Difference Between Credentialing and Contracting for Outpatient Behavioral Health Therapy Clinics
Understanding the distinctions between credentialing and contracting is crucial when managing an outpatient behavioral health therapy clinic. These processes play a fundamental role in your clinic’s operations and financial health. Here, we will demystify credentialing and contracting, their importance, and how they differ.
Credentialing: Verifying Provider Qualifications
What is Credentialing?
Credentialing is the process of verifying the qualifications and background of a healthcare provider to ensure they meet the standards to deliver care. This involves checking the provider’s education, training, licensure, certifications, work history, and malpractice history. Insurance companies and payers like Medicare and Medicaid use this process to ensure that the providers in their networks are competent and qualified.
Why is Credentialing Important?
Credentialing is critical because it:
Ensures providers have the necessary qualifications and training.
Maintains the quality of care provided to patients.
Is a prerequisite for providers to bill insurance companies and receive reimbursements.
The Credentialing Process
The credentialing process can be lengthy and detailed, often requiring:
Completion of a CAQH (Council for Affordable Quality Healthcare) profile.
Submission of all necessary documents for verification.
Periodic re-credentialing, typically every three years.
For behavioral health practices, having credentialed providers means being recognized as legitimate and capable of delivering high-quality care, which in turn enhances patient trust and practice reputation.
Contracting: Establishing Network Participation
What is Contracting?
Contracting is the process of establishing an agreement between a healthcare provider and an insurance company. This contract outlines the obligations and responsibilities of both parties, including reimbursement rates and the services covered. Once a contract is in place, the provider is considered in-network, making them eligible for negotiated rate reimbursements from the insurance company.
Why is Contracting Important?
Contracting is essential because it:
Defines the financial terms and reimbursement rates for services rendered.
Determines the provider’s participation in the insurance company’s network, affecting patient access.
Includes terms and conditions that govern the provider’s relationship with the insurance company.
The Contracting Process
The contracting process involves:
Negotiating the terms of the agreement, including reimbursement rates.
Signing a contract that specifies the fee schedule and other conditions.
Becoming an in-network provider, which can lead to increased patient referrals and higher revenue.
Key Differences Between Credentialing and Contracting
While contracting is often lumped in with credentialing, they serve distinct purposes:
Credentialing focuses on verifying a provider’s qualifications and competency to ensure they meet the necessary standards for delivering care. Credentialing follows the individual provider.
Contracting establishes the financial and operational terms under which a provider delivers services and gets reimbursed by an insurance company. It’s the process of entering into a contract between two business entities - the insurer and the private practice or clinic.
Why Both Processes Matter
For outpatient behavioral health therapy clinics, both credentialing and contracting are vital for seamless operations. Credentialing ensures that your providers are qualified and meet the standards required by payers. Contracting, on the other hand, secures the financial arrangements necessary for sustainable operations and patient access.
So once a therapist's credentials (i.e. LMFT, LPCC, LICSW, LP) are recognized, that therapist can be included on contracts (yes, sometimes more than one) between insurers and practices or clinics and submit claims to that insurer under their own license.
Tips for Effective Credentialing and Contracting
Start Early: Begin the credentialing and contracting processes well before you plan to see patients. This ensures you avoid delays in being able to provide services and receive payments.
Stay Organized: Keep all necessary documents updated and easily accessible. Incomplete or outdated information can significantly delay the credentialing process.
Outsource If Necessary: Consider outsourcing these processes to experts who can navigate the complexities and ensure timely and accurate completion. This can save time, reduce errors, and allow your team to focus on patient care.
In conclusion, understanding the difference between credentialing and contracting is crucial for the success of your outpatient behavioral health therapy clinic. Credentialing ensures that your providers are qualified to deliver care, while contracting establishes the terms under which you get reimbursed.
By managing both processes effectively, you can enhance your clinic’s reputation, streamline operations, and ensure financial stability.
At BreezyBilling, we specialize in helping behavioral health practices navigate these complex processes. Contact us today to learn how we can support your credentialing and contracting needs, allowing you to focus on what you do best—providing excellent client care.
