Clearing House: Insurance's Middlemen

A medical clearinghouse is a middleman between healthcare providers and insurance companies. It audits records, verifies codes, and checks for errors before sending claims to insurance companies. This process, known as scrubbing, ensures that claims are correct and can be processed by the payer. Once a claim is deemed clean, the clearinghouse sends the claim and any associated medical records electronically to the appropriate medical organisations.

Clearinghouses act as a middleman between healthcare providers and insurance companies

Clearinghouses are essentially electronic stations or hubs that allow healthcare practices to transmit electronic claims to insurance carriers in a secure way that protects PHI (Protected Health Information). They offer medical billers and billing managers a way to consolidate all their electronic claims and manage them from a single location, from an online dashboard control panel, similar to online checking.

The process of using a clearinghouse is as follows:

• The medical billing software on the user's desktop creates an electronic file (the claim) also known as the ANSI-X12 837 file, which is then uploaded (sent) securely to the user's clearinghouse account.
• The clearinghouse then scrubs the claim, checking it for errors (arguably the most important thing a clearinghouse does).
• Once the claim passes inspection, the clearinghouse securely transmits the electronic claim to the specified payer with which it has already established a secure connection that meets the strict standards laid down by HIPAA.
• At this stage, the claim is either accepted or rejected by the payer, but either way, a status message is usually sent back to the clearing house who then updates that particular claim’s status in the user's control panel.
• If rejected, the user has a chance to make any needed corrections and then re-submit the claim.
• Ultimately, assuming there are no other corrections required, and the patient’s insurance was verified beforehand, the user will receive a reimbursement check along with an explanation of benefits (EOB).

Clearinghouses are important because they:

• Provide an extra step in the verification process, catching errors that may have been missed.
• Specialize in insurance billing, potentially saving money on hiring and training new staff.
• Allow users to submit multiple claims at the same time in one batch instead of individually, saving time and ensuring faster payment.
• Allow users to submit claims electronically, reducing paperwork and postage.
• Provide quicker transit times, with payment usually within ten days.
• Allow users to find out about errors in real-time, giving them the opportunity to correct errors immediately instead of waiting for the insurance company to reject their claim.
• Allow users to manage all of their claims in one central location.

They check for errors in medical claims

A medical clearinghouse acts as a middleman between healthcare providers and insurance companies. They audit records, verify codes, and check for errors in medical claims before sending them to insurance companies. This process, known as "scrubbing", helps to ensure that claims are correct and valid. If a claim is incorrect, the clearinghouse will send it back to the provider to be corrected. If the claim is correct, the clearinghouse will forward it to the insurance company.

The clearinghouse process is designed to catch errors and omissions that providers may have missed. This extra step in the verification process helps to reduce the number of denied claims and speeds up the reimbursement process. By submitting claims electronically to a clearinghouse, providers can also reduce the amount of paperwork and postage required, as well as the time spent on phone calls to insurance companies.

Clearinghouses offer a centralised platform for managing claims, allowing providers to submit multiple claims simultaneously in batches. This streamlines the claims process, reducing the time and resources required. Additionally, clearinghouses provide secure transmission of electronic claims, protecting sensitive patient information.

The use of a clearinghouse can also help providers increase their reimbursement rates. By checking for errors and omissions and reformatting data to meet specific payer requirements, clearinghouses improve the accuracy and efficiency of the claims process. This, in turn, can lead to quicker reimbursement and improved cash flow for healthcare organisations.

Overall, the role of a clearinghouse in checking for errors in medical claims is crucial in ensuring accurate and efficient claims processing, reducing the administrative burden on healthcare providers, and improving the likelihood of successful reimbursement.

They ensure claims are processed correctly by the payer

A clearinghouse acts as a middleman between healthcare providers and insurance companies. It is a third-party entity that helps to facilitate a seamless flow of information and communication between providers and payers. This is especially important because different providers use different software solutions to send their electronic claims to payers.

Clearinghouses are important because they provide an extra step in the verification process, catching errors that might have otherwise been missed. They also specialise in insurance billing, which means that healthcare providers do not have to. This can be more affordable than hiring a new employee.

Clearinghouses ensure claims are processed correctly by the payer through a process known as "scrubbing". This involves checking for errors and sending the claim back to the provider to be corrected if necessary. Once the claim is "clean", the clearinghouse sends it directly to the insurance company.

Clearinghouses also ensure that the codes selected and submitted by the provider are valid. They will also check for duplicate or incorrect codes that tell the system what to bill for. Each service must have the correct billing code associated with it for the claim to be accurately processed. Quality control can keep claims from being denied or discharged, which is critical to keeping workflows streamlined.

Clearinghouses also offer format standardization services to ensure that the information included in the claims meets the payer's specific format and coding requirements. This helps to reduce the likelihood of claim rejections.

They allow for the electronic transfer of funds

A medical clearinghouse is a middleman between healthcare providers and insurance companies. They allow for the electronic transfer of funds, claims, and billing information in a secure and efficient manner.

The electronic transfer of funds is facilitated through the Automated Clearing House (ACH) network, which enables the movement of money between banks and credit unions. This system is run by Nacha, a self-regulating institution that manages, develops, and administers the rules surrounding electronic payments. The ACH network acts as a financial hub, helping people and organisations transfer money from one bank account to another.

ACH transactions can include payroll deposits, tax refunds, consumer bills, and tax payments, among other payment services. These transactions are processed in large volumes and facilitate digital transactions for banks, brokerages, and private retail businesses, allowing their customers to receive direct deposits and pay bills efficiently.

The use of the ACH network for electronic funds transfers offers several advantages, including increased speed and efficiency of transactions. The network batches financial transactions together and processes them at specific intervals, resulting in extremely fast online transactions. Additionally, recent rule changes have enabled most ACH credit and debit transactions to clear on the same business day.

The electronic transfer of funds through a clearinghouse ensures that healthcare providers can receive payments securely and promptly, reducing reimbursement times and streamlining the overall billing process.

They save time and reduce the risk of claims being rejected

Clearinghouses save time and reduce the risk of claims being rejected by acting as a middleman between healthcare providers and insurance companies. They are third-party entities that assist with electronic transactions, such as submitting claims, and facilitate a seamless flow of information and communication between providers and payers. This is particularly helpful because different providers use different software solutions to send their electronic claims to payers.

One of the most important functions of a clearinghouse is its ability to validate data within medical claims. This thorough validation process ensures that the claim is complete, holds accurate information, and is free of any errors. Without this step, healthcare providers would be at the mercy of unchecked claims, likely riddled with errors such as missing information or incorrect codes, which would result in claim denials and delays in processing.

Clearinghouses also offer format standardization services, ensuring that the information included in claims meets the payer's specific format and coding requirements. This helps to reduce the likelihood of claim rejections. If there are any errors found in a claim, the clearinghouse will immediately send a report to the provider, who can then correct any errors and resubmit the claim.

By utilizing electronic transmission services, clearinghouses ensure that information is sent to insurance companies securely and quickly, in compliance with HIPAA. This speeds up the reimbursement process, as insurance companies receive the claim faster and can reimburse the provider sooner.

Clearinghouses also track and obtain confirmations from payers, notifying providers promptly if there is an issue with their claim so that they can handle any denials. They take data from previously rejected claims to fix errors in future submissions, helping providers to avoid making the same mistakes and cutting down on time wasted.

Frequently asked questions