Clearinghouse

Definition

45 CFR 160.103 defines a health care clearinghouse as a public or private entity — the definition names billing services, repricing companies and value-added networks and switches — that processes health information received in a nonstandard format into standard data elements or a standard transaction, or does the reverse for a receiving entity. Clearinghouses used by physician practices include Availity, Optum (Change Healthcare), Waystar, Trizetto Provider Solutions, Office Ally and Inovalon; that list is illustrative and ownership changes hands, so confirm who operates a given connection before relying on it. A clearinghouse routes 837 professional and institutional claims to payer endpoints, passes back the acknowledgments the receiving system generates, delivers 835 ERAs, and supports 270/271 eligibility and 276/277 claim status transactions. The acknowledgments are worth separating from the clearinghouse's own edits: a TA1 interchange acknowledgment, a 999 implementation acknowledgment and a 277CA claim acknowledgment are produced by the system that received the file, and for Medicare fee-for-service that is the MAC's or CEDI's own front end, not the clearinghouse — Medicare Claims Processing Manual, Chapter 24 §50.3.3 sets out that model. On privacy standing, a clearinghouse is itself a covered entity under 45 CFR 160.103, but which obligations attach depends on the capacity it is acting in: 45 CFR 164.500(b) applies a narrowed set of Privacy Rule requirements when a clearinghouse creates or receives protected health information as a business associate of another covered entity, and the full subpart when it does so other than as a business associate. A practice engaging a clearinghouse to process its claims is normally in the first case, which is why the engagement is papered with a business associate agreement — the specifics of any particular arrangement depend on the rule as applied to it and on your own legal advice.

Common Misconceptions

Clearinghouses are not payers — they are intermediaries. A rejection and a denial are also different events, and the 999 and 277CA are not evidence of a clearinghouse rejection: those are acknowledgments issued by the system that received the file, which for Medicare fee-for-service is the payer's own front end. A rejection stops a claim before adjudication and carries no payment determination; a denial is an adjudicated outcome reported on the 835 with CARC and RARC codes. Appeal rights follow whichever rule applies. For Medicare, the Medicare Claims Processing Manual, Chapter 1 §80.3.1 states that a claim returned as unprocessable for incomplete or invalid information “does not meet the criteria to be considered as a claim, is not denied, and, as such, is not afforded appeal rights.” Commercial appeal and prompt-pay rights are set by the contract and by state law, so do not assume the Medicare treatment carries across.

Related Terms