Recent changes from the Centers for Medicare and Medicaid Services (CMS) will impact how credentialing and billing are managed at Critical Access Hospitals (CAHs), Rural Health Clinics (RHCs), and independent groups with privilege-only providers. The updates, effective July 1, 2025, require closer coordination between credentialing teams and billing departments to ensure compliance and avoid claim denials.
Credentialing teams must review provider affiliations and reassignments to ensure that all classifications are accurately documented. Any gaps identified should be addressed promptly. According to the guidance, “Credentialing Team should be asking this question – How is your current billing system configurations is setup especially for Medicare.”
One of the key regulatory changes affects Method II Billing for CAHs. From July 1, every provider listed on UB-04 claims—including independent, contracted, or privilege-only providers—must have formally reassigned billing rights to the hospital in PECOS. If this reassignment is missing, CMS will deny payment for the professional component with remark code N253: “Service not payable due to billing conflict.” Both the provider and an authorized official from the CAH must sign new reassignment requests as part of compliance.
Credentialing teams are advised to validate that all provider relationships are documented in PECOS via reassignment. Facilities using Method II need to clarify their billing type since this method requires detailed documentation of affiliations and reassignments for both employed and privilege-only practitioners.
For RHCs enrolled as facilities that bill Medicare, a CMS-855A form is required, linking privileged providers to the facility’s Tax ID. If structured as a group practice or supplier billing for professional services, a CMS-855B form is necessary. There is an exception: RHCs integrated under Method II CAH do not need a separate CMS-855B if they receive reassigned benefits; however, credentialing must confirm these arrangements.
Facilities that bill for contracted or privilege-only providers must submit a CMS-855A form to link those providers to the facility’s Tax ID in PECOS. Credentialing teams now also bear responsibility for verifying PECOS documentation and helping facilitate surrogacy access when needed.
Beginning July 1, 2025, CMS will systematically edit claims for proper reassignment presence and reject those lacking correct affiliations. This increases pressure on credentialing staff to proactively address any gaps before claims submission. Written documentation of all billing agreements and reassignments will be required during audits—not just those involving employed staff.
The actionable checklist includes confirming each facility’s billing model (Method II or otherwise), reviewing all provider affiliations in PECOS linked to tax IDs, validating forms submitted for contracted/privilege-only providers, and ensuring audit-ready documentation supporting all relationships.
According to federal guidance documents provided by CMS (source, source), these measures aim to streamline compliance processes at CAHs and RHCs while reducing claim denials due to incomplete or incorrect credentialing data.
The new requirements highlight the growing importance of collaboration between credentialing teams and other administrative units within healthcare organizations as regulations evolve.
