Claims sent electronically are often sent through a clearinghouse and transmitted via EDI (electronic data interchange). First, a clearinghouse is an agency that receives the claims from a lot of different doctor’s offices and distribute all of those claims to the correct insurance companies. This makes it so each doctor doesn’t have to connect electronically to every insurance, but rather the doctor connects only to one clearinghouse. The clearinghouse develops ‘connections’ with thousands of insurance companies to be able to send claims on doctor’s behalf. Two of the largest clearinghouses are Emdeon and Relay Health but there are many others also.
The doctor’s office uses its medical billing software to create claims (medical bills to the insurance) for every patient who the doctor treats. The medical billing software also creates electronic files for those claims so you can send those claims to the clearinghouse in a common computer readable format. Each claim within the file contains information about the insurance company to which the claim will be sent, information the doctor sending the claim, and information about the patient and the patient’s condition/treatment. As you will recall from looking at the paper claim, the information is very similar in nature; however, the electronic version is hard for a human to read.
As with paper claims, the electronic claim’s address is VERY important. IF the claim doesn’t make it to the right ‘address’ for the insurance company, it cannot be paid. Every insurance has an electronic address and sometimes multiple electronic addresses depending on how they route their claims internally. While the electronic address is different in many ways, you can think of it as like an email address. The address is called a Payer ID and it is alpha-numeric. This Payer ID tells the clearinghouse the electronic ‘mailing’ address for the insurance company. If you are curious about a Payer IDs, you can look at them on Emdeon’s web site (when you get to Emdeon's site, type Aetna in to the box titled payer name, then click the button titled view list).
The claims submitted electronically will produce two types of reports that tell you about the status of the claims you sent. These are clearinghouse reports and carrier reports. Both are referred to as EDI Reports (electronic data interchange). You can expect to receive these reports electronically within 24-72 hours after sending the claim. Although there are many different clearinghouses and many different insurance companies, the reports are basically pretty standard. These reports are VERY important.
The reports that come in reply to the claims you send will detail which claims that have been accepted sent forwarded to the insurance and which claims are rejected. If a claim is rejected it will not be sent to the insurance. The report is the only denial you will receive. If the rejection is not fixed, the claim will never be paid. In order to make sure you are collecting all the money due to the doctor’s office, you must review the reports daily, make the necessary corrections to denied claims and resubmit those corrected claims back through the clearinghouse for submission to the insurance.
The reports from electronic claims can be a little intimidating at first. They are a little tricky to read, but once you get use to them, it is really easy. To follow are a couple of example clearinghouse EDI reports for your review. In these examples, I have marked the reports to help you read them.
First is a clearinghouse rejection report. Review it carefully and notice the most important fields circled in red. There is a letter next to the field which corresponds with a description below in the legend.
This is another type of clearinghouse rejection report:
Next is an acceptance report. These claims will be forwarded to the insurance for adjudication also known as processing.
Carrier Reports are the second report you will receive. These come from the insurance company and this set of reports will only contain information about the claims that the clearinghouse accepted. Since the insurance has much more specific information about the patient and their policy, rejections from the insurance may be much more patient/policy specific. If a claim is rejected in an EDI report, this is the only rejection that you ever receive for a denied claim. Therefore the EDI reports must be reviewed daily and any errors must be corrected. After correcting the errors, the claim must resubmitted (sent to the clearinghouse again) if you wish to secure payment. Since most insurance companies EDI systems are separate from their processing / adjudication system the insurance claims department will have no record of claims that denied in the EDI reports.
So, if you ever call the insurance to ask why a claim is unpaid and they tell you that they never received it…
- Ask the insurance to confirm their payer ID and compare it to what you have in your medical billing software. Then correct it if necessary before resubmitting the claim through the clearinghouse. Or, if the Payer ID is correct in your medical billing program…
- Check your EDI reports to see if there is a rejection for that claim.