a necessary first step. The companies you chose to contract with (also referred to as being in network as a participating provider) will depend on several factors.

A typical scenario might work like this: If CredentialGenie started the enrollment process for your practice/providers now (January 2021), you can probably expect an effective date of mid to late April.

Typically, you will already have an idea of the carriers you want to panel with. However, our credentialing experts can usually identify additional payers for you to apply to depending on the state, county, region and specialty.


The process works generally like this:


When an application or Letter of Interest (LOI) is submitted, there is typically a 30 day minimum wait time for the application to be reviewed and considered by the network. Once your application is reviewed your application will either be rejected or accepted.


If a carrier rejects your application, this usually means that the insurance company does not need additional providers with your specialty in the requested service area (i.e. region, state, county). Said another way, there is likely an over-abundance of providers like you serving the area.


If a carrier accepts your application, the contracting process begins. This phase can take an additional 60 days or more to complete.


Once the contract is received, this is when rate negotiation can begin. There are times when higher rates can be negotiated, and CredentialGenie can help with this process. See the next section for more information.


However, if the carrier will not provide terms suitable to you and your practice, you can choose to not accept their agreement and bill out of network. While this practice has its benefits, out of network payments can create an inconvenience for patients because the rates they pay for your services will be higher.


If you have negotiated favorable terms and accept a contract with a payor, the next phase, called contract loading, usually takes an additional 60 to 180 days to complete. At the end of this period, the newly enrolled providers will receive an effective date, which is the date the insurance carrier will recognize as the first date that rendered services can be claimed for reimbursement.


A typical scenario might work like this: If CredentialGenie started the enrollment process for your practice/providers now (January 2021), you can probably expect an effective date of mid to late April.


Rate Negotiation

Oftentimes, we at CredentialGenie are asked to “negotiate the highest rate.” This is an understandable request, but it doesn’t work that way exactly.


Our typical process is to learn what the top 10 Current Procedural Terminology (CPT codes) codes you plan to bill for, and we then request a carve-out. Carve-outs can be defined, according to this article, like this: “Sometimes insurance plans subcontract a set of benefits to another plan or network. A health plan might cover a broad range of medical services like prescriptions and surgeries, but "carve out" all mental and behavioral health services to a different plan to manage.”


CPT codes are numbers assigned to tasks and services offered by your providers. The codes are used by insurers to determine the amount of reimbursement that a practitioner will receive for that service. If you’re planning on handling this process on your own, we recommend you read this excellent blog by verywellhealth, an award-winning health information resources, covering all aspects of how CPT codes are used in billing.


However, if you’re considering outsourcing your credentialing needs to a professional credentialing services organization, contact CredentialGenie today.


Submitting Claims


With a bank account in place and a way to receive payment established in previous steps, your practice is ready to enroll with insurance carriers and submit claims for reimbursement.


One rule of thumb is to make sure you have enough funds to cover four to six months of operating costs. The reason for this is because it can take that long before you are under contract with an insurance carrier and can safely begin submitting claims.

One rule of thumb is to make sure you have enough funds to cover four to six months of operating costs.

The credentialing experts on our team at CredentialGenie report that it can take from 60 to 180 days to finalize a contract. We recommend against filing claims before you are officially contracted, because carriers do not always pay retroactively. Furthermore, once you start filing legitimate claims, those can take another 30 to 60 days before you start to receive any reimbursements.


Therefore, in cases where sole providers are starting their own practices while still working full or part time, it’s a smart idea to either keep working, or make sure you have enough money in the bank to cover expenses in the interim.


For practices paying salaries for multiple providers, the same rules apply. However, you can bill for services in the meantime, but you should do so on a cash basis.


There is a lot to know when it comes to enrolling with insurance payers and submitting claims. Please make sure to ask us any credentialing enrollment questions you have.


Claim Reimbursements

Many new start-up practice owners want to know how much they can expect to receive from reimbursements. Questions like these aren’t always easy to answer, but we can offer some general guidance.


If you know the specific CPT codes you want to bill for, you can look it up and figure out what the reimbursement is at the CMS website.


Most insurance companies pay a percentage of a fee schedule based off of Medicare reimbursement rates. The average contract pays about 70 to 90% reimbursement, but it is possible to get a higher rate.


As your credentialing and enrollment service provider, CredentialGenie’s team of credentialing specialists can negotiate reimbursement rates on your behalf to help you get the highest reimbursements possible.


Growing Your Practice

You’re smart, and chances are your practice is going to grow because you’re reading articles like this or leveraging services like ours.


As you consider expanding your footprint, here are some potential scenarios to keep in mind:


Opening a new office in a different state

If you plan on using your existing Tax ID with the existing corporate location, it is advisable to check with the practice’s legal team to make sure that state does not need a specific tax ID.


Some states require practices to be registered within the state and a new Tax ID is required. This means new contracts are required, as well. This would effectively restart the process, as if a new practice is being opened, and this would also require the generation of another Type 2 NPI.


Opening a new office in the same state using the existing Tax ID and Type 2 NPI

A demographic update may be all that is required to add that location to existing contracts.


This process takes anywhere from 30 to 60 days.


A best practice would be to select an effective date beyond 60 days (for example, if you did this today, your effective date would be March 1st).


Payers may make retroactive payments if the scenario is a demographic update, but there will likely be delays in reimbursement.


If you practice across state borders:

Practitioners have to be licensed in both states regardless of the entity's tax ID status.


How to Know When You Need a Pro?

How do you know when it’s time to get professional help with credentialing and enrollment?


Sometimes, sole providers try to handle credentialing and enrollment by themselves. Mostly they do this because of limited budgets. But these sole providers soon realize that while credentialing isn’t rocket science, it requires significant time and attention to detail. And for someone trying to care for their patients full-time, having to dedicate so much time to credentialing takes away too much time from their primary duties.


For larger organizations who employ credentialing personnel, they find that turnover for this position is high, expertise is limited, and often they have a mess on their hands that has been accumulating long before they discovered it.


Whatever your situation, CredentialGenie is here to help. If you’re going the DIY route and simply need useful information, hopefully this article has informed you and pointed you in the right direction. If you’ve decided you need professional help from certified credentialing specialists, let us know how we can help.