Ask An Expert- What in the World is a Clearinghouse?

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Amanda Whitener has extensive revenue cycle expertise dating back nearly a decade, ranging from ambulatory surgery centers to optometry. As HELIX's RCM Account Manager, she focuses on helping ODs experience financial freedom by ensuring claims are worked quickly and correctly, as she has robust knowledge of operations for various areas of the practice. Amanda's primary role is helping offices reduce billing burden and labor costs while maximizing cash coming through the door. 

A Guide to Understanding a Clearinghouse

What in the world is a clearinghouse?

It’s been a while since we’ve talked about clearinghouses, and it can be a confusing topic for various reasons, not to mention that it naturally feels like it should be two words instead of one. I digress. In this article I hope to break down what it is and what it is used for to give you a better understanding of how a clearinghouse is a pivotal part of any practice in the healthcare space.

What is it?

A clearinghouse is basically an electronic post office for communication to and from providers/payers by way of claim submissions, rejections, denials, and payment/explanation of benefit (EOB) details. Within the clearinghouse, providers send claims via the payer’s Payer ID. Payers respond back electronically through the clearinghouse with a rejection, denial, or hopefully an EOB to show how they allowed/paid.

What is a payer ID?

If a clearinghouse is an electronic post office, a payer ID (which should be found on the patient’s insurance card) is the payers electronic address. Payer IDs are typically alphanumeric and five digits long. When loaded correctly into the practice management system, it gives the clearinghouse the necessary “address” for sending the claims.

How does the claims data move from the PM/EHR to the clearinghouse?

Electronic data is “pulled out” of the PM/EHR and transferred over to the clearinghouse, and the clearinghouse does the rest, drastically reducing the potential of manual entry error. This is why it is so important that practices set their PM libraries up with the correct payer information, and ensure they are getting their patients’ insurance cards to confirm the information every time the patient is seen.

What is the alternative to a clearinghouse?

If a clearinghouse is not set up, more than likely the practice will need to send claims either via snail mail, which may not be accepted by the payer, or through individual payer portals. If submitting through individual payer portals, the payers typically communicate back in the same way by providing rejections, denials, or EOBs through their portal. This makes it challenging for billers to report on imperative metrics such as overall rejection percentage, denial rates, etc. To do so, they would need to log into the individual portals and do some number crunching of their own. Whereas with a clearinghouse, all this information is typically stored in one place and easy to report.

Why isn’t it spelled with two words?

I do not have any clue!

Hopefully this has given you a better understanding of what a clearinghouse is, as well as what it does and its benefits. If you still have lingering questions, please don’t hesitate to reach out to the HELIX RCM team. We are always happy to help!

Reach out to the HELIX team with any other billing questions you have at this link; we might have the solution for you.

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