If you have ever attempted to process an insurance claim with a healthcare provider, you know that the stress is on a completely different level. You are not only managing whatever you needed healthcare for, you now have to worry about gathering all the documents from the healthcare provider and filling out all the forms for the insurance company, with the knowledge that you might be forced to take extra measures because of a technicality.
This is where clearinghouses come in. Healthcare providers send claim data to the clearinghouse, and the clearinghouse clears it for sending to the insurance company or carrier. Health care clearinghouses deal specifically with medical or health-related information.
The “clearinghouse” is only mentioned in healthcare when the entity or organization serves multiple healthcare providers and insurance carriers. If it operates in-house or as a department of either provider or carrier, it is not considered a clearinghouse.
What is a Healthcare Clearinghouse?
The most important question an insurance company needs to answer when it comes to healthcare is, “Is the individual or company’s claim accepted or rejected?”
However, before that question can be answered, insurance companies need to wade through various forms, printouts, and data formats.
None of these are the same, which means it takes time for the company to extract the data elements they need to begin processing the claim. After they process the claim, if it is rejected, they need to also figure out what might be missing from the data so they can give feedback.
If the missing data is provided, it will still come through the sending healthcare provider’s format, which the insurance company will need to understand to extract what they need to review the claim.
To summarize, a healthcare clearinghouse has one main function: it receives data from the healthcare provider (or any entity processing insurance claims for that provider) and extracts the data. It can be a public or private entity.
It arranges the data into one standard format for the insurance carrier, which immediately makes it easier for either the clearinghouse or the company to identify if there are any missing data elements.
The healthcare clearinghouse greatly reduces the burden on the insurance company, which can quickly give feedback on the claim and easily point out what data elements still need to be provided for a review to be conducted or a claim to be accepted or rejected.
Why Use a Medical Billing Clearinghouse?
What is a medical billing clearinghouse?
A medical billing clearinghouse receives electronic files from healthcare providers. The medical billing software then “scrubs” or checks the files for errors and flags any discrepancies, omissions, or errors for inspection.
After the file has been updated, the billing service sends the claim to the insurance carrier for acceptance or rejection.
Benefit 1: Medical billing clearinghouses are secure
Medical billings and other health-related claims and files are considered “HIPAA Transactions.” Because of HIPAA regulations, medical claims cannot be transmitted simply through an email file. It is considered an insecure transmission in that case. They are considered pieces of “protected health information.”
Every clearinghouse needs to be approved by HIPAA and prove that they are following regulations. In other words, every medical billing file sent through a clearinghouse is transmitted securely to the insurance carrier.
Benefit 2: Medical billing clearinghouses simplify transactions
With clearing houses, medical and healthcare providers no longer have to worry about sending information to insurance carriers that has possible errors or omissions.
Clearinghouses cut out the confusion by electronically checking the data elements given by the healthcare providers.
They automatically scrub for information the relevant insurance carrier needs for a claim review, and alerts the healthcare provider if any information is missing or in error. In this way, the long loop of insurance companies either asking for more information or rejecting the claims outright is halted at the clearinghouse.
Benefit 3: Medical billing clearinghouses allow insurance claims to be submitted by bundle
Without a clearinghouse, medical billing departments need to consult with each insurance provider separately or send the claims separately. The department then needs to sort out the information required by each provider, as well as deal with the different software systems of each one, besides their own.
With a clearinghouse, medical billing departments can submit the claims as a bundle, for example at the end of the day. The clearinghouse absorbs all the submitted medical claims’ electronic files from the healthcare provider, and then uses the extracted information for reformatting according to the insurance payers.
Because of this, medical claims departments can focus instead on preparing medical billing statements. This allows them to also focus on gathering the correct information for each billing statement, lessening the general back and forth with both the clearinghouse and the insurance payers.
Tips for Choosing the Right Medical Billing Clearinghouse Provider
Given this, how can an insurance carrier choose the right medical billing clearinghouse provider for them?
Tip 1: Choose a medical billing clearinghouse familiar with your state or district insurance regulations
Some clearinghouses are licensed to serve in several areas. When choosing a clearinghouse, observe first which other insurance companies consider the clearinghouse credible and smooth to work with.
A clearinghouse that does not flag the right errors on the medical billing side will transmit an incomplete file to you, which will delay the insurance process.
Tip 2: Choose a medical billing clearinghouse that serves hospitals or clinics in the healthcare network that are connected with you
For you to maximize the clearinghouse process, it is better if both you and the healthcare providers are connected to the same system. The clearinghouse system means you and different healthcare providers don’t need to share the same software; the clearinghouse standardizes sender information for the receiving entity.
Tip 3: Choose a medical billing clearinghouse with a transparent update system
It is helpful to stay generally updated about insurance claims that enter the system. A clearinghouse that clearly indicates when a new file has been opened, and its relevant status, allows insurance payers to anticipate the claims processing they will need to do.
At the same time, the electronic claims processing also allows the insurance payer to do less “work” in the sense that it becomes easy to explain a rejected claim or a claim under further review. Because of this, staying updated is just an easy way to know when a manual or “human” review of a claim needs to be made.
Tip 4: Choose a medical billing clearinghouse that is affordable for the number of claims it processes for you
If your clearinghouse does not have enough connections, it may end up processing much fewer transactions than you need to take the insurance claim review burden off your shoulders. If this happens, the clearinghouse will not simplify your processes and reduce transaction costs, making it more of a financial burden than otherwise.
If you want the clearinghouse to pay its own way, make sure it has enough connections that it will end up handling the majority of the transactions you need to make. When this happens, you will experience a much lighter burden and also be able to process many more claims cleanly and effectively, to the benefit of the company.
