For physicians and office administrators, credentialing is a necessary iniquity in order to partake in managed care plans. Managed care organizations such as health maintenance organizations (HMOs), preferred provider organizations (PPOs) and physician/hospital organizations (PHOs) must successfully select and retain qualified health care providers who will provide quality services to their subscribers. This process of selection and retention is known as credentialing. Credentialing is the process of review and verification of the information of a health care provider who is interested in participating with a managed care organization (MCO). Review and verification includes: current professional license(s), current Drug Enforcement Administration and Controlled Drug Substance Certificates, verification of education, post-graduate training, facility staff privileges and levels of liability insurance.
Managed Care Credentialing
The fundamental purpose of credentialing is to ensure that applicants meet the minimum requirements for a requested status and to determine whether the applicantion credentials are appropriate for the requested privileges within the MCO. Laws, regulations, and accreditation standards increasingly require MCOs to carry out the same level of credentialing that hospitals have long been required to carry out. Effective credentialing, and fair hearing and appeal processes all provide several advantages for an MCO. These advantages, at a minimum, include: risk management, accreditation, immunity from providers lawsuits under the Health Care Quality Improvement Act and positive marketing to those seeking to purchase health care policies, consumers, and potential member providers.
Under the theory of negligent credentialing, MCOs are responsible and can be held liable for exposing an injured subscriber to an unqualified provider by failing to conduct a proper credentialing review. They also undertake the risk that subscribers can look to collect damages when the subscriber is injured due to the malpractice of a provider deemed later to be unqualified. An MCO that exercises reasonable care in credentialing and monitoring its providers reduces its risk of liability of a malpractice suit by one if its members.
In its inception, NCQA used to limit its accreditation to HMOs, but has recently expanded to accredit Credentialing Verification Organizations (CVOs), Behavioral Managed Health Care Organizations, and Physician Organizations. JCAHO, which started out as a facility accreditation organization, accredits all types of MCOs through its health care network accreditation program. They also have a specific set of standards for PPOs and managed Behavioral Health Care Organizations. The AAHCC only accredits organizations that specialize in carrying out utilization reviews. They have recently broadened their focus to accredit MCOs. Finally, the smallest accreditation group, the MQC accredits medical groups and Independent Practice Associations (IPAs). MCO accreditation is important to many MCOs because the value of accreditation is looked upon as an indication to the public of the MCO devotion and commitment to the principles of quality and continued improvement of services. Some states require HMOs to be accredited. Many health care purchasers require or encourage accreditation before they will sign on with an insurer.
Immunity Under HCQIA
Another reason for an MCO to implement and perform proper credentialing is to qualify as a "health care entity" under the Health Care Quality Improvement Act (HCQIA). Most HMOs qualify as "health care entities" and many PHOs and PPOs may also meet this definition if they provide health care services.
The immunity conferred by the HCQIA is broad. It protects the MCOs credentialing committee members, and any other MCO committee members engaging in credentialing-related activities, including covering committee members with respect to credentialing decisions. The immunity can help to avoid suits against an MCO by a physician adversely affected by a credentialing decision, including suits for defamation and abuse of process. The immunity does not protect a health care entity from any civil rights claims.
Credentialing and managed care definitely share a strong relationship. With effective and thorough credentialing, MCOs are able to prosper and grow. It also provides several benefits to MCOs, which include a decrease in liability risk for malpractice and negligent credentialing, strong accreditations, immunities from physician lawsuits, and positive marketing. While effective credentialing takes time and effort, most MCOs feel that its benefits clearly outweigh the costs.