What Is a Clearinghouse in Medical Billing and Why Is It Crucial for Medical Practitioners?

The modern technological advancement and obligations in the healthcare industry have automated everything. With these rapid evolutions, every piece of paperwork has transformed virtually whether they are medical records, providers’ information, or claiming documents. To automate the healthcare revenue generation process, clearinghouses have been outstanding in providing optimal services to providers and payers both. But to understand what is a clearinghouse in medical billing is and how it uses technology to seamlessly connect with the authorities, let us break down some important information about clearinghouses in medical billing. 

What is a clearinghouse in medical billing?

What is a clearinghouse in medical billing

A clearinghouse in medical billing is a system that providers need to go through specifically when they need to have a smooth billing process.

The Health Insurance Portability and Accounting Act (HIPAA) pressed the importance of medical data privacy associated with Secure Electronic Data Interchange (EDI). Due to security threats, it is essential for healthcare providers to take their billing practice very seriously.

Submitting claims to a clearinghouse is an important part of the medical billing process instead of directly mailing them to the insurance provider. Generally, a healthcare clearinghouse scrubs and evaluates the reimbursement claims submitted by the providers and checks them for billing and coding errors.

Once the claim is checked, the healthcare clearinghouse transmits a response to the providers either for a rejection or for the acceptance of the claim electronically. The Healthcare billing process is one of the most challenging parts of the healthcare system. This is why National health clearinghouses consent healthcare providers to outsource their billing management to avoid a time-consuming and error-prone process that takes a lot of time.

Potential issues in processing medical claims

Potential issues in processing medical claims

Medical and healthcare billing for providers’ services and resources is becoming challenging due to the continuous updates and amendments in the billing codes and the claims requirements are getting tough and adhering to them and accurately meeting them is out of every provider’s capability unless they hire an expert. The International Classification of Diseases Tenth Revision Clinical Modification (ICD-10-CM) coding system contains over 68,000 codes to identify accurate treatment and procedures to be claimed in the bills. This has weighed the need of outsourcing medical billing and coding services for accurate and error-less coding to file healthcare claims.

Issues in healthcare claims can be as little as human errors, wrong diagnostic codes, coverage denials, improper calculations, or payer information and EDI address are some of them. In addition, issues can also arise when claims are made on the mismatched software at the submitting and preparing platforms which are often not compatible and get rejected. Healthcare claim denial management and correction processes in the medical industry can not only delay but negate reimbursements.

Technological changes in the US healthcare system have put a strong influence on the cash flow reimbursed through insurance providers. However, rising costs of healthcare management and services seriously affect the productivity of the provider in the field.

On the flip side, insurance companies accept it as a considerable step to encourage medical healthcare providers by sharing a big cost of healthcare as deductible or co-pay. This deductible co-pay amount will have a negative effect while pushing away the patient for costly procedures or treatments.

Benefits of using a medical billing clearinghouse

Benefits of using a medical billing clearinghouse

Accurate billing submission involves a wide range of efficient steps from the front desk of the hospital or practice providing services to the last patient visit. To optimize revenue cycle management, it is necessary to prioritize effective claim processes to continue the revenue cycle. This will involve checking and billing claims for improvements.

At the clearinghouse error checking and scrubbing are the main functions while analyzing claims. By scrubbing and examining the claims, a clearinghouse service provider will immediately get to know if there are errors and whether the claim meets the basic requirement for acceptance from insurance companies for potential reimbursement. The requirements for claim submission may vary among insurance companies and scrubbing by using the insurance-specific requirements enables the providers to come up with the solution in hours and minutes instead of days and weeks.

Smaller practices often don’t have this many resources to hire knowledgeable resources or staff that would be able to match the requirements of clearinghouse scrubbing requirements that varies with insurance companies. Big healthcare billing clearinghouse connects with several insurance companies by integrating a range of compatible software and learning their systems by investing a long time.

Their learning and experience allow them to educate healthcare providers about meeting payer’s expectations and submission of claims meeting the requirements.

Through compatible software, medical clearinghouses have access to make more than one transaction on the client’s dashboard electronically. With this, not only clearinghouse saves time from sending a single transaction to every payer but if a provider has submitted claims for multiple insurance companies, they will be sent in just a few clicks.

Besides, a quicker and shorter claim cycle enables providers to manage their revenue cycle accurately and forecast their financial burdens in a better way. Plus, going through an electronic healthcare process will also save the paper claim submission which also has a good impact on the environment.

Final Thoughts

Certainly, dealing with claims or any other issue in the healthcare industry is challenging. However, hospitals and providers can improve their claim submission and reimbursement effectively by connecting with a healthcare billing clearinghouse. Clearinghouses are covered by HIPAA and are eligible to bill multiple insurance entities and have efficiently overcome the software incompatibility issue that healthcare providers often face.

The notable benefits of a clearinghouse include a fast and quicker billing process, error scrubbing, assistance in billing, reduced administrative costs, and most importantly handling and claiming of claims and submitted correctly.