Medical Billing Clearinghouse: How the Claim Submission Process Works

Roughly 15% of healthcare claims are initially denied, according to the Healthcare Financial Management Association (HFMA). For healthcare providers, claim denials can create additional administrative work, delay reimbursement, and place greater pressure on the revenue cycle.

A medical billing clearinghouse can help reduce these challenges by reviewing claims for potential errors before they are submitted to insurance payers. Through claim scrubbing, eligibility verification, electronic claim submission, and claim status monitoring, the billing process can be managed more efficiently.

Understanding the role of a clearinghouse in healthcare can help healthcare organizations evaluate how a medical billing clearinghouse fits into the claim submission process and what should be considered when selecting a clearinghouse partner.

What Is a Medical Billing Clearinghouse?

A medical billing clearinghouse is a third-party service through which medical claims are received from healthcare providers, reviewed for errors, and transmitted to insurance payers.

Medical claim clearinghouses act as the connection point between providers and insurances. In modern healthcare billing, claims are generally submitted electronically rather than through paper-based processes. Through a clearinghouse in healthcare, information can be formatted and transmitted according to payer requirements.

Clearinghouses are a required piece of the modern healthcare puzzle. Without them, healthcare would essentially grind to a screeching halt. Because electronic claim submission is required by many insurance payers, clearinghouse services are used throughout the healthcare industry to support reimbursement.

Several functions are performed by a clearinghouse throughout the claims process. Claim scrubbing, eligibility verification, claim status monitoring, remittance advice processing, payer connectivity, and reporting may be included. A billing service may also be integrated with clearinghouse technology to create a more connected billing workflow.

How a Clearinghouse in Medical Billing Supports Healthcare Providers

Without a clearinghouse service, separate connections with numerous insurance payers would need to be established and maintained. Individual payer requirements, claim formats, and submission processes would also need to be managed separately.

Through a clearinghouse in medical billing, claims can be routed through a centralized connection point. Insurance claims can be submitted electronically to multiple payers without separate submission processes being managed individually. Administrative work can be reduced, billing accuracy can be improved, and the billing process can be simplified for the provider's billing team.

How the Claim Submission Process Works

Several stages are involved in the claim submission process, from the creation of a medical claim through the final reimbursement decision.

How Medical Claims Move from Provider to Payer

After a healthcare service has been provided, a medical claim is created using patient, provider, coding, and billing information. The claim is then submitted to a medical billing clearinghouse, where patient data and claim information are reviewed for errors, missing information, and payer-specific requirements.

After validation has been completed, the claim is transmitted to the appropriate insurance payer for adjudication. The claim is then reviewed by the payer, and a reimbursement determination is made. Following adjudication, payment information and remittance advice are returned to the healthcare provider.

Through this process, healthcare providers and payers are connected through a standardized electronic submission workflow.

How a Healthcare Clearinghouse Helps Transmit Claims

Many practices are trying to push towards going paperless and electronic remittance advice exists, the insurance reimbursement process was a much more tedious process. It involved driving to and from the post office at a moment's notice to submit claims on time to not risk a timely filing limit denial.

Today, claims can be submitted electronically through a clearinghouse, and the manual work associated with paper claims can be reduced. Claim status information can also be provided, allowing submitted claims to be monitored throughout the claims process.

Real-time claim status information may be provided through a clearinghouse, allowing potential issues to be identified earlier and payment delays to be addressed more quickly.

Benefits of Using a Medical Billing Clearinghouse

Several operational and financial benefits can be provided through the use of a medical billing clearinghouse.

How a Clearinghouse Helps Reduce Errors and Improve Billing Accuracy

Claim scrubbing is one of the primary functions performed by many clearinghouse solutions. During claim scrubbing, submitted claims are reviewed for claim errors, missing information, coding issues, and formatting problems that could result in claim rejections.

Potential errors can be identified before claims are transmitted to the payer. Through this process, billing accuracy can be improved, errors can be reduced, and fewer rejected claims may need to be corrected and resubmitted.

How a Clearinghouse Can Help Reduce Claim Denials and Payment Delays

Claim denials can create significant disruptions throughout the revenue cycle. Additional work can be required from billing staff when claims are denied or rejected, while reimbursement can be delayed.

Through claim scrubbing and validation, potential claim errors can be identified before submission. Payer requirements can also be reviewed, helping claim denials to be reduced.

Claim status can be monitored throughout the submission process, allowing reimbursement progress to be tracked. When a claim requires additional attention, the necessary corrections can be identified and the claim can be resubmitted. Through these processes, payment delays can be reduced and revenue cycle performance can be improved.

When organizations use a clearinghouse, these activities can be managed through a centralized workflow rather than through multiple disconnected payer processes.

Key Features of Medical Claims Clearinghouse Solutions

Different capabilities can be provided by medical claims clearinghouse solutions. The features included within each clearinghouse service should be evaluated according to the needs of the healthcare organization.

Claim Scrubbing and Eligibility Verification

Claim scrubbing and eligibility verification are commonly provided through clearinghouse solutions.

Through claim scrubbing, insurance claims are reviewed before submission for potential errors and payer-specific requirements. Through eligibility verification, patient coverage information can be confirmed before billing is completed.

When these processes are incorporated into the billing workflow, claim errors can be identified earlier, billing accuracy can be improved, and claim denials can be reduced.

Practice Management and Billing Software Integration

Integration with practice management platforms, billing software, and other healthcare billing systems can be provided through many clearinghouse solutions.

Through these integrations, duplicate data entry can be reduced and information can be transferred more efficiently. Claim status tracking, remittance advice management, payer enrollment support, reporting, and electronic attachment capabilities may also be provided.

The services a clearinghouse offers can therefore extend beyond basic claim transmission. A clearinghouse may provide multiple tools that are designed to simplify the billing process and streamline the billing process across the revenue cycle.

5 Steps for Choosing the Right Medical Billing Clearinghouse

Healthcare providers are provided with multiple options when a clearinghouse partner is being selected. And believe it or not, not all of them have the same hair-pulling experience that the majority of us have grown accustomed to. That's why it's so important to choose the right medical claim clearinghouse for your organization.

Step 1: Understand the Medical Claims Process

A strong understanding of the medical claims process should be established before clearinghouse solutions are evaluated. Appeals, denials, electronic remittance advice (ERA), ANSI transactions, Current Procedural Terminology (CPT), and Explanation of Benefits (EOB) documents are commonly included within the claim submission process.

Through familiarity with this terminology, clearinghouse demonstrations and product discussions can be evaluated more effectively. Differences between available clearinghouse solutions can also be more clearly identified.

Step 2: Evaluate Specialty Billing Requirements

Different requirements can be established for different healthcare specialties. Variations can be found in payer requirements, reimbursement structures, coding practices, and claim submission processes.

For example, if you're the owner of a mental health practice, you're going to have to work with managed care organizations (MCOs). Similarly, if you're a dentist the requirements placed on you by the payer are going to be different than what's required for submissions from pediatricians.

Although reimbursement is pursued across all healthcare organizations, differences in billing requirements can have a significant effect on the claims process.

If you don't know that key differences exist in the claim submission process for your specialty, you might end up with a generic clearinghouse partner.

Specialty-specific experience should therefore be considered during the evaluation of a medical billing clearinghouse.

Step 3: Identify Must-Have Features

Features should be evaluated according to the specific requirements of the organization.

There's no shortage of features in what medical claim clearinghouses provide. In fact, some might even say that these tools have too many.

A larger number of features does not necessarily indicate that a better clearinghouse solution is being provided. Greater value can be created through features that address an organization's specific billing needs.

The best way to approach features is to research all of them and rank those that are the most important to your organization.

Claim scrubbing, eligibility verification, claim status monitoring, payer connectivity, reporting, electronic attachments, and integration with billing software and practice management platforms can all be evaluated.

Step 4: Verify Insurance Payer Connections

Medical claim clearinghouses are only as valuable as the amount of connections they have to payers.

The effectiveness of a clearinghouse is largely determined by the payer connections that are available. A modern interface and extensive feature set cannot compensate for missing connections with the insurance payers used by an organization.

You need to ensure that you stay attuned to these discussions. Just because one clearinghouse provider has a nicer online image doesn't mean they have the payer connections necessary for your organization to collect its revenue.

Payer network coverage, supported claim types, enrollment requirements, and connection availability should be reviewed during the evaluation process. Through strong payer connectivity, claim submission can be simplified and reimbursement workflows can be improved.

Step 5: Evaluate Customer Service and Support

Customer service should be evaluated alongside technology and features when a clearinghouse is being considered.

Out of everything I've told you to keep in mind so far during your evaluation, the most important aspect to consider is customer service.

Even with advanced clearinghouse technology, claim denials, claim rejections, payer questions, and enrollment issues can still be encountered.

Based on the statistics and trends associated with claim denials, it's not really a matter of if you're going to have a problem with your claims, it's a matter of when.

When issues are encountered, knowledgeable support can be used to identify and resolve problems more efficiently. The availability, responsiveness, and expertise of the clearinghouse service team should therefore be considered during vendor evaluations.

Questions to Ask Before Choosing a Medical Billing Clearinghouse

Payer connectivity, claim scrubbing capabilities, eligibility verification, claim status visibility, reporting functionality, electronic attachment support, and billing software integration should be reviewed when a clearinghouse is being evaluated.

Implementation requirements, customer support availability, and claim error resolution processes should also be discussed. Through these factors, differences between clearinghouse providers can be identified and the right medical billing clearinghouse can be selected.

Conclusion

A medical billing clearinghouse is an essential component of the modern claim submission process. Through a clearinghouse, medical claims can be reviewed, scrubbed, transmitted, and monitored, allowing billing accuracy to be improved, claim denials to be reduced, and reimbursement to be supported.

From eligibility verification and claim scrubbing to payer connectivity and remittance advice management, several functions are performed throughout the revenue cycle. Although similar services may be offered by different providers, significant differences can be found in payer connections, technology, features, and customer support.

Through a clear understanding of the claims process and careful evaluation of available clearinghouse solutions, healthcare organizations can be positioned to select the right medical billing clearinghouse for more efficient claim submission, fewer billing errors, and stronger revenue cycle performance.