Choosing a medical claims clearinghouse: 5 things to look for

With millions of healthcare claims to process and millions of dollars at stake each month, getting claims right the first time is a top performance indicator for healthcare providers. The administrative burden is immense – there are more than a thousand health payers, each with their own requirements, edits and software. Each claim must be scrubbed to make sure every last detail is correct before it’s submitted – or the result will be delayed payments and lost revenue. By taking this resource-intensive activity off providers’ hands, medical billing clearinghouses are often the “most valuable player” of healthcare claims management. Choosing the right medical claims clearinghouse could make or break a provider’s claims management success.

What is a medical claims clearinghouse?

Healthcare clearinghouses help providers increase reimbursement rates by checking each claim before it’s submitted to the payer. They scrub for errors and omissions, then reformat the data to meet the specific requirements of each payer. Once a claim is cleared, the clearinghouse transmits the electronic claim (the “837 file”) to the appropriate commercial or government payer using a secure connection, in line with the Health Insurance Portability and Accountability Act (HIPAA). The payer evaluates the claim and communicates acceptance or rejection to the clearinghouse. If payment is due, the payer will issue a reimbursement check with an Explanation of Benefits (EOB) statement. Rejected claims may be resubmitted once any corrections have been made.

This sounds like a simple process, but it’s extremely complex. Tracking and adapting to individual payer edits, state insurance regulations, and multiple software systems call for a level of expertise and industry insight that would be challenging for in-house teams to maintain efficiently. With a singular focus on claims routing and the quirks of individual payer adjudication workflows, healthcare clearinghouses are often better placed to streamline electronic claims submissions.

What services do clearinghouses help with?

A healthcare clearinghouse can typically offer:

1. Claims processing: Managing the submission, processing, and tracking of medical claims electronically to insurance payers.
2. Denial management: Handling denied claims by identifying the reasons for denial, correcting errors, and resubmitting claims for reimbursement.
3. Real-time eligibility verification: Verifying patients’ insurance coverage and eligibility in real time to ensure accurate billing and reduce claim denials.
4. Electronic data interchange (EDI): Facilitating the electronic exchange of healthcare data between healthcare providers and insurance payers in standardized formats.
5. Electronic remittance advice (ERA) processing: Receiving and processing electronic remittance advice from insurance payers to reconcile payments and denials with submitted claims.
6. Claim scrubbing: Checking claims for errors, inaccuracies, and missing information before submission to reduce the likelihood of claim denials.
7. Coordination of benefits (COB) verification: Identifying primary and secondary insurance coverage for patients with multiple insurance plans to ensure accurate billing and reimbursement.
8. Claim status inquiry and reporting: Providing tools and services to track the status of submitted claims and generate reports on claim processing metrics.
9. Compliance and regulatory support: Ensuring compliance with healthcare regulations, such as HIPAA, and staying updated on changes in billing requirements and coding standards.
10. Provider enrollment: Helping healthcare providers enroll with insurance payers and update their provider information as needed.
11. Appeals management: Assisting healthcare providers in appealing denied claims through proper documentation and communication with insurance payers.
12. EDI connectivity and integration: Offering connectivity solutions and integration services to seamlessly exchange data between healthcare providers’ practice management systems and the clearinghouse platform.
13. Customer support and training: Providing ongoing support and training to healthcare providers and their staff on using the clearinghouse platform effectively and resolving issues related to claims processing and reimbursement

Why work with a medical claims clearinghouse?

The answer lies in the growing problem of denied claims. Denials dent provider profits through lost revenue and time wasted on reworking claims. A 2021 KFF study of in-network claims found that 18% were denied because they were for excluded services, 9% because of missing prior authorization or referrals, and 72% because of “other reasons.” This likely includes incorrect patient encounter codes, incomplete patient or physician information, or other data entry errors. Too many denials arise from avoidable human error.

Providers can ill-afford an inefficient claims management workflow. Direct submissions require staff to repeat the same data entry tasks repeatedly, using multiple software accounts. Monitoring claims status without a centralized system is messy. And with ongoing staffing pressures, many providers don’t have the resources or infrastructure to attempt this anyway. The savings of a direct-to-payer approach are soon outweighed by higher denial rates.

Healthcare clearinghouses can ease the burden on in-house RCM teams, smooth friction between providers and payers, and provide industry intelligence to streamline claims submissions. By partnering with a medical claims clearinghouse, providers don’t just save time and staff resources, but increase the likelihood of claims being submitted right the first time.

The importance of choosing a clearinghouse that stays compliant

Complying with industry regulations helps healthcare providers avoid costly fines and reputational damage. Compliance rules ensure adherence to stringent regulations like HIPAA, which safeguards patient data privacy and confidentiality, ensuring that all data handling practices comply with the highest standards.

A compliant clearinghouse implements robust security measures like encryption and access controls to protect sensitive information during EDI. Staying compliant fosters trust among stakeholders, including patients, healthcare providers, and insurance payers. It demonstrates a commitment to ethical practices and upholds industry standards, promoting long-term relationships and sustainability in the always-evolving healthcare field.

What to look for when choosing a medical billing clearinghouse?

Here are five features to look out for when choosing the right medical billing clearinghouse partner:

1. Usability

“Is this medical claims clearinghouse going to be easy to work with? Do they have a user-friendly interface?”

Given that a significant motivation behind working with a medical claims clearinghouse is to make the claims process easier, the first question to ask is how easy they’ll be to work with. The ideal clearinghouse partner will offer a streamlined user experience with an intuitive online claims dashboard or interface so that all claims can be managed in one place.

Inevitably, issues that need to be checked by the provider’s medical billing team will crop up. The clearinghouse should offer clear communication channels and protocols for verifying, correcting, and adding any missing information or documentation. Ideally, the clearinghouse’s interface will provide at-a-glance error reports and updates on the status of each claim, to minimize delays and allow staff to report on progress.

The clearinghouse should also offer staff training and real-time support for fast and effective implementation. Medical billing teams don’t want to spend hours chasing up queries, so investigating call center support protocols and response times is a smart move.

Some of the standard add-on services that make the medical claims clearinghouse more user-friendly include:

• Training materials: The clearinghouse should offer comprehensive training sessions, to empower healthcare providers and staff with the knowledge and skills to utilize the platform effectively.
• Customer service: The clearinghouse should pride itself on delivering exceptional customer service tailored to its users’ unique needs and challenges. A dedicated support team is available via phone and email to promptly address inquiries, troubleshoot issues, and provide personalized assistance. Their responsive and knowledgeable approach ensures that users receive timely support and guidance whenever they require assistance.

Also, look for a medical claims clearinghouse with security and privacy features to keep patient data safe. For example:

• Data encryption: All data transmitted through the clearinghouse platform should be encrypted using industry-standard protocols, safeguarding sensitive information from unauthorized access during transmission
• Access controls: Role-based access controls limit user access to specific features and functionalities based on their role and responsibilities within the healthcare organization, reducing the risk of unauthorized data access and misuse.
• Audit trails: Comprehensive audit trails track and record all user activities within the platform, enabling administrators to monitor and review user actions for compliance and security purposes. The medical claims clearinghouse should conduct periodic security audits and assessments to identify and address potential vulnerabilities and ensure ongoing compliance with industry regulations and best practices.
• Data redundancy and disaster recovery: Robust data redundancy measures and disaster recovery plans are in place to protect against data loss or corruption, ensuring continuity of service and minimizing downtime in the event of unforeseen incidents or emergencies.
• Confidentiality agreements: All staff members undergo training on data privacy and security practices and sign confidentiality agreements, reinforcing their commitment to protecting the confidentiality and privacy of patient information.

2. Reach and scope

“Does this medical claims clearinghouse connect to all our regular payers? Will we need to engage additional clearinghouses for specific cases?”

To leverage the advantages of outsourcing claims processing, providers must check that the clearinghouse can handle their specific claims mix and list their most-billed payers. Healthcare clearinghouses often specialize in different types of claims, such as in-patient, out-patient, dental, pharmacy, and so on, so this will likely be a quick way to narrow down the options. Similarly, some operate only in certain regions, and if the provider needs to submit claims to payers outside that area, they’re going to need another clearinghouse.

In most cases, choosing a clearinghouse with a broad reach and national scope will be beneficial so that all claims can be handled by a single vendor. If the provider plans to use the clearinghouse for Medicaid submissions, they’ll also want to check that their partner is set up to do this in line with state requirements.

Providers should also consider what services they need from their clearinghouse: submitting electronic claims? Verifying patient eligibility and coverage? Checking the status of claims and receiving ERAs? Some clearinghouses will perform all these functions, while others focus on one or two areas.

3. Error rates

“What are the clearinghouse’s average rejection rates? How can we accelerate corrections?”

Minimizing billing errors is the key to reducing rejections and denials. When discussing program components with a potential clearinghouse partner, providers should look for features that minimize errors, such as checks for duplicate information, missing attachments and coding discrepancies. A dashboard that flags any potential issues means errors can be found and fixed immediately, rather than being discovered weeks later.

To complement this process, providers should also consider what in-house actions could further reduce the risk of errors. Running internal checks with automated tools such as Claim Scrubber can ensure claims are in good shape before they’re sent to the clearinghouse. Claim Scrubber reviews every line of pre-billed claims and verifies patient information coding entries before being sent on. General and payer-specific edits can be checked to increase first-time pass rates.

Automated Prior Authorizations and Insurance Eligibility Verification tools offer another layer of extra checks, by verifying eligibility at each stage of the patient’s healthcare journey.

4. Affordability

“How are the clearinghouse’s contracts structured? Are there extra fees to watch out for?”

Providers will want to find a reasonably priced clearinghouse. Some charge a fixed monthly fee, while others charge a variable fee based on the volume of claims each month. Providers with relatively low claims should choose the first option.

Eligibility checks, claim status updates and remittance receipts are likely to be charged separately, so these should also be factored into contract discussions. Because the rules around claims submissions often change, providers should avoid being locked into long-term contracts, and clarify the termination arrangements.

Using a medical claims clearinghouse offers several financial benefits for healthcare providers:

• Faster reimbursement: Clearinghouses streamline the claims submission process, reducing the time it takes to submit and process claims. This results in quicker reimbursement from insurance payers, improving cash flow for healthcare organizations.
• Reduced claim denials: Healthcare clearinghouses employ claim scrubbing technology to identify and correct errors before submission, reducing the likelihood of claim denials. These solutions help minimize the need for costly appeals and resubmissions, saving time and resources.
• Improved efficiency: Automating manual tasks and providing electronic solutions for claims processing lets clearinghouses increase operational efficiency within healthcare organizations. Staff can focus on patient care instead of administrative tasks, optimizing productivity and reducing labor costs.
• Lowered administrative costs: Clearinghouses offer a centralized platform for managing claims and interacting with insurance payers, streamlining administrative processes and reducing administrative overhead costs associated with paper-based systems.
• Access to reporting analytics: Clearinghouses often provide analytics and reporting tools that offer insights into claim submission trends, denial rates, and reimbursement patterns. Healthcare providers can use this data to identify areas for improvement and optimize revenue cycle management strategies.
• Negotiation power with payers: Clearinghouses provide valuable data and analytics that healthcare providers can use during contract negotiations with insurance payers. Access to comprehensive claim data and performance metrics strengthens providers’ negotiating position, potentially leading to more favorable reimbursement rates.

It’s also worth considering how partnering with a clearinghouse that integrates with other claims management solutions can deliver cost savings elsewhere in the revenue cycle, through optimized workflows and greater efficiency.

5. Integrated services

“How does this service fit within our broader revenue cycle management (RCM) activities?”

Claims management doesn’t happen in isolation: everything from the patient billing experience to internal denials management should work together to improve the entire revenue cycle. It’s important to look for a clearinghouse that can integrate with other RCM tools to improve first-pass rates and shorten payment cycles. Some clearinghouses can receive electronic remittance advice (ERA) and even automate payments, which could help providers get paid faster and further reduce the administrative load on staff. Clearinghouses can also integrate with a provider’s electronic medical record and medical billing software to plug any gaps before claims are submitted. This integration ensures that accurate and up-to-date patient information is included in claims, reducing errors and denials. Additionally, clearinghouses may offer tools or APIs (Application Programming Interfaces) that allow EHR systems to transmit claims data directly to the clearinghouse platform, eliminating the need for manual data entry and improving efficiency.

Clearinghouses should also integrate with practice management (PMS) systems to streamline claims submission. This interoperability enables a seamless transfer of patient and billing information from the PMS to the clearinghouse platform, automating claim generation and submission. Clearinghouses may even provide real-time claim status updates and remittance advice directly within the PMS.

As noted, providers can accelerate claims and denial management by leveraging tools such as Claim Scrubber and ClaimSource. These tools draw on Experian Health’s unrivaled dataset and analytics platforms, and integrate with Experian Health’s other RCM solutions to verify and automate the information being added to each claim. Experian’s patient identity solutions can also be used to keep patient data safe and secure, and cross-check demographic information to prevent hold-ups and streamline the entire process.

Technological Trends and Innovations

Technological advancements, particularly artificial intelligence (AI), are transforming claims denials management. AI-powered algorithms can analyze vast datasets to identify patterns, predict claim outcomes, and optimize workflows. These solutions enable healthcare providers to choose clearinghouses based on performance metrics, such as claim acceptance rates and denial management capabilities. By harnessing AI, clearinghouses offer unparalleled accuracy, speed, and intelligence, empowering healthcare organizations to maximize revenue and streamline healthcare operations.

Glossary of Clearinghouse Terms

• Clearinghouse: A third-party entity that acts as an intermediary between healthcare providers and payers (insurance companies or government agencies) to facilitate the electronic processing of medical claims.

• EDI (Electronic Data Interchange): The electronic exchange of structured data between computer systems, used by clearinghouses to transmit medical claims data between providers and payers.

• HIPAA (Health Insurance Portability and Accountability Act): Federal legislation that sets standards for protecting and securing patients’ health information, including electronic transactions such as those handled by medical claims clearinghouses.

• Claim Submission: The process of sending a request for reimbursement for healthcare services rendered to a patient to the payer through the clearinghouse.

• Claim Validation: The process of verifying the completeness and accuracy of medical claims data before submission to the payer, helping to reduce errors and denials.

• EDI Enrollment: The process by which healthcare providers register with a clearinghouse to exchange electronic data, including setting up connectivity and establishing secure transmission protocols.

• Rejection: When a submitted medical claim does not meet the requirements or standards set by the payer, resulting in a refusal to process the claim for reimbursement.

• Error Code: A numeric or alphanumeric code provided by the clearinghouse or payer to indicate the reason for a claim rejection, facilitating troubleshooting and correction of the issue.

• Electronic Remittance Advice: A document sent by the payer to the healthcare provider detailing the status of processed claims, including payment information and explanations for any denials or adjustments.

• Claim Status Inquiry: The process of querying the clearinghouse or payer to obtain information on the current status of a submitted medical claim, such as whether it has been received, processed, or paid.

• Claim Resubmission: The process of correcting and re-submitting a rejected or denied medical claim for reconsideration and processing by the payer.

• Batch Processing: The method clearinghouses use to handle multiple medical claims simultaneously, typically in large batches, to increase efficiency and reduce processing time.

• Payer List: A directory maintained by the clearinghouse containing information about the insurance companies and government agencies with which it interfaces for medical claims processing, including contact details and electronic submission requirements.

Learn more about how Experian Health’s medical claims clearinghouse and claims management solutions can help providers simplify and accelerate claims processing for faster payments and fewer denials.