Medallion’s Derek Lo<\/p>\n
Jasmin Kemp Photography<\/p>\n
Doctors can only practice medicine in states where they\u2019re licensed. <\/strong>Then each insurer they work with needs to verify their credentials. It\u2019s a messy and time-consuming process that costs more than $1 billion each year. Miss a deadline? Forget working with that insurer in that state till you\u2019ve fixed the error. Misplaced a form required for the signoff process? Ditto.<\/p>\n Medallion\u2019s Derek Lo figures that his software can cut through the system\u2019s redundancies, slashing the time and cost of paperwork designed to prevent quacks from practicing medicine and safeguard patients that\u2019s spiraled into something wasteful and burdensome. \u201cIt is an extremely duplicative process,\u201d Lo told Forbes. \u201cIt doesn\u2019t make sense to credential the same doctor 20 times and to do it every three years across all these plans. There should be a single clearinghouse to standardize this.\u201d<\/p>\n Today, the San Francisco-based startup is launching a new clearinghouse, which it calls CredAlliance, after months of building in stealth. To date, it has signed up a few dozen payers and, Lo said, five of the nation\u2019s 10 largest health plans are considering joining the alliance.<\/p>\n \u201cMedallion is taking on one of the great unsung problems,\u201d said Dr. Sachin Jain, CEO of managed care company Scan Health and an advisor to Medallion. \u201cThere\u2019s a lot of data submission and a lot of credentialing verification that goes on, most of which is duplicative and repetitive.\u201d<\/p>\n Lo, an alum of the Forbes 30 Under 30 list in Healthcare,<\/a> originally started Medallion in 2020 to automate healthcare back-office operations and compliance.<\/a> Today, the venture-backed company has raised a total of $130 million\u2014including a previously unannounced $43 million round led by Acrew Capital in July\u2014at an estimated valuation of $440 million. Its contracted annual revenue is now approaching $50 million. Customers include Tampa General Hospital, a 982-bed not-for-profit hospital in Florida, and digital mental health firm Headspace.<\/p>\n \u201cIt doesn\u2019t make sense to credential the same doctor 20 times and to do it every three years across all these plans. There should be a single clearinghouse to standardize all this.\u201d\n<\/p>\n Derek Lo, Medallion cofounder and CEO<\/p><\/blockquote>\n Credentialing, which is just one piece of what Medallion does, is a process that involves the evaluation of doctors, nurses, therapists, physical therapists and the like to make sure that their education, training and licensure meet requirements. Lo figures that 4 million credentialed providers in the United States are contracted with an average of 19 payers. It\u2019s an important process, but it adds up to roughly 25 million times a year that providers need to get credentialed, by Lo\u2019s calculation. That\u2019s costly and time consuming for the health insurers, which typically run the process, and it\u2019s frustrating for physicians and health systems to be bogged down in paperwork at a time when there are shortages of doctors and nurses. \u201cIt\u2019s like, wow, that seems really stupid,\u201d Lo said.<\/p>\n Lo\u2019s big idea with the credentialing clearinghouse was to bundle credentialing together and allow cost-sharing among insurers. Medallion\u2019s standard credentialing rate for a doctor in network with just one payer, say Blue Shield of California, is $30 to $50. But as Medallion brings on more payers (who typically cover these fees) to its clearinghouse, that will allow the cost of credentialing to be shared amongst them. In addition, Lo said, Medallion can line up doctors\u2019 different credentialing expiration dates, making it easier to keep track of all the deadlines and reduce the paperwork burden.<\/p>\n \u201cAcross the large payers, there is significant overlap,\u201d he said. He started to realize the scale of the problem because Medallion had an existing credentialing business that handled the paperwork as one-offs. \u201cAs we were growing, we could see how much duplication there is. There\u2019s no reason everyone needs to do the same thing over and over again,\u201d he said.<\/p>\n Medallion\u2019s customers for the new effort include CareSource, which offers health insurance to more than 2 million people, and Valor Health Plans, a Medicare Advantage health insurance plan designed for nursing home residents. While there have been efforts to coordinate credentialing at a local or regional level, Lo said that Medallion is the first to take it on nationally, perhaps not surprising given that VCs would typically rather expand markets than reduce them. Lo has a different take: \u201cWe want to own the credentialing market and we want to shrink it.\u201d<\/p>\n MORE FROM FORBES<\/strong><\/p>\n ForbesLonger Leash On Life: Inside The Dog Longevity StartupBy Amy Feldman<\/a>ForbesMIT Spinout Strand Therapeutics Raises $153 Million To Make Cancerous Tumors Light UpBy Amy Feldman<\/a>ForbesBiotech Startup Tahoe Therapeutics Raised $30 Million To Build AI Models Of Living CellsBy Alex Knapp<\/a>ForbesHow A 60-Year-Old Drug Developer Built A $4.4 Billion Biotech Treating \u2018Butterfly Skin Disease\u2019By Amy Feldman<\/a>ForbesHow This New Biotech Billionaire Outmaneuvered Merck In ChinaBy Kerry A. 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