Failed credentialing audits can cost healthcare organizations far more than time—they can lead to denied reimbursements, financial penalties of up to $100,000, and even the loss of payer contracts.
When payers build their network of healthcare providers, they look out for the most qualified and skillful providers. They ensure they work with the best providers through credentialing audits.
These audits are essential for ensuring regulatory compliance, minimizing risks, and maintaining patient care quality. They are typically performed by healthcare organizations, regulatory bodies, or insurance companies, also known as payers.
The credentialing process helps payers verify providers’ qualifications and documents to ensure they are qualified and can deliver optimum patient care.
Recognizing what payers examine in these audits is not only helpful but essential. This knowledge enables healthcare organizations to confidently manage the process, evade disqualification, and accelerate the credentialing timeline for quicker approvals.
So, in this blog post, we’ll discuss:
- Why do credentialing audits matter
- The key documents that Payers look out for and why
- How to evaluate provider performance records
- The additional verification requirements for exceptional cases
- The administrative records needed for credentialing audits
- Common pitfalls to avoid during credential audits
Let’s get right in.
Understanding Credentialing Systems and Process Compliance
Credentialing audits examine the systems and processes used to manage documentation and compliance.
These systems and processes include:
- Credentialing Software Audit Trails: Audit trails demonstrate transparency and accountability in credentialing activities. Payers check for logs of updates, verifications, and approvals
- Documentation Tracking Systems: Effective tracking systems prevent lapses in credentialing documents. Auditors evaluate the system functionality, including alerts for upcoming expirations
- Electronic Signature Compliance: Electronic signatures must comply with legal standards such as the E-SIGN Act. Documentation includes proof of secure signing protocols and user authentication
- Record Retention Compliance: Retaining records for the required period ensures their availability for audits or legal inquiries. State laws often require retaining records for 7–10 years
- Security Protocol Documentation: To protect credentialing data, auditors review encryption protocols, access controls, and breach response plans
- Backup System Verification: Data backups prevent credentialing disruptions during system failures. Documentation of this includes schedules for backups, storage locations, and recovery testing records
Why Do Credentialing Audits Matter?
Credentialing audits ensure that the current credentialing and re-credentialing process is suitable and smooth.
For instance, in March 2022, MultiPlan, a healthcare cost management company, performed an audit on Primoris Credentialing Network.
This audit showed that Primoris’ policies and procedures met all the requirements for credentialing, re-credentialing, appeals, provider rights monitoring, and system controls.
Without this audit, the company would have incurred various consequences, such as claim denials, network exclusion, and revenue loss. The audit provided coverage for:
- Patient Safety: Ensures only qualified providers treat patients
- Legal Protection: Prevents liability issues from improperly credentialed providers
- Network Integrity: Maintains payer network quality standards
- Regulatory Compliance: Meets state and federal requirements for provider participation
Provider organizations (e.g., clinics, hospitals, virtual care, etc.) and payers carry out credentialing but manage slightly different processes.
Provider organizations initiate the process by gathering the necessary information or data. The payer (private sector or government-managed) uses credentialing to assess the providers in their networks.
The credentialing process starts when the provider submits an application enclosing their information, such as education, licenses, work experience, and other data.
Documentations that Payers Look Out for during credentialing audits
Payers scrutinize eight critical credential elements during audits, with specific verification requirements for each:
1. State Medical License Status (Critical Priority)
- Current license verification through the state board
- Disciplinary action history
- Multi-state compact participation status
2. DEA Certification (High Priority)
- Active registration status
- Prescribing authority verification
- Schedule-specific authorizations
- State-specific controlled substance licenses
3. Board Certification (Core Requirement)
- Primary specialty verification
- Maintenance of certification status
- Recertification timeline compliance
- Board eligibility documentation, if applicable
4. Malpractice Insurance Coverage (Essential Requirement)
- Active coverage verification
- Policy limits
- Policy history
- Carrier reputation
5. National Practitioner Data Bank (NPDB) Reports (Risk Mitigation Priority)
- Adverse disciplinary actions
- Malpractice settlements
- Continuous monitoring
6. Educational Background Verification (Foundational Check)
- Primary source verification
- Accreditation status
- Specialized training certifications
- Dates of attendance
7. Work History Documentation (Comprehensive Review)
- Chronological consistency
- Employer contact verification
- Performance records
- Privileges history
8. Clinical Privilege Verification (Patient Safety Focus)
- Active privileges
- Scope of privileges
- Disciplinary actions or suspensions
Administrative Records Required for Credentialing
Operational records provide the framework for consistent and compliant credentialing practices. Below is a list of administrative records you’ll need for credentialing:
- Policy and Procedure Documentation: Auditors review policy manuals for updates and adherence to standards
- Staff Training Records: This includes training schedules, certifications, and attendance records.
- Quality Improvement Plans: Payers review plans to reduce errors and improve credentialing workflows.
- Corrective Action Plans: This includes past corrective action plans, steps for resolution, and resolution timelines.
- Communication Logs: These logs track correspondence with providers, payers, and regulatory bodies.
Time-Sensitive Credentialing Documentation Checklist
Expired licenses, certifications, or insurance policies can delay credentialing in certain situations. To prevent this, payers focus on the following credentialing documents:
- License expiration dates
- Insurance policy renewal status
- Continuing education completion records
- Board certification maintenance requirements
- Hospital privilege reappointment
Essential Compliance Documentation for Credentialing Audits
Compliance documentation helps in ensuring that credentialing audits meet legal, regulatory, and institutional standards.
Below are some essential compliance documentation:
- Credentialing Committee Decisions: These records capture the determinations made by credentialing committees regarding a provider's privileges and their inclusion in a network.
- Primary Source Verification Records: Primary source verification (PSV) ensures the authenticity of the provider's credentials, which is vital for patient safety.
- HIPAA Compliance Documentation: Payers require confirmation that providers comply with HIPAA regulations to protect patient information.
- Medicare/Medicaid Participation Status: Providers must demonstrate eligibility and compliance with Medicare and Medicaid regulations.
- State-Specific Requirement Compliance
States often impose unique credentialing requirements, and providers must demonstrate compliance with these regulations.
High-Risk Credentialing Scenarios: Enhanced Verification Protocol
Certain situations require specialized documentation and verification to comply with payer and regulatory requirements.
These six scenarios trigger additional payer scrutiny and require supplemental documentation:
1. Locum Tenens Providers
Required Documentation:
- 30-day advance notification to payers
- Temporary privilege verification
- Malpractice tail coverage confirmation
- State-specific locum requirements
- Assignment of benefits documentation
2. Telemedicine Providers
Required Documentation:
- Multi-state license verification
- Platform security certification
- Virtual practice protocols
- Interstate compact participation
- Remote prescribing authority
3. Emergency Privileging Records
Required Documentation:
- Proof of emergency authorization
- Temporary licensure or certification documentation
- Malpractice insurance coverage
- Written justification for the emergency privileging
- Expedited credentialing audit logs
4. International Medical Graduate Verification
Required Documentation:
- ECFMG (Educational Commission for Foreign Medical Graduates) certification
- Visa or work authorization documentation
- Residency and fellowship completion records
- Licensure verification from the country of origin and any U.S. state where the provider practices
- Malpractice history
5. Allied Health Professional Supervision Agreements
Required Documentation:
- Supervision agreements
- Supervising physician credentials
- State-specific compliance documentation
- Malpractice coverage verification
6. Out-of-Network Provider Documentation
Required Documentation:
- Detailed billing disclosures
- Records of payer communication
- Emergency care exception documentation
- State and federal balance billing compliance records
Provider Performance Metrics in Payer Audits
Payers not only evaluate credentials but also assess provider performance to ensure ongoing care quality.
They evaluate six quantifiable performance areas that directly impact network participation:
1. Clinical Outcomes (Primary Focus)
- Patient mortality rates
- Readmission percentages
- Complication rates
- Length of stay metrics
- Post-procedure recovery data
2. Quality Scores
- Patient satisfaction ratings
- Care effectiveness measures
- Preventive care compliance
- Population health metrics
- Quality improvement participation
3. Patient Complaint Documentation
- Complaint resolution rates
- Repeat complaints
- Detailed records of complaints, resolutions, and follow-ups
- Identification of patterns in complaints
4. Peer Review Outcomes
- Review scores
- Percentage of cases reviewed
- Improvement feedback utilization
- Frequency and outcomes of disciplinary actions
5. Procedure Volume Data
- Number of procedures performed annually
- Case complexity
- Relationship between procedure volume and clinical outcomes
6. Adverse Event Reports
- Frequency of reported adverse events
- Average resolution time
- Provider compliance with mandatory reporting standards
Critical Compliance Areas for Credentialing Success
Six core compliance areas where payers have zero tolerance for deficiencies:
1. Provider Directory Accuracy (Federal Requirement)
Mandatory Elements:
- 48-hour update requirement
- Quarterly attestation
- Panel status verification
- Location accuracy confirmation
- Specialty verification
2. Reappointment Timeline Compliance
Required Documentation:
- 180-day advance tracking
- Primary source re-verification
- Performance data review
- Peer review completion
- Committee approval documentation
3. Ongoing Monitoring Documentation
Key Elements:
- Monthly checks for license expirations
- Sanction screenings through databases
- Incident reporting logs
- Continuous review of compliance with federal and state requirements
4. Emergency Response Protocols
Essential Documentation:
- Temporary privileging
- Record of credentialing waivers
- Communication protocols
- Written plans for provider credentialing
5. Facility Site Visit Records
Mandatory Requirements:
- Inspection checklists
- Maintenance records
- Safety audits
- Reports from payer-conducted site visits
6. Risk Management Documentation
Required Elements:
- Incident reports
- Malpractice claim history
- Action plans
- Regular risk assessments
Common Credentialing Audit Red Flags to Avoid
These six deficiencies trigger automatic audit failures and require immediate corrective action:
1. Expired Credentials
Automatic Failures:
- Expired state license
- Lapsed DEA registration
- Outdated board certification
- Non-current insurance coverage
- Expired clinical privileges
2. Primary Source Verification Gaps
Failed Requirements:
- Missing direct verification
- Incomplete NPDB queries
- Unverified education history
- Non-validated work history
- Outstanding reference checks
3. Incomplete Provider Files
Automatic Failures:
- Missing critical documents
- Inaccurate or outdated demographic information
- Incomplete employment history or unexplained gaps
- Absent or unsigned attestation forms
- Missing malpractice insurance documentation
4. Late Reappointment Processing
Failed Requirements:
- Failure to complete reappointment reviews
- Overdue documentation updates
- Unsubmitted reappointment applications
- Missed deadlines for committee approval
- Gaps in active credentialing status
5. Inadequate Peer Review Documentation
Automatic Failures:
- Missing peer review evaluations
- Incomplete documentation of performance reviews
- Lack of signed peer review assessments
- Missing evidence of follow-up actions
6. Poor Follow-Up Documentation
Failed Requirements:
- Missing correspondence with payers
- Inconsistent updates in provider files
- Lack of tracking for outstanding items
- Failure to document resolution
Wrapping Up
Thorough documentation and proactive management of credentialing processes can ensure success during audits.
By focusing on compliance, transparency, and quality, organizations can maintain trust with payers and deliver consistent patient care.
Need help with your credentialing process? Reach out to Assured. Assured’s automated credentialing system can cut onboarding time to 2 days. It is perfectly compliant with CVO applications and can help you save up to $50,000 annually per specialist.
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