Electronic Claims Clearing Houses

One of the questions we are frequently asked is why claims have to be sent to a clearing house rather than directly to the insurance payer. In fact, The THERAPIST can create claims for direct submission to payers and there is usually nothing to prevent you from doing so.

Standard Claim Formats

The first genuine standard for electronic health care claims was the National Standard Format (NSF) and was published by the Health Care Financing Administration (now called the Center for Medicare Services or CMS). The standard includes almost every possible kind of information you can imagine about providers, patients, insurance coverage, and services provided. It would be easy, or so we thought, to support this wonderfully universal format that appeared to be supported by most payers.

Alas, like so many other "standards" in the computer industry, this too was not what it had been advertised to be. Far from being universally accepted, it seemed that almost nobody was using it, at least not as written. Some companies claimed to use it but we discovered that virtually every company that says they use the NSF has actually modified the format for their own purposes. Even Medicare and Medicaid carriers, who would be expected to be rather rigid about using a government designed standard, did not use the NSF untouched.

Now, with the implementation of HIPAA, there is a new standard, the ANSI X12 X098 837 4010A1. Despite the cumbersome name, this new standard has the force of law behind it. Now every payer is required to use this new standard and is not allowed to modify it. It remains to be seen if this will be enforced. The new standard is considerably more complex than previous formats but is also more flexible. Unfortunately, much of that flexibility gives payers plenty of room to tailor their requirements while still being within the letter of the law.

There is a loophole in the law that allows for non ANSI X12 claims to be sent from providers to clearing houses. The clearing house then has the responsibility of converting the claims to the ANSI X12 format before sending them on to the actual payers. This is a particular boon for providers using old software that does not support the new format. Users of The THERAPIST Pro 2.0 or later however, have the choice of sending direct or through a clearing house.

Why Use a Clearing House?

The question remains: if you can submit your claims directly to payers for free, why should you pay to use a clearing house? Unfortunately submitting claims directly to payers has hidden costs that may not be obvious. The biggest is that you will have to go through a potentially long and involved testing and certification process with every payer to which you intend to submit electronic claims. This can take weeks or months and involve you to send many claims.

One thing we have learned over the years is that, just in other areas, it is important to follow the money. Consider that when you are trying to pass a testing phase with a payer, it is not in their financial interest to get you certified. The longer they drag it out, the longer they don't have to pay you. Clearing houses, on the other hand, don't make their money unless you are successfully submitting claims so it is most definitely in their financial interest to get you running as quickly as possible.

Clearing houses also offer the service of screening your submissions and letting you know immediately when there are problems. This lets you make the corrections and resubmit quickly. Again, payers have no financial interest in giving you rapid turn-around so it can be weeks before you know that you need to resubmit.

What Do Clearing Houses Charge?

There is no standard pricing structure. Many have an up-front setup fee or a yearly charge. They may or may not charge for each claim. Some allow a certain number of claims for a monthly or yearly amount with charges for claims beyond that number. Usually, you can find a clearing house that will cost about the same as it did for paper claims taking into account purchasing forms, printing, envelopes, and mailing.

Recommended Clearing Houses

At this time, the only clearing house we are recommending is HEW. Check out their prices and services to see how they meet your needs.