Clearing House

Now that we know about what medical code is and what it does, you probably realised that it is difficult to process all the records by the providers themselves. Medical coders are hired by the providers to process these data but they also need to further process and send claims to insurance companies.

Providers can directly submit the records and medical claims themselves to insurance companies but then it takes a lot of time away from the providers. Hence, there are companies that help them  with the process and they are called Clearinghouses. We will look into them in depth here

A clearinghouse is the liaison between healthcare providers and insurance payers for managing end-to-end healthcare payment processes. A healthcare provider can submit a medical claim directly to the insurance payers or via a clearinghouse. Some of the top US clearinghouses are Navicure / ZirMed, Availity, Emdeon,Trizetto Provider Solutions.

• In the process of medical billing, there is a high chance that a claim gets denied or rejected. For the purpose of reimbursement of a medical claim, clean claims must be sent to the insurance payer. A clean claim is a ‘submitted claim’ without  any errors or other issues (inaccurate and missing information, including patient name, subscriber information, diagnosis codes, procedural codes etc) and sent for reimbursement with all of the necessary documentation. For this purpose, the providers need to ensure that all the information entered into the Provider system is correct and without any errors. In regard to this, clearinghouses come to action for checking errors in the claim. 
• Clearinghouses ease the burden of medical billers by taking the information necessary to create a claim and then restructuring it into the appropriate format. Payers send medical claims to various insurance payers who may have different formats and guidelines. So, clearinghouses help them to format and restructure those claims. For example:  A provider may send out ten claims to ten different insurance payers, each with their own set of guidelines for claim submission. Instead of having to format each claim specifically, a biller can simply send the relevant information to a clearinghouse, which will then handle the burden of reformatting those ten different claims. Only clean claims without errors are sent through EDI (Electronic Data Interchange) to the payers system.

The major functions of a clearinghouse are: 

• Formatting the medical claims into proper electronic format 
• Checking for errors (Claim scrubbing is the process of scanning medical claims for errors that would cause payers to deny the claim) in the claim
• Audits a claim
• Verifying if the claims are rightly processed by the payer 
• Sending payer’s response to the provider (i.e “remittance advice” and “explanation of benefits”) and then repeating the cycle until the claims get accepted for payment
• Correcting claims in case of rejection and resubmitting clean claims to the insurance providers

Now we know how the clearing houses help providers to submit claims to insurance companies. 

The whole process from a patient visit to medical coding to claim submission and finally the payment processing for providers is part of the medical Revenue Cycle. Every medical facility and providers follow the same cycle to handle the bills and payments. Let's look at it in the next slide.

Revenue Cycle Management (RCM) is the financial process of tracking and analyzing the revenue, starting from Patient registration to billing the patient and payment process. 

RCM basically covers these topics: 

1. Patient appointment and registration 
2. Insurance Eligibility 
3. Patient visit and treatment 
4. Patient engage in service 
5. Claim creation 
6. Claim submission 
7. Claim Management (Accept, reject and deny)
8. Payment Processing 

The revenue cycle management includes the following steps:

• RCM process starts when a patient reaches out to the provider for medical care
• When a patient seek medical care they take an appointment at a  provider’s office
• Patient registration in provider’s system is carried out (age, DOB, demographics, insurance information etc.) by the administrative staff 
• Provider verifies patient’s insurance plan (i.e. if the insurance is active or not, check for insurance eligibility, determine the type of insurance plan, verify the benefits of insurance) of the patient by calling their payer office or through the website 
• Patient check-in and consult with the provider and engage in the service (services may be a normal checkup, office visit, surgery etc.)
• Provider records the patient information, like patient's diagnosis, treatments, recommended drugs, services, supplies etc. in the billing system after the patient checks-out 
• Those information of the visit is then sent to a medical coding professional (Medical coders) by providers. 
• Medical coders reviews the provider information, extract the billable information and assign alphanumeric and numeric codes i.e procedure codes and diagnosis codes to the service provided to the patient. 
• Procedure codes i.e. CPT codes tell the payer what service the healthcare provider performed. Diagnosis code i.e ICD codes  tell the payer why the patient received the services.
• After medical codes are assigned, the claim is then created and sent to the clearinghouse for checking errors and formatting.
• In some cases, healthcare providers send a medical claim directly to an insurance payer. High-volume payers like Medicare or Medicaid may receive bills directly from providers. This helps to reduce the time that it takes to receive reimbursement. 
• The clearinghouse then scrubs the claim, checking it for errors basically known as, “Claim Scrubbing”
• Claim scrubbing is the process of scanning medical claims for errors to avoid the chances of claim denials by the payers
• Claim is then submitted to Insurer’s System (Payers)
• Once the insurer receives the claim the adjudication process starts.

Claim scrubbing is the process of scanning medical claims for errors that would cause payers to deny the claim. This process verifies that all medical codes in a medical claim are accurate. Once a claim is created and ready to submit, claim scrubbers scan it for errors before it goes anywhere. If claim scrubbers detect errors, a medical coder will manually correct the claim. Claim scrubbers are primarily available through third-party medical billing services. It is a way of auditing claims before they are submitted to insurers.

Adjudication process in insurance payer’s system, starts when insurance payer receives the medical claim and starts the review process. Insurance payer determine their financial responsibilities in this process. Claim adjudication process includes following steps:

• Insurance companies evaluate the claim and decide if the claim is valid and how much they need to reimburse the provider. 
• The claims can be either accepted, denied or rejected by the insurance payers. In each scenario, the following actions are taken.
  ‍

• After Adjudication process, clearinghouse receive claim responses 
• Clearinghouse send ERA/EOB statement to the provider for their claim explaining the reason for acceptance, denial or rejection of the claim
• When claim is accepted, provider receives payment from insurance payers as per their insurance plan and any amount that is not covered by insurance plan is billed to the patient 
• Provider is reimbursed

EOB is a statement issued by a payer to the provider. It is the paper version of the statement that states the medical services the patient received and details on how the cost will be shared between the insurance payer and the patient. EOB contains following details:

1. Patient Information
2. Medical services received and cost of the service
3. Amount paid by health insurance plan
4. Amount not covered by health insurance plan
5. Any outstanding amount patient is responsible for paying
   ‍

Electronic Remittance Advice(ERA) is the electronic version of claim payment details that payers send to the providers.  ERA contains information if a claim was paid or denied, final status and any adjustments the payer made to the billed amount.

The purpose of ERA is to eliminate paper-based explanations received from payers known as EOB (Explanation of Benefits) and as it is electronic it is fast and more reliable then EOB.

‍