Financial Sustainability

Distributed credentialing: The new provider mobility imperative

December 17, 2020 2:42 pm

Validating the identity and credentials of practitioners poses a significant revenue cycle, recruiting, and physician relations challenge for healthcare organizations.

Credentialing is a federally mandated, yet largely nonstandard process performed across the industry to ensure patient safety. Given that many physicians deliver their services at more than one provider organization, it seems logical that physician credentialing would best be performed in a collaborative process. Yet hospitals and health systems historically have preferred to go it alone, and the result has been billions of dollars of waste each year.

Before the COVID-19 crisis, hospitals and health systems tolerated the operational and revenue cycle impact of a four-month credentialing process. Many chalked it up to “the cost of doing business.” The pandemic has called that assumption into question, as it has forced provider organizations to rethink many of the processes around the delivery of and payment for care.  New, collaborative approaches have emerged that apply principles of blockchain and distributed ledger technology and promise to bring about a sea change in how organizations manage this process.

(For a perspective on how hospitals, health systems and payers have historically approached credentialling, see the sidebar “The provider identity challenge,” below.)

The promise for a solution

The new wave of blockchain- and DLT-based solutions has come at a time when physician identity has grown into a “hair-on-fire” problem. The COVID-19 crisis has greatly intensified the need to quickly mobilize clinicians. Widespread adoption of telemedicine, increased engagement of clinicians across their communities and the movement of clinicians to virus hot spots have all contributed to increasing credentialing workloads. Meanwhile, the additional time to complete the substantial workloads is impeding rapid access to care.

The new solutions promote collaboration by sharing validated, curated information across trusted networks. Although they all use collaboration as their differentiator, these new networks employ a variety of business models and technical structures to accomplish the task. The following are two examples of the underlying principles being applied.

Credentialing data exchanges. Such a solution involves a new type of shared DLT database, which enables the exchange of primary-source verified clinical credentials. At its core, the solution creates a market for access to information that verifies physician credentials by providing a means for organizations to contribute verified information for other organizations to access.

This Fall, the Michigan Health & Hospital Association (MHA) provided its members with access to such a program in response to COVID-19’s impact on member hospital medical staff offices. The MHA introduced the COVID-19 Credentialing Exchange Program with the goal of making it easier for members to engage new clinicians in the COVID-19 response, to enable those clinicians to get to work faster and to promote clinician mobility while ensuring patient safety and quality. In this program, accredited healthcare organizations are coming together to create a trusted network through which clinician credentials can be organized and shared in support of each organizations existing onboarding processes.

This type of system enables a health system that needs to credential a physician or other practitioner to acquire verified credentials from reputable and accredited source. Further, as multiple versions of verifications of a physician may exist across the marketplace, the shared platform provides the ability to form consensus on the reliability of the information, thereby significantly improving reliability overall.

Further, members of an exchange can eliminate the manual process of applying specific accreditation standards, bylaws, business rules and general credentialing requirements to their daily routines. These specifications are captured on the exchange for each unique member or facility. As a result, the exchange understands exactly which credentials are relevant and needed and, thus, presents only actionable information.

This process is more efficient than traditional methods where health systems are all independently doing the same jobs and manually analyzing the data en masse to determine compliance. The data and the work are shared among the network participants.

Such an exchange can serve as a common utility for the industry to curate and distribute credentialing information among market peers regardless of the systems and methods they use locally. To ensure it creates a trusted environment for collaboration previously unachievable, the solution must meet three basic conditions:

  • Limit network membership to quality-focused healthcare organizations.
  • Employ a validation engine to manage member requirements.a
  • Render primary source data immutable through DLT

Credentialing data synchronization. A similar model to the exchange approach relies on data synchronization. In this approach, enterprises that currently maintain separate copies of provider databases collaborate in creating of a synchronized, shared source of provider demographic data.

Across the network, data changes are chronologically recorded and shared in a cooperative and tamper-resistant manner. Updates entered by members are replicated across all the other parties’ copies of the shared demographic data, thereby allowing the members to improve the quality of changes to directories and lower data management operating costs.

This data synchronization model broadcasts information globally across the network. Every node on the network sees all the data. It is optimized for network transparency whereas the data exchange model is optimized for peer-to-peer data exchange.

Innovation opens new doors

Provider identity is one of the first use cases where the industry is seeing the use of blockchain and DLT in production. These projects demonstrate a great fit for the use of DLT, which can create shared sources of truth among enterprises. This technology opens the doors to innovative new business models, and now viable networks of entities are proving the model’s utility.

One reason provider identity is low-hanging fruit for blockchain is that the data being managed is not as sensitive as protected patient information. Such initiatives do not operate in a regulatory “no-fly zone”. Each uses the technology to its best effect: to enable networks to solve shared problems of trust, transparency and alignment. As a result, these projects are gaining traction at a rate not seen in early blockchain and DLT initiatives.

Redefining provider identity

The potential benefits are not limited to the traditional definition of credentialing. When data assets move fluidly, the definition of credential and its sources can become more flexible, enabling new types of digital innovation previously not possible. Traditional efforts to credential physicians could be displaced by a shared, living source of truth for identity and reputation managed by the individual physician rather than by middlemen who extract fees for access to data.

  • New types of micro-credentials also could be introduced that help us understand what consumers really want to know. For example:
  • How often has the surgeon done this type of procedure?
  • What have been the outcomes?

Does the physician’s practice pattern or product choices result in better value or a faster return-to work?

This type of information is as important to a patient as where the physician graduated from medical school, yet the traditional credentialing process limits innovation.

A third model of information sharing may be on the horizon: The creation of a passive provider identity platform where the credentialing process is a by-product of the clinician’s day-to-day activities. The physician would be the holder of certain pieces of information, and other essential pieces would be held by the curators who make up the ecosystem.

This vision of passive, person-centric identity is referred to as self-sovereign medical identity. In this model, the physician carries a “wallet” on his or her phone that contains the physician’s information, allowing the physician to open and close the door to their information as they move through their professional career.

The future of professional identity as a shared value approach

An exciting opportunity exists within the healthcare market to create a disruptive and transformative solution that addresses the historic challenges facing practitioner identity and reputation through a shared-value approach.

Recent technical innovations have opened the door to new business models that promote financial success while improving public trust in our healthcare delivery system.

The go-to-market process for these models is complex, and the solutions themselves are still new. Digital transformation is hard. Much is yet to be learned about the technical and non-technical variables over the coming years. But what has been achieved to date is remarkable and suggests old problems in healthcare can be solved in exciting new ways through collaboration and technology.

Today, these approaches can help us think differently about how we validate a physician’s identity and reputation, while also helping to remove the burden of credentialing from physicians and nurses. Tomorrow, we may find such approaches can help us design a better system for value-based care.


a The validation engine analyzes exchange data and curates only the verifications available on the exchange that meet specific requirements, by occupation, by each member. This validation can be set to reflect enterprise-, division-, regional- or facility-specific rules. The intent is to relieve the credentialing professional of the burden of complex rules enforcement.

The provider identity challenge

Tracking and validating provider identity has long been an “Achilles Heel” for healthcare. Health systems, payers and physicians themselves spend countless hours and over $2.1 billion annually attempting to curate and maintain accurate and complete practitioner records.a

The need for physician credentialing is not only mandated but also quite clear. Providers must ensure a healthcare practitioner can competently deliver patient care within a specific clinical setting.

Physicians must also be credentialed by every health plan with which the provider organization has contracted for payment. Malpractice insurers, volunteer organizations, the military and Medicare/Medicaid all require various forms of credentialing, with the common result that physicians may maintain redundant credentials information with as many as 25 independent entities across the market. For telehealth physicians practicing in the acute care space, a single practitioner may be credentialed at hundreds of organizations.

The process for initially completing credentialing for a newly contracted practitioner often takes four to six months from recruitment, appointment and completion of payer enrollment. A single initial credentialing episode costs an organization, on average, between $500 and $1,400+ to complete, with payer enrollment costing an additional $2,000 to $3,600+, depending on the number and complexity of contracts maintained by the organization.b Practitioners cannot bill for services until this work is completed (with a few exceptions from Medicaid and Medicare). In the hospital setting, physician net revenue forfeited from delays in this is process amounts to about $9,000 per day, on average.c

Credentialing must then be reperformed every two years for care delivery organizations and every three years for payers. In the interim, all expirable credentials (e.g., licenses, board certifications, DEA clearances) must be tracked and confirmed to be active and unlimited.

Finally, healthcare organizations also need to actively monitor the information and pronouncement of the numerous sanctions issuing authorities (e.g., OIG, licensing boards, etc.) to confirm all members of their clinical staff remain compliant and in good standing. Delays, inefficiencies, miscommunications and errors in these processes directly impact recruitment, the revenue cycle, cost, quality of care and retention.

For payers, accurate provider directories are critical for connecting their beneficiaries to the right provider. Payers spend billions of dollars annually on managing provider data, yet they struggle to maintain accurate and complete directories as required by state and federal laws. CMS reports that 52% of providers offices reviewed contained at least one error.d

When payers are found to have errors, they may face penalties of up to $25,000 per day per beneficiary.e

There has been no significant innovation in this space in 20 years. Analogue processes using phones, email, and fax machines are the norm. These provider identity and reputation challenges limit our ability to recognize the potential for telemedicine and generally stand in the way of our ability to recognize the quadruple aim (higher quality, lower costs, improved patient satisfaction and improved physician satisfaction).

Talk to any physician, and it will be clear that issues related to credentialing and directories are a primary driver of dissatisfaction. The average physician is affiliated with 20 health plans and must handle requests manually and with each plan and health system individually. These repetitive tasks related to proving and reproving basic information such as a medical school graduation need to change if the healthcare system is to reduce physician burnout.


a “Streamlining provider data management could save billions … but is it possible?” Health Plan Week, Jan. 30, 2017.

b These costs do not consider NCQA-accredited credentialing organizations that employ delegated credentialing agreements with payers. As of January 2018, about 186 organizations maintain this accreditation.  With delegated credentialing, healthcare systems send a list of newly credentialed and re-credentialed providers each month to those contracted insurers who allow delegation, to accept their work prima facia. To do this, the healthcare delivery organization’s credentialing operations must be NCQA accredited. Without delegated credentialing (the vast majority of the market), healthcare delivery organizations forward all credential artifacts to the health plans and they reverify everything themselves. The NCQA provides an online list of the 234 healthcare organizations and credentials verification organizations (CVOs) it has accredited to date.

c Analysis based on Merritt Hawkins, 2016 Physician Inpatient/Outpatient Revenue Survey, 2016.

d CMS, “Online provider directory review report,” Jan. 19, 2018.

Jaffe, S., “Obamacare, private Medicare plans must keep updated doctor directories in 2016,” Kaiser Health News, March 2015.



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