Medical Billing Clearinghouse

Written by Kimberly Clark
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Medical billing clearinghouses are responsible for preparing and submitting medical claims to healthcare plans or health insurance companies. They operate somewhat as middlemen, making sure the claims are approved for payment for medical services rendered. The clearinghouses usually contract their services to medical providers or facilities that need help formatting their medical claims.

Beginning on October 16, 2003, the federal government started requiring all medical claims to be filed electronically in a HIPAA compliant format. HIPAA refers to the Health Insurance Portability & Accountability Act of 1996, which was issued by the Department of Health and Human Services (HHS). The act was passed in an effort to simplify and standardize (1) the information coded onto medical claim and (2) the format in which the medical claim is digitally transmitted to the healthcare plans and insurance companies (payers) responsible for certifying the claim.

Prior to the ruling, there were a vast number of medical diagnosis and procedure code sets being used throughout the medical industry and there were several inconsistencies in the claims transactions codes being developed. As a result, many medical providers were reluctant to purchase new computer software and hardware to prepare and submit HIPAA compliant medical claims, at least until all the kinks in the regulations were ironed out. Outsourcing their claims to a medical billing clearinghouse instead allowed the provider to continue generating their claims in their existing configuration.

Functions of Medical Billing Clearinghouses

Once the medical billing clearinghouse receives the claim from the provider, its first responsibility is to translate the data into a HIPAA-compliant claims format and then it must transfer the claim electronically to the payer. Claims are then monitored for approval and remittance of payment. When the medical billing clearinghouse receives the claims disbursement, it forwards the payment, less the clearinghouse's filing fee, on to the medical provider. Some billing software programs can coordinate claims submissions with clearinghouses, or submit directly.


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