Q Could you explain what a clearinghouse does?

A When your facility submits a claim electronically, you can choose to deal directly with the insurance company or submit the claim to a clearinghouse that then submits the claim to the insurance company. Simply put, a clearinghouse serves as the middleman in electronic-claims submission between your facility and various insurance companies.

Q Do we need to use a clearinghouse to bill electronically?

A Not necessarily. Find out which method provides more efficient collections at the lower cost. If you're submitting to only a few carriers, direct submission may be the less-expensive choice. On the other hand, independent claim submission may not be the most cost-effective method because of the time it will take your staff to file claims. When determining whether to use a clearinghouse, shop around for the best price and services. Also weigh staff costs for direct submission against the clearinghouse fees.

Q What are some of the benefits and drawbacks of submitting your claim directly to the insurance carrier?

A There's usually no charge to submit the claim directly to the insurance company. Other benefits of direct submission will depend on the skills of your billing personnel. They need to be familiar with multiple claims submission modules, both electronic and paper (remember that not all carriers are yet fully HIPAA compliant).

Submitting claims directly may also be more time-consuming. You may have to dial in to multiple locations to transmit your claims. Some carriers still require data entry into their own online claim form. Most carriers can't edit claims on-line at the time of submission; and if the carrier rejects a claim, your staff will have to correct and resubmit it. In most cases, insurance companies do not advise you of claim errors until further along in the reimbursement process, thus delaying your claim reimbursement by as much as four to six weeks. Keep in mind that your software must be able to deliver HIPAA-compliant (code sets) claims to the insurance companies.

Q What are some of the benefits and drawbacks to contracting with a clearinghouse?

A Using a clearinghouse may help you streamline your billing process and improve your cash flow. Submission through a clearinghouse is usually a much easier process, as it does not require data entry. Most clearinghouses use an electronic format called a "print image" which lets them gather the necessary claim information directly from your billing software. Your software does not need to be adjusted for compliance with the CMS October 2003 code sets because the clearinghouse will adjust for this before submission to the insurance companies. Plus, your staff only has to connect to one location and can submit all claims in a single transmission.

Of course, not all clearinghouses are created equal. Assessing the pros and cons of a clearinghouse depends largely on the quality of service you receive. When comparing service and performance, here are some key factors to consider:

• The fee they charge. Clearinghouses usually calculate fees on a per-claim basis, but they may charge a base monthly fee as well. If you're outsourcing your coding and billing, your billing company should bear this expense.
• Not all insurance companies work through clearinghouses and some insurance companies only work with specific clearinghouses. This may mean you still have to submit a portion of your claims directly or that you may have to deal with multiple clearinghouses.
• A good clearinghouse can tell you which carriers require enrollment (most government and many commercial carriers do) and provide the enrollment application with most of the information filled in for you to complete and submit to the carrier.
• The clearinghouse can check your claims for validity, payer specifications (such as modifier usage) and HIPAA compliance. Here's a tip: Comparing the clearinghouse's findings against a thorough in-house audit of the same batch of claims is one way to double-check service quality.
• If you're submitting your claims via a clearinghouse, your in-house software does not have to be compliant with the new CMS code set requirements. The clearinghouse will convert your data to meet these requirements before sending to the payer.?
• A good clearinghouse will let you correct "flagged" claims (likely rejections) online before it sends the claim to the carrier.
• An efficient clearinghouse can submit electronic batches at any time the payer may request or in any format it requires (Envoy or Web MD, for example). The clearinghouse should also provide you with reconciliation reports, including when the claim was submitted, when the carrier accepted the claim, and when the claim was processed and dispatched for payment.

  As your practice grows, the clearinghouse may prove more economical than hiring on more full-time billing personnel. Before you outsource, be sure to do your homework to hire a reputable, professional, HIPAA-compliant provider with impeccable references.