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Get the Most Out of Your Clearinghouse


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What to Look For When Making a Transition

By Lauren Collins and Cindy Groux, CHBME

Most medical billing companies utilize a clearinghouse. However, there may come a time when your company is ready to transition to a new one. To help you prepare for this potential transition, we have compiled some questions and answers that can guide you through this process.

An Overview of Clearinghouses

Clearinghouses transmit electronic claims to insurance carriers, serving as the transport mechanism of claim information between a physician or billing office and a payor. The majority of claims are entered into your practice management or billing software. The software will generate an electronic file (known as an 837 file), which contains all the claims to be sent (uploaded) to a clearinghouse. The clearinghouse performs "claim scrubbing" – perhaps one of the most valuable services offered – which checks all claims for errors that may cause them to be rejected immediately by your clearinghouse or later by the payor.


Claims can be rejected for thousands of reasons; clearinghouses perform eligibility verification to check that a patient name and ID number are correct, that the claim is sent to the proper payor, and that the patient is eligible for coverage on the dates of service. Once the claims pass inspection, the clearinghouse will parse through the batch and forward them to the payors. The claim will either be accepted or rejected by both the clearinghouse and the payor. A status message is sent back through the clearinghouse, and a "277" claims acknowledgment file will contain the status notification from the payor. The 277 file information can be later used, if needed, to prove timely filing.

Clearinghouses offer additional services. A great clearinghouse will have stellar customer support that is easy to contact. Dashboard reporting tools are helpful when managing rejections by both the clearinghouse and the payor, and some clearinghouses offer real-time claim correction from within their Web portal.

Answers to the Top Three Questions About Transitioning to a New Clearinghouse

The following Q&A is a resource for you as you search for and transition to a new clearinghouse.


1. What are the key factors in selecting a new clearinghouse?
It is vital to be comfortable with the vendor's industry experience and previous track records of success. Being agile enough to conduct prompt and proactive client services is paramount to the success of any billing company and providers during the transition and – most importantly – with the final system. Look for experienced, hands-on, and personalized support staff who act promptly on client requests and issues. Conducting client reference calls and asking specific questions about service levels is key. A vendor's track record of success or struggles is a good indicator of that vendor's future performance within your organization.

As clearinghouse technology has evolved into Web-based solutions, billing companies and providers should have simple and easy-to-use tools that are customized to their workflow and billing practices. Search for vendors that deliver a customized workflow management solution that can be tailored to fit your business needs. Ensure that all vendors being evaluated can process all HIPAA transactions, including patient eligibility, claims status, and paper-based services, such as patient statements and paper claims. Multiyear archival of all transactions processed through your clearinghouse should be available at minimal costs, if any.

2. What should I do to prepare for a transition to a new clearinghouse?
Ask the vendor to explain its payor enrollment and registration policy. A quality clearinghouse will conduct this work on behalf of its new client – and it ensures accuracy with the payor requirements and frees up the client to continue doing their work. Also, being able to archive all claims and remittances in a new clearinghouse, prior to the "go live" date, allows for a more seamless transition.

A quality clearinghouse vendor will detail all aspects of the implementation project plan, conduct all paperwork on the client's behalf, and make useful recommendations before, during, and after the transition.

3. What about cost-per-transaction versus cost-per-provider options?
Pricing varies as much as the products and services of the vendors. A per-transaction fee agreement versus a cost-per-provider option should be determined based on practice size and monthly claim volume. Some vendors charge for participating (Par) payors and ERA transactions, and others do not. Billing companies and practices should weigh all vendor options, including their product and organizational experience, and discuss the best pricing options. Limit term agreements to a 90-day "out clause," which allows you to terminate the contract if client service levels drop.

Clearinghouses are important tools for the efficient and accurate processing of claims. Follow the steps and best practices outlined here to ensure a smooth transition.

Lauren Collins has almost 20 years of experience designing and implementing global network infrastructures. Lauren has written a book on mobile technology and has contributed to other technology books and publications. She also is a technology mentor for high school and college students.


Cindy Groux, CHBME, is the president/CEO of Health Care Practice Management, Inc. She brings 30 years of revenue cycle management experience to her company and clients. Cindy can be reached at or 302-633-5840, ext. 320 should you have any further questions regarding her experience transitioning to a new clearinghouse.

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