It’s important to submit a clean and compliant dental claim, which the payer quickly approves and reimburses with the complete amount as per the contract.
However, many practices face either claim denials or underpayments due to missing some key steps.
They forget to thoroughly check a claim to flag and correct mistakes. Plus, when they submit electronic claims, these should follow the electronic claim standards defined by HIPAA.
Your practice can achieve that if you invest in dental clearinghouses. These software solutions flag errors in claims and submit them electronically to reduce denials and protect your revenue.
Want to know how? This blog helps you with that. It provides a step-by-step guide through the key roles clearinghouses play in scrubbing the claims and sending them through the right process.
What are Clearinghouses?
Clearinghouses are software solutions that function as intermediaries between the practices and insurance companies. These systems review and transmit claims to the right insurers for reimbursement.
Dental practices send the claims to clearinghouses, which flag errors in claims via scrubbing. When the claims are corrected, clearinghouses review and submit them to the payers.
This step saves time and reduces the risk of claim denials because the clearinghouse ensures correct formatting and accurate coding in the claim.
All that makes it an important aspect of your revenue cycle management, which shouldn’t be missed.
So, when you’re looking to invest in dental revenue cycle management services, confirm that your service provider easily integrates with your clearinghouse solution to reduce denials and protect your claims.
How Does a Clearinghouse Work?
Now that you know what a clearinghouse is, let’s move a step ahead and find out how it’s important to manage your dental revenue cycle.
Step 1: Claim Creation
When a patient is treated at the practice, the front-end staff creates a claim for that procedure with accurate coding and documentation, when required, in the practice management system.
Step 2: Clearinghouse Submission
Submitting the claim directly to the payers is risky, as claims can be denied or underpaid for even a minor error. Therefore, it is submitted to the clearinghouse first.
Step 3: Claim Scrubbing
It’s the phase where the clearinghouse’s actual job starts. In this step, the software:
- Reviews incorrect or incomplete information about the patient
- Flags invalid CDT codes
- Confirms that the payer ID is correct
- Identifies missing required documents
If there are any errors in the claim, the clearinghouse flags these mistakes and rejects the claim. Many clearinghouses provide real-time feedback, so that the practice can correct the errors as soon as possible.
It protects a practice from experiencing and managing claim denials, which aren’t easy to recover.
Step 4: Claim Submission
Clearinghouses act as the digital middleman between the practices and the payers. These tools streamline the communication between them through the electronic data interchange (EDI).
EDI is a process during which clearinghouses convert the dental claims into the ANSI 837 format.
It’s a standard for electronic claim submissions, which is mandated by the Health Insurance Portability and Accountability Act (HIPAA).
Most dental payers, like government-run Medicaid and Medicare programs and commercial insurers, require practices to submit dental claims under the ANSI 837 format to make sure claim submissions comply with HIPAA standards.
So, after converting the claims, the clearinghouses send them to the dental payer.
Step 5: Claim Status Tracking
Modern clearinghouses are built to track a claim’s status after submission. These systems use an EDI 276 transaction to confirm with the payer if they have received the claim.
Payer responds via an EDI 277 transaction to provide a claim tracking number. Clearinghouses use that to check whether the claim is reimbursed, denied, or under adjudication process.
Dental practices can use that information to proceed with the next steps.
What are the Functions of Clearinghouses?
Let’s move ahead and learn about the essential functions a clearinghouse performs.
Flag Validation Errors
Flagging the validation errors is the most important function of clearinghouses. While reviewing the information submitted by the practice, it flags the validation errors, such as:
- Coordination of benefits errors
- Incorrect provider’s NPI
- Invalid CDT codes
- Missing documents and narratives
- Wrong patient’s subscriber ID
The clearinghouses make sure that the flagged errors are corrected, so these can be submitted to the payer for timely reimbursement.
Remove Inactive Coverage
While a patient’s coverage is verified before claim submission, the clearinghouse performs one last check during claim scrubbing to prevent claim denials. Modern clearinghouses can verify the patient’s coverage, along with benefits and frequency limitations, before submission, to confirm if the claims are accurate and follow regulatory compliance.
After verifying all these details, the clearinghouse rejects the claim if the patient doesn’t have active coverage.
Identify Missing Patient Details
The clearinghouses check patient demographics to see if the patient’s name, address, or other details are correctly entered in the dental claim form. If billers miss information or enter incorrect details, a clearinghouse rejects the claim and suggests those that need correction.
Route Claims to Payers
A clearinghouse relieves your practice staff of worrying about checking a payer ID for claim submission. The clearinghouse automatically validates the insurance company on your claim form, matches it with the payer ID, and then routes the claim to the correct payer.
For example, if you’re submitting a Delta Dental claim, it matches the payer on your claim form, uses the payer ID 94276 for electronic claim submission, and routes it to the payer.
What are Clearinghouse Rejections?
Clearinghouse rejections occur when the clearinghouse rejects a claim before submitting it to the payer.
These are not payer rejections, but are caused by technical and data-quality issues detected in pre-submission checks.
If you clearly understand these rejections with the reasons, you can reduce the denial rate.
The following are the common reasons for a clearinghouse rejection:
Front-end Data Entry Gaps
Correct data entry during patient scheduling is very important. Making a mistake here can be fatal for the whole billing process. The following errors during the front-end process result in clearinghouse rejections:
- Entering an inaccurate insurance ID
- Using the wrong membership status
- Billing for a procedure that exceeds the patient’s frequency limitations
Solution: Minimizing the errors during patient scheduling in dental RCM can significantly reduce this gap. Professional front office management services help optimize the process so patients’ details are entered accurately and verified with expert support.
Invalid Payers’ or Providers’ Credentials
When you enter the wrong provider NPI or don’t correctly mention a practice’s membership status with the insurance company (whether in-network or out-of-network), it causes clearinghouse rejections.
Additionally, the payer’s information, like the payer ID, is a must because the payer is the main receiver of the claim submission. A clearinghouse rejects the claim if the payer ID is incorrect.
Solution: The front desk staff should add the provider’s and payer’s accurate details in the practice management system while scheduling an appointment and planning a treatment. It reduces errors in the future steps of the billing process, making it correct.
Incompatible CDT Codes
Inaccurate CDT codes are also prone to clearinghouse rejections. Examples of coding errors include:
- Using outdated codes
- Upcoding (using CDT code with a higher reimbursement rate instead of the actual procedure code)
- Downcoding (using a CDT code with a lower reimbursement rate instead of the right code)
Solution: While linking the CDT codes to a procedure, the billers should ensure that these match the American Dental Association’s CDT code updates, and also comply with the payer’s accepted coding lists in the fee schedule. A reputable dental billing and coding partner, like TransDental, can help with that. Such a company leverages the expertise of AAPC-certified professional coders and maps each claim with an accurate CDT code.
What are the Benefits of Using a Clearinghouse?
According to a Research and Markets report, the dental clearinghouses market in the US is expected to grow by $351.3 million during the five-year span of 2024-2029.
Ready to discover why the clearinghouse market is growing so fast? Let’s discuss how your practice can reap the benefits of investing in a clearinghouse.
Fewer Denials and Less Delays
Some major causes that result in claim denials and payment delays include:
- Incorrect patient demographics
- Errors related to CDT coding
- Missing or incomplete documentation
Clearinghouses identify these errors before claim submission, reducing the chances of claim denials and delays.
Faster Reimbursements
When a claim is free of errors, it reduces the claim adjudication period and speeds up the reimbursement process without any delays.
HIPAA-Compliance
Clearinghouses use HIPAA-compliant protocols during the claim scrubbing process. It’s a safety measure that makes sure patients’ privacy is protected, and data is managed securely during claim submission.
Enhanced Profitability
Faster reimbursements mean better cash flow for the practice. A claim denial financially cripples a practice. By avoiding these denials, clearinghouses add to your dollars, enhancing your practice’s profitability.
How to Choose a Clearinghouse for your Practice?
When investing in a clearinghouse, make sure:
- Your practice management system integrates with the clearinghouse software.
- The payers you often deal with should be on the clearinghouse’s list.
- Avoid the clearinghouse that has complicated contract termination clauses.
- It provides real-time feedback after flagging errors in a claim
Conclusion
Clearinghouses scrub the claims before the biller submits them to the insurer. These are important RCM automation and software solutions for dental practices, protecting claims from denials and flagging issues before submission. Clearinghouses use their early warning system to alert practices about potential mistakes, ensuring reduced claim denials, faster reimbursement, and effective denial management.
Frequently Asked Question (FAQs)
How do clearinghouses help prevent claim denials?
Clearinghouses check dental claims in real-time via claim scrubbing and flag all the errors, whether these are incorrect codes, missing documentation, or payer policy violations. It allows practices to correct errors and submit clean claims, reducing the likelihood of denials.
How do clearinghouses connect with the practice management system?
A clearinghouse connects with a practice management system via the API or HL7 integration. With that, the PMS transfers patient insurance data to the clearinghouse, so it can check the claim details and flag any errors.
What is the difference between a clearinghouse rejection and a claim denial?
A clearinghouse rejection occurs when the software initially rejects a claim by flagging errors, which can be corrected before submitting it to the payer. On the other hand, a claim denial occurs after submission, when the payer denies the claim due to wrong information.
What should a dental practice do when an insurer denies the claim?
Claim denials come with an Explanation of Benefits (EOB), in which the payer explains the denial reasons in detail. Dental practices should look for the denial reasons and correct them for resubmission and prevent them for future claims.
