The patient is seen by the provider and a claim that details the visit is created and uploaded to a batch file that is submitted, either automatically or manually, to an outside entity called a clearinghouse. Most claims submitted electronically will go through a clearinghouse because most billing systems lack the ability to translate every claim to the correct format that each insurance carrier may need.

 So what is a Clearinghouse?

In medical billing, the middleman between the provider and the insurance carrier is called a clearinghouse. A clearinghouse's role is to:

  • Scrub the claim by checking for errors and verifying that the claim is compatible with the payer software.
  • Implement policies and procedures that protect electronic Protected Health Information (PHI) from unauthorized access and is responsible for reporting any breach of data to the affected parties in order to comply with HIPAA requirements.
  • Provide a service to both providers and insurance carriers by ensuring faster more accurate submission of claims, EOB’s and payments. Both will pay the clearinghouse for the service they provide. Both will be enrolled to send and receive claims.
  • Ensure claims that go through the clearinghouse will have an electronic date stamp that shows the date the claim was transmitted and the date the claim was accepted by the health carrier. This is the assurance that the claim is on file at the health plan and that it has passed the clearinghouse edits.

Once the claim is transmitted to the Clearinghouse, the claim will be checked for errors. If errors are found, the claim will be returned back to the medical biller for correction and then resubmission.

Some of the edits that a Clearinghouse could check for are:

  •  The ID number is correct.
  •  The procedural and diagnosis codes are correct.
  •  The procedure being performed fits the diagnosis.
  •  The relationship to the subscriber is correct.
  •  The patient’s name and date of birth is correct.
  •  The COB calculations are correct.
  •  You are properly enrolled to submit claims electronically to that carrier.
  •  You are submitting to the correct carrier.
  •  The carrier accepts electronic secondary claims.

Claims with errors need to be fixed immediately

  • If the claim is not corrected and resubmitted, it will remain in a holding pattern, unprocessed and aging until some human takes the time to review it.
  • The health carrier will have no record of these claims because they would have been returned prior to reaching the health carrier. 
  • Fixing an error could be as simple as correcting the spelling on the patient's name, calling the patient for updated insurance information, or it could be a claim that cannot be submitted electronically, requiring billing by paper.

The way to fix the error will vary but ALL errors should be fixed daily.

Please be aware that an error free claim does not guarantee that the claim will be paid nor does it mean that this same claim will be deemed error free by the health carrier. Most health carriers will subject a claim to a wide range of additional edits.

Clearinghouses not only submit claims but most have a host of other services such as eligibility verification, paper claim submission, patient invoicing and revenue management. 


Back to Chapter Five

Next to Electronic vs. Paper