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10
Provider Organization
Credentialing and
Privileging
Managed-care organizations consist of three primary areas: Health Maintenance
Organization (HMO), Physician Hospital Organization (PHO), and Preferred Provider
Organization (PPO). Additional categories of contracted services within the man-
aged-care environment include Independent Practice Association (IPA), Management
Services Organization (MSO), and Accountable Care Organization (ACO).
These entities all assume liability for the accuracy and thoroughness of the cre-
dentialing verication process and how this information is used in negotiating man-
aged-care contracts with payers, employers, third-party audits, and the public. It is
extremely important that the credentialing verications conducted by Medical Staff
Services Professionals (MSPs) within the managed-care arena are done accurately
to reduce the risk of liability exposure. Designing, implementing, and maintaining
strong credentialing practices also ensures that participating members in specic
health plans are provided care by only the most qualied and competent practitioners.
The example text below is representative of what the contracting covenants usu-
ally say that gives rise to the liability for doing this correctly, and the assumptions
that give rise to both vicarious and ostensible agency
1
theories of liability.
TYPICAL MANAGED-CARE PROVIDER ORGANIZATION
REPRESENTATIONS AND WARRANTIES
a. Provider Organization represents and warrants that only properly cre-
dentialed and privileged participating physicians and allied health pro-
viders (hereinafter, “Represented Providers”) will be allowed to provide
covered services.
b. Provider Organization and each Represented Provider represent and
warrant that the information set forth in the Medical Staff Credentialing
and Privileging Data Set or other similar report furnished to payer is true
and correct.
c. Provider Organization shall promptly notify Network of any changes in the
information contained in the Medical Staff Credentialing and Privileging
Data Set within thirty (30) days of such change.
d. Provider Organization represents and warrants that it is authorized to nego-
tiate and execute contracts on behalf of its Represented Providers and will
provide evidence of authority upon request.

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