Choosing a medical claims clearinghouse: 5 things to look for

August 2, 2022 by Experian Health

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 different 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 partner could make or break a provider’s claims management success.

What do providers need to look out for?

What is a medical claims clearinghouse?

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 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 different 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, clearinghouses are often better placed to streamline electronic claims submissions.

Why work with a medical claims clearinghouse?

Perhaps engaging with a clearinghouse seems like an unnecessary extra step. Many large providers have huge revenue cycle management (RCM) teams that could bring this work under their own medical billing umbrella. As patient responsibility grows, providers are already managing a sizeable chunk of the billing process themselves. Why not submit insurance claims to the payer directly?

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 over and over, 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.

Here are 5 features to look out for when choosing the right medical billing clearinghouse partner:

1. Usability

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

Given that a major 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 all claims can be managed in one place.

Inevitably, issues will crop up that need to be checked by the provider’s medical billing team. 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.

For fast and effective implementation, the clearinghouse should also offer staff training and real-time support. 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.

2. Reach and scope

“Does this 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 lists 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. Choosing the right medical billing clearinghouse could reduce the error rate for paper claims from around 28% to 2-3%. 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 up 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?”

Clearly, providers will want to find a clearinghouse that’s reasonably priced. Some charge a fixed monthly fee, while others charge a variable fee based on the volume of claims each month. Providers that have relatively low claims throughout each month should go for the first option.

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

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 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.

As noted, providers can accelerate claims and denials 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.

Find out 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.

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