Many people don’t know what is a clearinghouse in medical billing. Or how exactly they help send medical claims to insurance companies and why this service is so essential and important to medical practices. There are many different types of clearinghouses, depending upon their use as there are different types of medical claims, for example, Durable Medical Equipment (DME) claims, dental claims, pharmacy claims, in-patient facility claims, and out-patient medical claims. The easiest way to explain what clearinghouse is to picture a puzzle and how it is solved. This is what a clearinghouse does in medical billing; they help to resolve different types of claims in medical billing. For example, just imagine several million licensed healthcare practitioners, each with different medical claim software, sending out medical claims to over 5000 different insurance carriers across fifty states, each one having its own insurance policies and regulations, and then each insurance carrier having their own software program.
A Clearinghouse can serve as the perfect solution for an information disaster in medical billing. If on average only 10 medical claims are sent per day to 5 different insurance companies by every practice, then you would have millions of insurance claims sent every day worldwide. Now combine this scenario with numerous phone calls and claim re-submissions, as a claim error is not completely resolved until reimbursements are made and the bill gets paid. This process was earlier carried out on paper which was an absolute nightmare for the postal services.
With the workforce required to send all the information to the insurance carriers and handle all the paperwork and phone calls to ensure that claims have been submitted and received. The process presented a huge cost to healthcare and would get confusing all the time. Sometimes, it even resulted in claims not being resolved in time or being delivered at the wrong address.
With the advent of digital technologies, medical claims can be sent electronically. Medicare and major insurance companies have established medical billing software tools and portals where healthcare practice owners, hospital administrators or outsourced medical billing company vendors can submit medical claims to insurance companies in a secure way, in which patient’s medical information is protected against any third party use. In addition, clearinghouses offer medical billing professionals and experts a secure way to manage and consolidate all their medical claims from a single location with the use of smart dashboards, customizable templates, easy navigational tools and much more.
Medical billing software creates an electronic file which is the medical claim; it is then uploaded and sent to the medical billing clearinghouse account. The clearinghouse then checks for errors which is arguably the most important thing. As soon as the claim passes inspection, the clearinghouse securely sends out the electronic claim to the specified insurance payer. All this is done with a secure connection that meets the strict standards of HIPAA.
At this point, the claim can either be accepted or rejected by the insurance payer. A message is also sent back to the clearinghouse about the status of the claim which is then updated in the control panel, whether it is an accepted or rejected claim. If the claim is rejected by the insurance payer, then you have the chance to make all the necessary corrections and then re-submit the claim. Assuming that there are no further corrections required, and the patient’s insurance has been verified beforehand, you will then receive the reimbursement or an electronic funds transfer (EFT) along with the explanation of benefits (EOB).