Billing 101: What is a clearinghouse?

Mental health billing is a complicated task by design. Understanding the codes, applying them correctly, and adjusting for human error is a full-time job, but it is rarely the only job private practice owners have.

In fact, you already have a full-time job caring for your clients. Likewise, each of your staff members has a long list of responsibilities. While billing may be a part of what they do, they cannot dedicate the entire day to double checking each claim prior to submitting them to their respective insurance companies.

But if you have already dealt with insurance companies before and had a claim rejected due to an error, you know how time-consuming it can be to correct and resubmit. The protracted process means you will have to wait to get paid for services you may have done months in the past.

If you have followed our previous sections carefully, you are already familiar with the most common billing pitfalls and how to avoid them. In this section, we will discuss one very important strategy that will help you stay on top of your billing (and avoid legal trouble): using a clearinghouse.

We briefly discussed clearinghouses in previous sections of this eBook, however this section is dedicated to discussing the many benefits of using this intermediary service. Let’s get started.

What do clearinghouses do?​

A medical clearinghouse is a middleman between you (the provider) and the insurance company. You select and pay the clearinghouse to audit your records and verify that everything looks good before sending them through. The clearinghouse checks for errors and makes sure that the codes you have selected and submitted are valid.

This process is known as scrubbing. If your claim is incorrect, the clearinghouse will send it back to you to correct the errors. If your claim is correct (or clean), the clearinghouse sends the claim directly to the insurance company.

Why are clearinghouses important?

There are a lot of great reasons to use a clearinghouse. Here are the ones that we think matter:

1. A clearinghouse provides an extra step in the verification process. It catches errors that you may have missed.
2. A clearinghouse specializes in insurance billing so you do not have to. Instead of hiring a new staff member and then training him or her to work on billing codes, you can send your claims through a service that only works on insurance billing. It may be more affordable than hiring a new employee.
3. You can submit multiple claims at the same time in one batch instead of individually. This saves you time and ensures that you will receive payment faster.
4. You can submit your claims to the clearinghouse electronically. This means less paperwork and no postage.
5. Electronic submissions also mean a quicker transit time. You will get paid sooner, usually within ten days.
6. With an electronic clearinghouse, you will find out errors in real time. You will get the opportunity to correct errors immediately instead of waiting for the insurance company to reject your claim.
7. You can manage all of your claims in one central location.

How to choose the best clearinghouse for your private practice

With so many clearinghouses to choose from, how do you decide which one is best for your private practice? Here are a few things to look out for:

Go national

Do not choose a regional clearinghouse. National clearinghouses usually have a long list of insurance companies they work with, which reduces your workload because you can electronically bill more insurance companies. The scale of national clearinghouses also allow them to be more affordable than their regional counterparts oftentimes.

Check their payer list

Even if you choose a national clearinghouse, it is not automatically guaranteed they will work with the same insurance companies you do. Ask to see the payer list before entering an agreement.

Do not get trapped into a lengthy agreement

Find a clearinghouse that offers a month-to-month contract. There are some good ones that do require an annual contract, but it is important to keep your financial situation in mind when making this decision.

Shop around

Do not just go with the first clearinghouse that ticks off the above boxes. You may be able to find a better monthly fee if you shop around.

Test their customer service

It is guaranteed at one point or another, you will need to reach out to their customer service or support lines. It is a good idea to test their service for promptness, quick resolution, and empathy.

Avoid clearinghouses that send claims to other clearinghouses

The more your claims are passed around, the longer you will have to wait to get paid. It also increases the chances of claims getting lost in the shuffle.

Verify compatibility

Make sure that your chosen clearinghouse is also compatible with your billing software. If you are using our software, Ensora Mental Health, formerly TheraNest (if not, you can sign up for a free 21-day trial here), we support Office Ally, a nationwide clearinghouse.

A clearinghouse is an asset

It is an affordable insurance billing assistant that can verify your claims, serve as a second pair of eyes, and help you get paid quicker. What is not to love? Be sure to follow the outlined steps for choosing the best clearinghouse for your private practice’s needs, and you will be just fine.

Want to learn more about insurance billing? In the previous chapter, we discussed insurance billing mistakes to avoid. In the next one, we’ll talk about billing and your employees.

You can also download the Billing 101 eBook as PDF.