Medical Billing

# What Is a Clearinghouse in Medical Billing? 6 Benefits of Using Clearinghouse

- September 23, 2022
- Posted by Kristen Edwards

23 Sep

A clearinghouse in medical billing reserves a special place in terms of clearing and forwarding reimbursement claims for practices and hospitals. As the process of reimbursing claims and providing financial security to healthcare providers are essential steps in medical billing, clearinghouses play a key role in the healthcare billing process which is undeniable. What is a clearinghouse in medical billing? And what impact does it creates on the reimbursement process for healthcare providers? The following detailed discussion clears all of your related confusion for the clearinghouse.

## What is a clearinghouse in medical billing?

The medical billing and credentialing process is a time-consuming and complicated process. However, the necessity which arises when providers are required to use a clearing process needs discussion. A clearing house service provider can help a healthcare provider to streamline the billing process by eliminating errors from claims, evaluating details in the claims, enabling the right information about insurance providers, and making arrangements for EFT – electronic funds transfer.

source:timedoctor.com

A clearinghouse evaluates the medical billing claims for errors and checks whether they are correctly processed to be accepted by the payers. Basically, a clearinghouse operates as a bridge between insurance payers and healthcare providers. Once the clearinghouse establishes the report for claims, the claims and the associated medical records are sent to the respective organizations.

Clearinghouses are responsible to receive the non-standardized data from the healthcare providers and convert them electronically to a standard format that is acceptable and ingestible in the payers’ billing system which is HIPAA compliant.

With this process, it becomes possible for healthcare providers to receive payments timely and manage the revenue cycle effectively.

### What does a clearinghouse do during claims submission?

Healthcare providers are supposed to install medical billing software where they upload their claims electronically to be checked and evaluated by the clearinghouse. Clearinghouse scrubbed the claims for coding and billing errors and transferred the claims to respective insurance providers for further processing. The whole billing and claiming procedure is processed over an electronic medium that is secured through provided guidelines across the healthcare system.

## Essential benefits of using clearinghouse in medical billing

As mentioned earlier, a clearinghouse is an essential part of the medical claiming and billing process. Therefore, eliminating clearinghouses from the medical claiming process would be an impossible task. There would be a myriad of benefits to using clearinghouses, some of them are listed below;

### 1. Convenience at its best

Technological advancements have compelled healthcare organizations to put everything online instead of doing them on paper or through the mail. Large insurance companies, especially those associated with a federal system like Medicare and Medicaid, prefer electronic clearinghouses to audit and process claims.

In addition, medical billing software offers patient portals in their application where a patient can see, upload, and manage their prescriptions, request appointments, and see lab tests. This patient portal can be accessed easily through mobile, tablets, laptops, and smartphones.

### 2. Improved billing process

Many times, providers have to input the information in the claiming software, fill out the forms electronically, and take out the prints to submit them to the clearinghouse to review them for potential errors. If there aren’t any errors, then the claims are sent to the insurance providers. But if they find any errors, these claims and documents are sent back to the providers to fix them and resubmit them after redoing all the work again which brings the providers on square one again.

This process takes time and it is challenging to get the bills approved in the respective time if the clearinghouse doesn’t perform what they actually do. In short, they actually do everything electronically, reducing the paperwork and time and energy consumed by staff and involved entities. Typically, you will find yourself in a better position to provide focused care and attention to your patients eliminating the hassle of paperwork and clearing and forwarding claims.

source:gooftheraoy.org

### 3. Better Readability

When the paperwork is involved with the manual entries of the information, it is hard to understand the language and handwriting of the individuals which increases ambiguities. With the electronic systems and digital medical records, it becomes easy to read and process data without putting extra time to gather information again and again and maintain uniformity across the data.

The electronic system is administered by the clearinghouse service provider which increases legibility and with this electronic process, insurance companies can process and read data easily. Also, with digitalization, it becomes even possible to determine the spelling mistakes in names and other preventable errors that cause claims rejection.

### 4. Accurate Documentation

According to the American Medical Association – AMA, 42% of physicians approximately face malpractice issues in their entire career sooner or later. However, it is unlikely that you can do anything to speed up the legal procedures once the claim is generated against you. But here your clearinghouse can help you by providing accurate information about the case in question. This means that the database of the clearinghouse will ease your burden of proof if you get caught in a malpractice lawsuit.

### 5. Improved administrative efficiency

With the need of integrating technology into the healthcare system, insurance providers and healthcare providers have to use billing software to expedite the process. But this software is not compatible with each other which can be more time-consuming from both sides if one software has the information and the other non-compatible software has to integrate all the data again to process the claims.

This elaborates the essential requirements of the clearinghouse more clearly than where software that is compatible with both healthcare provider and the insurance provider is used which makes the whole process quicker and easier.

Plus, when you receive EFT payments from your insurance provider and ERA electronic remittance advice from the clearinghouse after the claim submission, you and your staff don’t have to worry about the claim process and the reimbursements and can focus on more important medical responsibilities instead.

### 6. Reduced returned claims and fewer errors

The main cause of claim rejection is often found to be human error. However, according to the United States Accountability Office, the majority of claims are denied because of the eligibility in question for the codes input that insurance companies deny processing as they believe that the care that patient received was unnecessarily provided by the healthcare provider. Besides, estimation says that medical billing errors have approximately cost $125 billion to providers in loss each year.

source:apexedi.com

Clearinghouses are responsible to audit claims and bills for errors including;

- Incorrect patient information such as misspelled names and addresses, wrong birth dates or years, etc.
- Missing data
- Inaccurate use of billing codes such as wrong placement of HCPCS/CPT/ICD-10 codes and services
- Erroneous information about the insurance provider
- Duplicate billing for the same service
- Incomplete information about diagnostic and procedures performed

### Tips to choose the right clearinghouse services provider for medical billing

Now when you know a great list containing the benefits of clearinghouse in medical billing, you must contact one to back your financial matters with experience.

However, every clearinghouse offers a wide range of services that are tailored to medical billing needs. This is why you should;

- Evaluate the options you need assistance in
- Investigate the response time
- Focus on the reliability of the service
- Verify the turnaround time
- Consider other competitive options as well.

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