The Downstream Effects of Poor Provider Data Management: Why We Need to Improve Provider Directories

For more than half of all patients, using a health plan’s provider directory to select a physician is the starting point for their care journey. But if they get off on the wrong foot—because of a missing phone number, the wrong network status, or an incorrect address—there are bound to be more hurdles along the way.

When the data in a provider directory is inconsistent and inaccurate, it’s difficult for patients to find the care they need. But poor provider data management (PDM) impacts much more than the patient’s experience. The downstream effects of bad data trickle into all facets of the healthcare system, and can lead to surprise billing, access to care barriers, and network adequacy misrepresentation. While it’s imperative that we make improvements, updating and maintaining provider directories is yet another time-consuming administrative process. To ensure delivery of quality and affordable care, health plans and providers need to adopt a modern solution to streamline provider directory management.

The provider directory landscape has sustained longstanding challenges, despite multiple efforts from health plans, providers, and regulators to improve the accuracy of data. Recent studies and audits continue to confirm what we already know: provider directories are messy, and they aren’t getting any better.

In March 2023, researchers compared provider information in the five largest private health plans in the nation and found 81% of entries in the provider directories were inaccurate. In a review of directories from a dozen Medicare Advantage health plans in six states, 33% of the provider listings contacted were inaccurate or had unavailable provider data, known as ghost networks. In this case, the Senate Finance Committee’s majority staff made calls to providers to determine the prevalence of mental health provider ghost networks. The result? The staff could only make appointments for 18% of the listings! A Health Affairs study similarly found that 53% of patients searching for behavioral care in provider directories found inaccuracies.

These findings highlight how poor PDM and ghost networks hinder a patient’s access to healthcare, which can be especially detrimental amid a national public health crisis. When patients cannot access the care they need, their health situations are likely to deteriorate, initiating a ripple effect of higher downstream healthcare costs.

It’s clear that the current state of provider data management in healthcare is unacceptable. But how does poor PDM effect other areas of healthcare? Sound data management processes help to ensure swift credentialing, payer enrollment, network participation, and payment of providers. When these processes fail, costs escalate. Physician practices revealed their annual directory maintenance costs are $2.76 billion. Further, the mismanagement of provider data—often the result of repetitive, manual, error-prone processes—contributes heavily to claims processing errors, especially denials, adding nearly $17 billion annually in unnecessary healthcare costs.

The costliness of poor PDM also affects patients, as they rely on provider directories to seek care that is covered by their health plan and avoid unexpected medical expenses. A 2020 study in the Journal of General Internal Medicine found that 30% of patients who received surprise bills noted errors in their health plan’s provider directory. Incorrect directory information not only leads to unexpected out-of-network bills, but it can also result in hours of administrative follow-up by the patient or a caretaker.

In an effort to improve the timeliness and accuracy of provider directories, regulators and legislators have introduced new requirements intended to protect patients from receiving care they can’t afford. The response by federal legislators was the passage of the No Surprises Act (NSA) intended to protect patients from surprise billing. With the NSA in place, the onus falls on the payer to keep their provider directories current, but without reliable provider data, it’s difficult to determine if providers are in- or out-of-network, further complicating the billing and reimbursement process. The result is immense legal pressure on payers and providers to stay compliant.

In an ideal, less complex healthcare system, health plans and providers would play nicely, sharing the responsibility of provider data management. A report from the Council for Affordable Quality Healthcare and the American Medical Association explained that a combined effort, including streamlining data collection and providing timely data updates, can help improve health plan provider directories. Nevertheless, it’s not a specific group’s fault keeping provider information accurate is so challenging, as it’s often changing. Multiple industry reports state that between 20% and 30% of directory information changes annually.

Without a national provider directory in sight, and strong federal enforcement of the NSA, health plans are on the hook to comply with the law and keep their directories up to date. To start improving provider directories, both health plans and providers need to make timely updates, streamline the processes to submit data, and leverage interoperability and automation. Madaket’s all-in-one solution eliminates data siloes, establishes standardized processes, and automates directory maintenance, at scale.