Web-based doctor credentialing helps health insurers target costs.

U.S. health insurers are saving money and cutting administrative hassles by switching over to paperless, Web-based systems that collect information on physicians who seek to join their networks. They also can use such information to promote consumer-driven health plans.

Managed-care companies such as health maintenance organizations and preferred provider organizations must select and retain qualified physicians who will provide quality services to their sub scribers, according to Margolis & Co. PC., a Bala Cynwyd, Pa.-based management consulting firm.

Credentialing, the process of reviewing and verifying a health-care provider's qualifications, is a"necessary evil" for physicians to participate in managed care plans, according to Margolis. The process includes current professional licenses, verification of a physician's education, post-graduate training, hospital staff privileges and levels of liability insurance.

Online credentialing initiatives are a way to cut some of the administrative red tape in managed care, said David H. Glusman, co-director of the health-care group at Margolis.

"The physicians will have less angst and wasted time in dealing with an HMO, and the HMO can more efficiently deal with the physicians" he said.

Effective credentialing provides several advantages for a managed care company, including risk management, accreditation and immunity from provider lawsuits, according to Margolis.

The Universal Credentialing Data Source, a project spearheaded by the Washington, D.C.-based Council for Affordable Quality Healthcare, says it is seeking to address a problem that has plagued physicians for decades: the need to complete multiple, perhaps dozens, of credentialing forms.

The Web-based data collection system, believed to be the largest of its kind, went live nearly four years ago, said Atul Pathiyal, project director of credentialing for CAQH. Today, participating physicians number about 270,000. With that figure rising by about 10,000 a month, the system is expected to soon account for more than half of all practicing U.S. physicians, he said. "Our initiative was to replace all of the paperwork with a single, national electronic data set," said Pathiyal.

About 250 health insurers are participating, including large, national companies and Blue Cross Blue Shield plans, he said.

The CAQH initiative is eliminating $33 million a year, or 1.1 million hours, of provider and support staff time required to complete and return application forms, according to a September 2004 analysis by the Medical Group Management Association. The association's members are individual managers of medical group practices.

Health insurers want providers to use online credentialing, because saving time is equivalent to saving money, Glusman said. A health insurer's credentialing staff can spend anywhere from a half-hour to two hours verifying one doctor's paper application. But credentialing the paperless, electronic way can cut the process to a half-hour or less, be said.

The system has helped Great-West Healthcare automate data processes and cut staff, saving the company an estimated $720,000, according to CAQH. The system also helped Aetna Inc. lower its re-credentialing mailings by about 15,000 applications. And the initiative helped WellPoint Inc. process initial credentialing applications, on average, eight days faster than it could with paper applications, according to CAQH.