Role of Clearinghouse in Medical Billing

Clearing House acts as a post office for sending the claims from health care providers to the insurance company. The reason a clearinghouse is chosen to pass the claim to the insurance company is

Contacting and finding the insurance company details to send the claims directly to them which becomes a tedious process and it also includes testing/certification process.
The insurance transmission method should be configured in a proper way by the billing staff or the practice management team.
It requires involvement more manpower sending it directly to the company.
The entire process could become erroneous and faulty because of the involvement of a lot of data entries, accounts, etc.

So, it is very clear in the above cases that clearinghouse is a route before the claims reach from the provider and company. The use of clearinghouse involves some charge of the fees as well. The charge of the fees could fall between $125 to $300 from initial start-up fees to billing service. The charging cost depends on insurance type and the per claim cost.

However, there is no cost involved if we send the insurance claim directly to the company which is an advantage over the usage of the clearinghouse.

Advantages of using Clearing House

It becomes easier to find out and fix the errors which take only in few minutes.
The success rate of the claims is much higher as compared to the rejected rate of the claims.
The claim processing and reimbursement time becomes faster and is generally completed under 10 days.
It allows submitting all the claims at once to the clearinghouse rather than sending each individual insurer separately. The process is fast and clean thereby making the reimbursement process much easier and fast.
It reduces the involvement of physical paperwork, stamps, or envelops.

Electronic Claim Method

The claims can only be sent to the clearinghouse via the electronic claim method (EDI). In case the insurance company doesn’t consider the electronic claim, we can still send the claim electronically to the clearinghouse and let them know to send it to the company in paper format.

In addition to sending the claims to the insurance company, the clear house also does the following tasks.

Electronic Remittance Advice
Report claims of the statuses
Verification of Eligibility
Tracking the status of the sent file
Statement Services of Patients
Making reports of payment processing
Summarizes transactions and making reports of clearinghouse activity

The workflow of the Clearing House

A health care provider uses a billing software. Then it enrolls with a clearinghouse. The provider then sends the claims to the clearinghouse. The insurance company is also enrolled with the same clearinghouse and thus gets the claims to the provider.

Example of EDI 837 and 835 Clearinghouse

Step-1: A health care provider uses ’A’ Billing Software.

Step-2: provider enrolls with ’B’ Clearing House and an ID gets issued to the provider.

Step-3: ‘A’ Billing software can generate an EDI 837 message and can send the claims through the FTP message method to the clearinghouse.

Step-4: The ‘B’ clearing house would receive the message, determines the company from the claims, and thus transfers the claim to the corresponding company.

Step-5: The insurance company receives the claim, verifies it, and gets it through the claim adjudication process and sends the response 835 back to the clearinghouse. Finally, the company completes the payment by sending it to the provider.

Example of EDI 270 and 271 Clearinghouse

Step-1: A health care provider uses ’A’ Billing Software.

Step-2: provider enrolls with ’B’ Clearing House and an ID gets issued to the provider.

Step-3: ‘A’ Billing software can generate EDI 270 message and can send the claims through the web service call method to the clearinghouse within few seconds.

Step-4: The ‘B’ clearing house would receive the message, determines the company from the claims, and thus transfers the claim to the corresponding company using the web service.

Step-5: The insurance company receives the claim, verifies it, and gets it through the claim adjudication process and sends the response 271 back to the clearinghouse. The clearinghouse sends the response to the billing software of the provider within seconds. Finally, the company completes the payment by sending it to the provider.

The clearinghouse at times can’t process the claims from the providers. However, they will accept the claims and forward it to other clearinghouses just like courier service which can accept the mails and transfer it to the destination through other courier services in case there is the unavailability of delivery options.

Example:

The Provider ‘A’ uses a billing software and then enrolls with a particular clearinghouse. The insurance company hasn’t enrolled in the clearinghouse which is used by ‘A’. Then it sends the claims to another clearinghouse which is enrolled by the insurance company. The latter clearing house thus sends the claim to the insurance company. In such cases, we can expect the process to take a long time and the payment process can also delay.