What Is a Clearinghouse?

What a clearinghouse does

Instead of connecting separately to hundreds of payers, a practice connects once to a clearinghouse, which maintains those payer connections.

• Claim scrubbing: checks claims against format and payer edits before sending.
• Routing: delivers each claim to the right payer.
• Acknowledgments: returns confirmation that claims were received and accepted.
• Eligibility: supports real-time insurance eligibility inquiries.
• Claim status: supports electronic claim status inquiries.
• Remittance: delivers electronic remittance advice for payment posting.

The standard transactions

HIPAA requires standard electronic formats for common transactions, defined by X12. The most important for providers are the 837 (claims, with professional and institutional versions), the 835 (payment and remittance advice), the 270 and 271 (eligibility inquiry and response), the 276 and 277 (claim status inquiry and response), and the 278 (authorization request and response). Clearinghouses also return 999 and 277CA acknowledgments that confirm whether claims passed format checks and were accepted by the payer.

Rejections versus denials

A clearinghouse rejection means a claim failed a check before reaching the payer's adjudication system. It has not been denied, and it can be corrected and resubmitted. Working rejections quickly is one of the easiest ways to shorten the time to payment.

Choosing a clearinghouse

Look at payer coverage for your region and specialty, how detailed and understandable rejection messages are, how well the clearinghouse integrates with your billing system, whether it supports eligibility, status, and remittance as well as claims, and how pricing is structured. Integration matters: a clearinghouse that feeds rejections and remittances directly into billing work queues removes a lot of manual file handling.