Updated: Apr 26
And Why Do We Require This One File To Enroll Providers in Healthcare Anyway?
As a follow-up to an earlier post regarding the best place for Blockchain technology to enter healthcare, this post below will outline a tactical point of focus to direct that innovative set of efforts. Having led several practice and hospital transitions involving over 1,200 providers in my career, I have experienced the energy, resources, and time invested in this arduous process. More tangibly, I've watched the real dollars in revenue go unprocessed by the payor and the balances of accounts receivable steadily rise until the enrollment process is completed… on average no sooner than 120 days. Up until recently there haven't been many innovative options to improve this process, until Blockchain technology arrived providing some hope.
Verifying a provider's credentials and formally establishing this clinician as a trusted provider of care is without question a critical first step in setting up a medical practice. This credentialing and enrollment (C&E) process helps ensure the right clinicians are providing the right care for patients. Since C&E is really where medical care begins, this would be the best place to think through applying Blockchain technology initially. C&E is made or broken with the often overlooked, but required monthly provider update file. There isn't necessarily a specific formal name for this file, but ask anyone in the Managed Care or Medical Staff departments at any health system or provider group and they will know exactly what I'm referring to. This provider update file is how these departments provide routine updates of new providers that are being added to or removed from a health system's payroll as well as changes in clinical scope or location assignment.
This is a terrific focal point to not only explain through an example how a distributed ledger technology (DLT) or Blockchain technology might work, but also where it can be a potential step towards significant efficiency improvement in healthcare.
How do medical providers get set up to provide care?
The provider C&E process on its own is a dense enough topic for its own series of articles, however a couple important points can be highlighted to catch those unaware up a bit in order to weave in Blockchain technology.
When physicians as well as advanced practice providers (nurse practitioners, physician assistants, among others) are hired by a health system or provider group there are of course applications, interviews, and background checks like many of the other roles at these organizations. However, for medical providers there are extra layers required.
For large health systems and provider groups, there may be a managed care department or medical staff department. These are the typical departments that coordinate C&E processes. Credentialing ensures that the professional credentials are validated for the applicant medical provider. Enrollment is the process to establish the provider with a payor (insurance or government) in order to authorize clinical services to be rendered, medical claims to be generated by the provider group, and ultimately those claims being processed (adjudicated) for payment by the payor.
If a health system has a large enough provider population, this organization may be authorized to perform delegated credentialing which allows the provider to help with a lot of the credentialing process in order to help keep up with the volume. To facilitate communicating the frequent changes to provider rosters, for when a new provider is added to the payroll or when one leaves or changes medical scope or practice location, a monthly file is generated by the managed care or medical staff departments at a provider organization. This allows for a mechanism to communicate provider roster changes to the payor so that both parties' rosters can be maintained accurately. Or one would hope as the payor receives such a file monthly and is expected to update their claims processing systems in an accurate and prompt fashion.
Could setting up medical providers be any quicker?
We have just covered at a high-level how medical providers are set up to render clinical services to patients. For those larger healthcare organizations that have delegated credentialing, and many that don't, the monthly provider update file is a key function for communicating roster changes…monthly. So, if there is a monthly cadence for when providers change at an organization there is bound to be at least a 4-week delay unless a provider's onboarding is well coordinated in line with the cadence of the enrollment process. At first glance this coordination would appear to be fairly reasonable to accomplish during the recruitment process to avoid that two to four week delay.
However, why does it need to be a file that is transferred between the provider organization and the payor monthly, or even at all? If this information is housed in one or more databases at the provider organization (electronic medical record and billing system), and then a file (often a manual generated spreadsheet) is sent to the payor for their team to update the payor databases doesn't that sound a bit inefficient? The old adage "that's how we've always done it" can be heard often when conversing around this process, but as technologies improve this shouldn’t have to be the case.
What if both parties, the provider organization and the payor, agreed to an initial roster and established this on a Blockchain technology. That roster as a starting point could be the initial roster used as a potential "genesis block" for the purposes of this high-level supposition. Then as soon as a change is made to a roster this could theoretically with Blockchain technology be communicated more rapidly. There would be a reduction of transfer/receipt of information delays, clerical errors when updating records, and at least a few weeks saved in terms of provider readiness to see patients.
On a more global view, and looking at this from the individual medical provider standpoint, another approach with blockchain could be taken. Perhaps there could be a registry that providers enroll into that houses their identification, credential supporting documentation, and their medical practice historical information that then is accessible by those providers and payors that are interested in processing C&E for these individuals. Then, as the medical provider's career evolves from education, professional certification, and employment, all of this information gets logged and leveraged through records on the supposed blockchain as a blockchain would allow more efficiently and immutably. That should certainly help healthcare in a lot of ways.
How would blockchain help make healthcare better if it starts with credentialing and enrollment?
There are organizations looking into this functionality as potential use cases (see those listed in the previously mentioned blog post (LINK) and I believe that this particular function, C&E, is a critical starting point for blockchain to begin and become widely successful. Once blockchain, or any other significantly innovative technology, has been evaluated there are countless add-ons that can be more efficiently layered into this new way of doing business. Here are just a few areas in healthcare that will be saved or benefited from a blockchain replacing C&E:
Compliance against billing fraud & abuse
Medical billing compliance and auditing could be simplified while becoming more efficient to monitor billing fraud and abuse. Having an immutable record of where providers are rendering services and even applying smart contract layers in order to limit the scope of services authorized for payment could be deployed saving the government and insurance payors millions of dollars in overpayments.
Denials from credentialing & enrollment flaws
Payors denying claims for "provider not enrolled" or other C&E setup issues are very common in today's healthcare revenue cycle environment. Yes, despite C&E taking sometimes well over four months to process, the process is flawed despite all the time taken that could have made the provider setup accurate to begin with and avoiding these common denials altogether.
Redundant clearinghouse intermediate process steps
The entire claim generation, clearinghouse intermediary, and payor adjudication processes could be layered on top of the C&E blockchain-based foundation. If there is already an accepted and utilized blockchain technology to manage the change in C&E between provider organizations and payors, why couldn't claim data and payment information "ride" along that same pathway? Furthermore, why would claims and payment clearinghouses even be necessary with a blockchain-based pathway?
Direct financial statement impacts
And last but not least, the financial impact today's lengthy and flawed C&E process costs healthcare organizations is staggering. Let's suppose just one moderately sized health system with a couple hundred providers happens to be acquired by another health system, we will leave out the potential for this happening across state lines. All providers and locations would need to be re-credentialed and re-enrolled with the above-mentioned process. Even if just one medical provider changes practice the same process must be completed. I have personally witnessed a consistent pattern that approximately 120 days’ delay in payment processing is the norm for provider organizations with even just one individual medical provider changing employment. The good news it seems to take the same amount of time for transitioning large provider populations. Let's look at the both the balance sheet and the income statement with an example each.
Balance sheet impact example: AR Days
If the national average gross days in accounts receivable (AR days) is just under 50 days (to keep the concept simple for this already lengthy blog post - thank you if you've made it this far) a typical delay in claim processing could extend AR days by a multiple of 2.4. Health systems already work hard enough to keep this number low, and 50 isn't all that great a number for AR days. Take a stronger performing health system with AR days closer to 30 days, the transition delay would be a 4.0x multiple. It must be stated that success in AR days performance does not correlate into C&E speed and accuracy.
Income statement impact example: Gross Revenue
Setting aside accounts receivable as just one potential impact on the balance sheet, let's take a look at one impact to revenue on the income statement. The "top line" of the income statement, gross revenue, which everyone in healthcare tries their best to increase as much as possible as factors driving down net revenue seem to abound would be directly affected by a 120-day delay in C&E. In fact, it doesn't stop at the top of the income statement but flows down through the page to impact the "bottom line", profitability. If, for example, a moderately sized Emergency Medicine provider practice operating 24/7 with just $15,000 in average daily revenue happened to be involved with change in ownership through integration with another health system, such a 120-day delay in C&E might easily cause a $1,800,000 shortfall to their gross revenue expectations. A small practice could be gravely impacted by this. But in most scenarios, this small practice in transition is likely being integrated into a much larger group and this income statement shortfall would be absorbed by the other clinical divisions of the acquirer. However, a large organization is not immune from the 120-day C&E delays. Today's flawed C&E process doesn't favor the large organization any more than the small organization.
Credentialing and enrollment is ripe for technological innovation, we can hope the right technology is coming soon
The list of adverse impacts that today's arduous and flawed C&E process has in healthcare is a pretty long list and hits organizations hard regardless of how well they perform in other aspects of their business. C&E being the first stage for any provider to be set up for providing clinical services is a great place for an innovative technology like blockchain to be implemented to bring noticeable long-term improvement. Starting with the antiquated monthly provider update file is a terrific function to replace with blockchain. Once this C&E process is greatly improved, hopefully through the right new technology which right now appears to be blockchain, there are many layers that can be more easily integrated with this key foundational step in place to build even greater efficiencies in healthcare as a result.
The details mentioned in this post are primarily focused around commercial insurance payors. It should be noted that the National Plan & Provider Enumeration System (NPPES) was developed out of the 1996 Health Insurance Portability & Accountability Act. The NPPES database is used to register providers and issue National Provider Identification numbers (NPIs) for both medical providers and health systems. This NPI would function much like a Social Security Number and would stay with a provider regardless of where they practice medicine or whether their specialty changes over time. Prior to the NPI, each provider would enroll with a particular payor and be issued a provider enrollment identification number issued to each provider at each location they see patients.
The NPI would be much more efficient, if it was maximized as much as it has the potential to. Perhaps like the monthly provider update form used for commercial insurance, the government payors and the commercial insurance payors could leverage the NPPES system more fully. Or better yet, convert the NPPES system, which has had good adoption throughout the US, to a blockchain-based platform.
Do you agree that this monthly provider update file is the right first place to explore blockchain?
Share your thoughts as a comment on this post. Like it if you agree that this is viable proof of concept. And please share your counterpoints as to why blockchain, as we foresee the technology today, may not be a good fit at this time.
Thank you again for reading this post I hope it is insightful.