Clearing House ~ Requirement Constraints

After claim is generated, where we will send the bill ?
You will immediately say "To the insurance company if the patient has insurance".

That's right. But are we going to send to the claim to each individual insurance company directly ? . Patient might be enrolled with different insurance company not to one particular insurance. So it may be very tedious job to send the claim to each insurance company directly.

Why ? Here are the reasons

1. Each time if you found new insurance from the patient, then you have to contact the insurance company and get the details how to send the claims directly to them.This process is potentially long and involved testing/certification process to complete and go for live.

2. Billing staff or the Practice management should be able to configure to setup configuration for each insurance transmission method (login, password, mode of transmission, etc).

3. On the other side (Insurance or Payer), think insurance company will receive the claims from different practice. For this, they should have the enough manpower which will increase their cost.

4. The unnecessary added confusion of multiple accounts to log into, and multiple data entries, which increase the opportunity for errors.Lost claims and lack of tools for efficient claim management

So What is the solution ?
So we need a POST OFFICE, so then if we post the claims to POST Office, then they will take to deliver to individual insurance/Payer. That's what Clearing House is.

Here is the diagram that explains.

So Clearing house is a company that passes claims and reports between a provider and insurance company. Is there any cost for this Post office ? Yes
Clearinghouses charge fees in many ways. Some charge an initial start up fee to the billing service ranging from $125 to $300. Most of them charge a per claim fee of some sort, depending upon the Insurance(hereinafter i will always mix the words insurance or payer or carrier)

Instead of clearing house, if you send the claims directly to insurance company, there is no cost involved in that. That is the only advantage over clearing house.

Here is the list of advantages using clearing house to send Claims

Allows you to catch and fix errors in minutes rather than days or weeks
Results in significantly higher claim success --fewer rejected claims.
Rapid claims processing: Submitting claims electronically can reduce your reimbursement times to under ten days.
Eliminates the need to prepare claims and manually re-key transaction data over and over for each payer
Submit all your electronic claims in batch all at once, rather than submitting separately to each individual payer. A medical billing clearinghouse allows you to submit all your claims at the same time, rather than submitting them separately for each individual insurer. Again, the faster and more cleanly your claims are submitted to the carriers, the faster payments are received by your medical billing client.
Reduce or eliminate need for paper forms, envelopes and stamp.

You may ask "Can i send the paper claims to the clearing house ?
No, Only Electronic claim (EDI) you can submit to the clearing house. But there is scenario where suppose particular insurance company does not accept Electronic claim submission(very rare), so in this case, still you can submit the electronic claim format to the clearing house and you can instruct the clearing house to send the claim via paper to that insurance company.

Other than transmitting the claims to the insurance company, there are some task are performed by the clearing house. Here is the list and we will see in detail about this in the upcoming chapters.