Electronic Claims Submission: Complete Guide to EDI 837 & Claims Clearinghouses [2024]

Electronic claims submission has revolutionized healthcare billing. Yet many practices still don't fully understand how electronic submission works, why it's superior to paper claims, or how to maximize the technology's potential.

This comprehensive guide covers everything you need to know about electronic claims submission, including the EDI 837 standard, how claims clearinghouses work, claim scrubbing, real-time eligibility verification, rejection prevention, and security best practices.

The Evolution from Paper to Electronic Claims

Why Healthcare Moved to Electronic Claims

Historical Context:

• Pre-1990s: All claims submitted on paper (CMS-1500 form)
• 1990s: HIPAA mandated electronic transaction standards
• 2000s: Electronic claims became standard
• 2010s: Paper claims nearly extinct
• 2020s: Paper claims exception, not rule

Why the Shift:

Speed:

• Paper claim: 45-60 days to payment typical
• Electronic claim: 15-30 days to payment
• EDI + ePA: 5-15 days or real-time

Accuracy:

• Paper: Transcription errors, illegible handwriting
• Electronic: Automated validation, fewer errors
• Claims scrubbing catches issues before submission

Cost:

• Paper: Printing, envelope, postage ($2-5 per claim)
• Electronic: $0.50-2 per claim (clearinghouse fee)
• Savings: $15,000-50,000+ annually for medium practice

Efficiency:

• Paper: Manual data entry, sorting, mailing
• Electronic: Automated submission, batch processing
• Staff can focus on higher-value activities

Current State of Electronic Claims (2024)

Adoption Rates:

• Medical practices: 95%+ use electronic submission
• Paper claims: <5% of claims (mainly exceptions)
• Electronic claims: 95%+ processed

Industry Standards:

• EDI 837 (standard claim format)
• X12 versions (837-4010, 837-5010, evolving)
• Real-time processing capabilities
• Automated eligibility verification

Future Direction:

• More real-time processing
• Electronic prior authorization (ePA) growth
• API-based interfaces (vs. EDI)
• Direct integration between EHR and payers
• Automated claim status updates

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Understanding EDI 837: The Standard Claims Format

What is EDI 837?

EDI (Electronic Data Interchange) is the standardized format for electronic data exchange in healthcare.

837 refers specifically to the Health Care Claim transaction standard.

EDI 837 Contains:

• Patient demographic information
• Insurance information
• Diagnosis codes (ICD-10)
• Procedure codes (CPT/HCPCS)
• Modifier information
• Rendering provider information
• Billing provider information
• Detailed claim line items
• Patient responsibility calculations

EDI 837 Versions

EDI 837-4010:

• Older version
• Some payers still accept (mostly older Medicare)
• Being phased out
• Limited functionality

EDI 837-5010 (Current Standard):

• Current primary standard (since 2012)
• All payers accept
• Enhanced functionality
• Better error checking

EDI 837-6020 (Emerging):

• Next generation being developed
• Not yet mandated
• Some payers testing
• Will eventually replace 5010

For Your Practice:

• Most likely using 837-5010
• Verify with your clearinghouse
• Upgrade to 5010 if still on 4010
• Don't worry about 6020 yet

EDI 837 Structure

The claim is organized in hierarchical levels:

File Header
├── Patient Level
│   ├── Subscriber (Insurance holder)
│   ├── Dependent (if family plan)
│   └── Claim Details
│       ├── Service Line 1 (Diagnosis, CPT, Modifier, Amount)
│       ├── Service Line 2 (Diagnosis, CPT, Modifier, Amount)
│       └── Service Line N
├── Provider Details
│   ├── Billing Provider (Your organization)
│   ├── Rendering Provider (Doctor who provided service)
│   └── Facility Information
├── Insurance Information
│   ├── Primary Insurance
│   ├── Secondary Insurance
│   └── Tertiary Insurance
└── File Trailer (Claim totals, verification)

What Information is in an EDI 837?

Claim Header Information:

• Claim number (unique identifier)
• Date of service
• Date of claim submission
• Claim type (institutional, professional, dental, etc.)
• Patient control number

Patient Information:

• Name, DOB, Gender
• Address, Phone, Email
• Social Security Number
• Relationship to subscriber (self, spouse, child)

Insurance Information:

• Insurance company name and ID
• Subscriber ID number
• Group number
• Plan type (HMO, PPO, Medicare, Medicaid)
• Prior authorization numbers
• Claim file indicator codes

Provider Information:

• Billing provider NPI and name
• Rendering provider NPI and name
• Facility information (if applicable)
• Provider tax ID
• License numbers

Service Details (Per Line Item):

• Service date (from/through)
• Procedure code (CPT or HCPCS)
• Modifier codes (up to 4 modifiers)
• Diagnosis codes (ICD-10, primary and supporting)
• Units of service
• Charge amount
• Description of service

Amounts:

• Claim total charges
• Patient deductible
• Patient coinsurance
• Patient copay
• Other patient responsibility
• Insurance responsibility

EDI 837 Example (Simplified)

CLAIM EXAMPLE:

Claim #: CLM-2024-001234
Date of Service: 10/15/2024
Patient: John Smith, DOB 01/15/1965
Insurance: Blue Cross, ID: 123456789

Service Line 1:
- CPT: 99214 (Office visit, established patient, moderate complexity)
- Modifier: 25 (Significant, separately identifiable E&M service)
- Diagnosis: I10 (Essential hypertension)
- Charge: $150.00
- Patient Copay: $30.00
- Insurance pays: $120.00

Service Line 2:
- CPT: 99396 (Preventive visit, age 45-64)
- Diagnosis: Z00.00 (Encounter for general adult medical examination)
- Charge: $200.00
- Patient Copay: $0.00 (preventive, no copay)
- Insurance pays: $200.00

Claim Total:
- Total Charges: $350.00
- Patient Responsibility: $30.00
- Insurance Responsibility: $320.00

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How Claims Clearinghouses Work

What is a Claims Clearinghouse?

A claims clearinghouse is a third-party service that:

1. Receives claims from healthcare providers
2. Validates claims (checks for errors)
3. Reformats claims for different payers
4. Submits claims to insurance companies
5. Receives and returns claim status/payment information
6. Provides reporting and analytics

Important: Clearinghouse is the intermediary between you and insurance companies.

Clearinghouse vs. Direct Submission

Can You Submit Claims Directly to Insurance Companies?

Yes, but most don't:

• Medicare: Can submit directly
• Some large payers: Accept direct submission
• Most payers: Don't accept direct submission (must use clearinghouse)

Why Use a Clearinghouse?

Without Clearinghouse:
Your Practice → Multiple Direct Connections → 50-100+ Insurance Companies
= Complex, expensive, error-prone

With Clearinghouse:
Your Practice → Single Connection → Clearinghouse → 50-100+ Insurance Companies
= Simple, affordable, standardized

Benefits of Using Clearinghouse:

• One connection instead of 100+
• Standardized format (EDI 837)
• Automated validation
• Batch processing
• Better reporting
• Cost-effective ($0.50-2 per claim vs. $5-10+ for direct)

How Clearinghouse Process Works

Step 1: Claim Submission (Your End)

• You prepare claims in your PMS
• PMS generates EDI 837 file
• File submitted to clearinghouse (electronically)
• Timeline: Seconds to minutes

Step 2: Clearinghouse Validation

• Clearinghouse validates EDI format
• Checks claim data completeness
• Validates diagnosis/procedure codes
• Checks for common errors (age/sex mismatch, etc.)
• Timeline: Seconds to minutes

Step 3: Claim Scrubbing (Covered Below)

• Optional advanced scrubbing (if purchased)
• Automated error detection and correction
• Missing data identification
• Pre-submission validation

Step 4: Clearinghouse Reformat

• Converts EDI 837 to payer-specific format
• Some payers want different formatting
• Clearinghouse handles all variations
• Timeline: Seconds

Step 5: Insurance Company Submission

• Clearinghouse submits to insurance company
• Multiple submissions to multiple payers
• Batch processing (groups claims for efficiency)
• Timeline: Immediate to next business day

Step 6: Insurance Company Processing

• Payer receives claim
• Payer validates against their systems
• Payer adjudicates (makes payment decision)
• Timeline: 5-30 days typical

Step 7: Response Back to Clearinghouse

• Payer sends payment decision
• EDI 277CA (claim status response)
• EDI 835 (payment remittance)
• Timeline: 1-30 days after payer adjudication

Step 8: Clearinghouse to Your Practice

• Clearinghouse receives payer response
• Reformats for your PMS
• Sends status and payment information
• Posting to your accounts receivable
• Timeline: Same day to next day

Step 9: You Post Payments

• Receive payment from payer (if approved)
• Receive claim status (if denied/pending)
• Post to patient accounts
• Follow up on denials
• Timeline: Ongoing

Major Claims Clearinghouses

Top Clearinghouses (By Market Share):

Clearinghouse	Market Share	Specialties	Key Features
TriZetto	25%+	All	Large, comprehensive, many integrations
Emdeon	15%+	All	Reliable, good reporting, many payers
Availity	12%+	All	Digital first, good dashboards, growing
Change Healthcare	10%+	All	Recent merger consolidation, large
Waystar	8%+	Multi-specialty	Modern platform, good support
Allscripts	6%+	Primary care	Integrated with EHR, moderate fees
Athena	5%+	Small practices	Cloud-based, good for small practices

Regional/Specialty Clearinghouses:

• Dental: Dentrix, Eaglesoft clearinghouses
• Mental Health: Specialized mental health clearinghouses
• Small practices: Local or regional specialists

Clearinghouse Fees

Typical Clearinghouse Costs:

Per-Claim Fee (Most Common):

• $0.50-2.00 per claim submitted
• Volume discounts available (lower for high volume)
• Example: 2,000 claims/month × $1.00 = $2,000/month

Flat Fee (Monthly):

• $300-1,500/month depending on volume
• Good for predictable, consistent volume
• Often includes some number of claims (e.g., "up to 5,000")

Percentage of Claims (Rare):

• Some offer percentage of claims submitted
• Usually 0.5-2% of billed amount
• Less common than per-claim model

Bundled with PMS:

• Many PMS include clearinghouse access
• Included in PMS fee
• Check if included or separate

Hidden Fees to Watch:

• EDI testing fees ($200-500)
• Implementation fees ($500-2,000)
• Report fees (should be free)
• Portal/online access fees
• Technical support fees (should be free)

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Advantages of Electronic Claims Submission

Speed Advantage

Paper Claims Timeline:

• Prepare claim: 1-2 days
• Print and mail: 1-2 days
• In-transit: 3-5 days
• Payer receives: 5-7 days
• Payer processes: 15-30 days
• Total: 25-45 days from submission to processing

Electronic Claims Timeline:

• Prepare claim: <1 day
• Clearinghouse validates/submits: <1 day
• Payer receives: Same day
• Payer processes: 5-15 days (faster due to clean data)
• Total: 6-16 days from submission to processing

Impact:

• Electronic is 15-30 days faster
• Means revenue 2-4 weeks earlier
• Significant cash flow improvement

Accuracy Advantage

Paper Claims:

• Manual data entry error rate: 5-10%
• Illegible handwriting causes rejections
• Lost in mail
• Misfiled at payer

Electronic Claims:

• Data entry error rate: <1% (with good systems)
• Automated validation catches errors
• No legibility issues
• Automatically tracked

Result:

• Fewer rejections
• Fewer denials due to data errors
• Faster first-pass acceptance rate

Cost Advantage

Paper Claims:

• Printing: $0.10-0.20 per claim
• Envelopes: $0.05 per claim
• Postage: $0.65 per claim
• Staff time (prep, collate, mail): $0.50-1.00 per claim
• Total: $1.30-1.85 per claim

Electronic Claims:

• Clearinghouse fee: $0.50-2.00 per claim
• PMS cost (already paying for software): $0
• Staff time (less manual work): -$0.50 per claim
• Total: $0.00-2.00 per claim (usually lower)

Annual Savings Example:

2,000 claims/month = 24,000 claims/year
Paper cost: 24,000 × $1.50 = $36,000/year
Electronic cost: 24,000 × $1.00 = $24,000/year
Annual Savings: $12,000

Efficiency Advantage

Staff Time Reduction:

• No printing/collating
• No manual addressing
• No mail preparation
• No manual tracking
• Automated status updates
• Automated payment posting (optional)

Time Savings:

• 5-10 hours per month in manual processes
• $2,500-5,000/year in labor savings
• Staff can focus on high-value activities

Better Reporting and Tracking

Electronic Claims Provide:

• Real-time claim submission verification
• Automated delivery confirmation
• Claim-by-claim status tracking
• Payer-level analytics
• Denial trend reporting
• Payment posting automation
• Batch processing visibility

Benefits:

• Know within hours if claim submitted
• Know within 24 hours if payer received
• Can track to specific payer
• Identify bottlenecks
• Measure performance
• Improve over time

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The Claims Scrubbing Process

What is Claims Scrubbing?

Claims scrubbing is the automated process of identifying and correcting errors in claims BEFORE submission.

Goal: Improve clean claim rate and reduce rejections.

Key Principle: Fix problems before payer sees them (much faster than fixing after rejection).

What Claims Scrubbing Checks

1. Data Completeness

• Required fields populated
• No missing information
• Proper formatting

2. Data Validity

• Valid CPT codes (exist in current year)
• Valid ICD-10 codes
• Valid HCPCS codes
• Valid modifiers
• Proper code format

3. Age/Sex Consistency

• ICD-10 codes appropriate for patient age
• ICD-10 codes appropriate for patient gender
• Example: Prostate cancer code for female patient (invalid)

4. Diagnosis-Procedure Consistency

• Procedure codes appropriate for diagnosis
• Medical necessity apparent
• Example: Knee surgery with diagnosis of headache (inconsistent)

5. Bundling Rules

• Codes that should be bundled (NCCI edits)
• Component codes not listed separately
• Properly used modifiers when separating
• Example: Basic ECG listed separately when stress test includes it

6. Duplicate Claims

• Same claim submitted twice
• Identified by patient, DOS, provider, amount
• Automatic detection and flagging

7. Patient Responsibility Calculations

• Correct copay
• Correct deductible
• Correct coinsurance
• Correct patient responsibility percentage

8. Insurance Verification

• Correct insurance company
• Active coverage on service date
• Coverage includes service type
• Benefits available

Claims Scrubbing Workflow

Step 1: Software Configuration

• Define scrubbing rules for your practice
• Set up by payer preferences
• Configure bundling rules
• Set validation parameters

Step 2: Claim Submission to Scrubber

• All claims automatically sent to scrubber
• Or select claims to scrub
• Or manual batch upload

Step 3: Automated Analysis

• Software checks against 1,000+ rules
• Identifies all issues
• Classifies issues (critical vs. warning)
• Suggests corrections

Step 4: Issue Classification

Critical Issues (Must Fix Before Submission):

• Missing required fields
• Invalid codes
• Invalid patient age/sex combinations
• Duplicate claims

Warnings (Should Review):

• Unusual code combinations
• Bundling concerns
• Medical necessity questions
• Complex modifiers

Informational (For Review):

• Notes on claim structure
• Suggestions for improvement
• Payer preference notes

Step 5: Correction Options

Auto-Correct (If Enabled):

• Software automatically fixes certain issues
• Corrects formatting errors
• Removes duplicate codes
• Adjusts calculations
• Requires approval before submission

Manual Review and Correction:

• Staff reviews issues
• Makes corrections manually
• Approves for submission
• Documents decisions

Reject and Hold:

• Critical issues can't be fixed
• Claim held from submission
• Staff investigates
• Claim resubmitted after correction

Step 6: Claim Approval

• All issues resolved (fixed or approved)
• Claim ready for submission
• Final verification performed
• Batch submitted to payers

Scrubbing Software Options

Integrated (Included in PMS):

• Many PMS include basic scrubbing
• Good for 80% of issues
• May lack sophistication
• Check with your PMS vendor

Standalone Scrubbing Services:

• Dedicated software
• More sophisticated rules
• Better customization
• Separate cost ($100-500/month)
• Examples: Scynexis, ClaimsMate, CureMD

Clearinghouse Scrubbing:

• Many clearinghouses offer scrubbing
• Integrated with submission
• Good convenience
• Additional cost ($100-200/month usually)

Expected Results from Claims Scrubbing

Before Scrubbing:

• Clean claim rate: 90-93%
• Rejection rate: 7-10%
• First-pass acceptance: 85-88%
• Rework time: 10+ hours/week

After Scrubbing (3-6 months):

• Clean claim rate: 95-97%
• Rejection rate: 2-3%
• First-pass acceptance: 92-95%
• Rework time: 2-3 hours/week

Impact:

• Fewer rejections (better clean rate)
• Faster payment (fewer rework cycles)
• Reduced staff time
• Better Days in AR
• Improved revenue

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Real-Time Eligibility Verification

What is Real-Time Eligibility Verification?

Real-time eligibility verification checks patient insurance coverage at point of service by connecting directly to insurance company systems.

Process:

• Patient arrives at appointment
• Staff enters patient ID and insurance info
• System queries insurance company
• Insurance responds with coverage details
• Within 10-30 seconds

Information Provided:

• Is coverage active on this date?
• What are the patient's benefits?
• What is patient responsibility (copay, deductible)?
• Are there any benefit limitations?
• Prior authorization requirements?
• Covered vs. non-covered services

Why Real-Time Eligibility Matters

Problem (Without Real-Time Verification):

• Patient comes in covered
• No one verifies coverage before service
• Service provided
• Insurance denies: Coverage lapsed
• Claim denied
• $500+ denied claim
• Can't collect from patient (coverage issue, not patient responsibility)

Solution (With Real-Time Verification):

• Patient comes in covered
• Staff verifies coverage in real-time
• If coverage lapsed: Can't provide service (or get authorization)
• No claim denial
• Revenue protected

Real-Time Eligibility Benefits

Financial Benefits:

• Prevent eligibility denials (eliminate 5-10% of denials)
• Accurate patient cost estimation
• Better point-of-service collections
• Reduce bad debt write-offs

Operational Benefits:

• Know coverage status before service
• Identify authorization needs upfront
• Reduce claim denials
• Reduce rework

Patient Benefits:

• Know their cost before service
• Avoid surprise bills
• Better patient experience

How to Implement Real-Time Eligibility

Technology Requirements:

• Real-time eligibility software
• Integration with PMS
• Internet connection (critical)
• Staff training

Connectivity:

• Direct connection to major payers
• Connectivity to smaller payers via clearinghouse
• 95%+ of patients can be verified
• 5% may not be available (paper plans, etc.)

Cost:

• Software: $50-200/month
• Often included in comprehensive PMS
• Clearinghouse may offer it

Implementation Timeline:

• Setup: 2-4 weeks
• Staff training: 2-3 hours per person
• Go-live: Within 1 month

Real-Time Eligibility Best Practices

When to Verify:

• At time of scheduling (call-ahead)
• At check-in (when patient arrives)
• Before service (final verification)
• Best practice: All three

What to Document:

• Date and time of verification
• Coverage status confirmed
• Patient responsibility quoted
• Any special requirements noted
• Staff who performed verification

What to Do If Coverage Issue Found:

• Discuss options with patient
• May need to reschedule
• May get pre-authorization
• May proceed with patient accepting responsibility
• Don't proceed without plan (reduces denials)

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Common Claim Rejection Reasons

Top 10 Claim Rejection Reasons

Rejection #1: Invalid or Missing Patient ID

• Patient ID doesn't match insurance records
• Insurance ID number incomplete or wrong
• Subscriber vs. dependent confusion
• Fix: Verify insurance ID matches identification card

Rejection #2: Invalid Diagnosis Code

• ICD-10 code doesn't exist (typo, old code)
• Code not specific enough
• Invalid code format
• Fix: Verify code in current ICD-10 code set

Rejection #3: Invalid Procedure Code

• CPT code doesn't exist
• Code invalid for this claim type
• Code format incorrect
• Fix: Verify code in current CPT code set

Rejection #4: Incomplete or Missing Data

• Required field left blank
• Address missing
• Provider NPI missing
• Fix: Complete all required fields before submission

Rejection #5: Age/Sex Mismatch

• Diagnosis code inappropriate for patient age
• Diagnosis code inappropriate for patient gender
• Example: Prostate cancer on female patient
• Fix: Verify patient demographics match documentation

Rejection #6: Invalid Insurance ID

• Insurance doesn't recognize this subscriber ID
• ID belongs to different carrier
• ID not active for services
• Fix: Verify correct insurance company and ID number

Rejection #7: Duplicate Claim

• Exact claim already received/processed
• Same patient, provider, DOS, amount
• Earlier submission not cancelled
• Fix: Cancel earlier claim or adjust amount on resubmission

Rejection #8: Missing Modifier

• Modifier required but not included
• Example: Bilateral procedure without modifier 50
• Modifier needed to differentiate codes
• Fix: Add appropriate modifier

Rejection #9: Missing Authorization

• Prior authorization required but not provided
• Authorization number missing from claim
• Authorization invalid/expired
• Fix: Obtain authorization and reference on claim

Rejection #10: Invalid Service Date

• Service date blank or invalid format
• Service date in future
• Service date before coverage effective
• Service date after coverage terminated
• Fix: Verify service date format and validity

How to Handle Rejections

Step 1: Identify Rejection

• Clearinghouse returns rejection reason
• EDI 997 (acknowledgement) with error code
• Specific rejection code provided

Step 2: Investigate Root Cause

• Review original claim data
• Check against documentation
• Verify correct information
• Determine if it's data error or system issue

Step 3: Correct the Issue

• Fix data element(s)
• Verify correction accuracy
• Run through scrubber again
• Ensure clean before resubmission

Step 4: Resubmit

• Submit corrected claim
• New claim number (if required by payer)
• New submission date/time
• Document resubmission

Step 5: Track

• Monitor for second acceptance
• If rejected again, investigate further
• May need to contact payer for clarification
• Document all attempts

Prevention is Better Than Correction

Best Rejection Prevention:

1. Claims scrubbing (catches 70%+ of rejections)
2. Staff training (catches obvious errors)
3. Real-time validation (EDI validation)
4. Peer review (second set of eyes)
5. Automated validation rules (configured properly)

ROI of Prevention:

100 claims/day = 2,400/month = 28,800/year

Without scrubbing:
- 10% rejection rate = 2,880 rejections/year
- 20 minutes to fix each = 960 hours
- Cost: 960 hours × $25/hour = $24,000/year

With scrubbing ($150/month):
- 2% rejection rate = 576 rejections/year
- 20 minutes to fix each = 192 hours
- Cost: 192 hours × $25/hour = $4,800/year
- Software cost: $1,800/year
- Total cost: $6,600/year

Savings: $24,000 - $6,600 = $17,400/year
ROI on scrubbing: 966%

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Claim Tracking and Status Checking

How Claim Status Tracking Works

Automatic Tracking (Your Clearinghouse/PMS):

• Claim submitted → Status: "Submitted"
• Clearinghouse sends → Status: "Sent to Payer"
• Payer receives → Status: "Received"
• Payer processes → Status: "In Review"
• Payer approves/denies → Status: "Adjudicated"

EDI 277CA (Functional Acknowledgement):

• Clearinghouse sends claim
• Payer confirms receipt
• Message returned to clearinghouse
• Shows "Acknowledged by Payer"

EDI 835 (Payment Remittance):

• Payer sends payment information
• Details approval, denial, or pending
• Amount approved
• Patient responsibility
• Adjustment codes
• Claim explanation

Manual Status Checks:

• Online payer portal
• Phone payer directly
• Clearinghouse portal
• PMS reporting

Claim Status Terminology

Status Meanings:

Status	Meaning	Action
Submitted	Sent from your PMS to clearinghouse	Wait for clearinghouse confirmation
Queued	Waiting in clearinghouse queue	Normal, will be sent soon
Sent	Transmitted to insurance company	Wait for payer response (5-30 days)
Received	Insurance company received claim	Wait for adjudication
In Review	Payer reviewing claim	Wait for decision
Pending	Additional information needed	Payer will contact, or contact payer
Approved	Payer approves claim	Expect payment in 3-10 days
Partial	Partially approved (some codes paid, some denied)	Check remittance details
Denied	Payer denies claim	Review denial reason, consider appeal
Duplicate	Duplicate claim detected	Check if original was submitted
Hold	Claim on hold by payer	Contact payer for reason

Best Practices for Claim Tracking

Daily Tracking:

• Review claims submitted that day
• Verify all claims submitted successfully
• Note any submission errors
• Resubmit any failed submissions

Weekly Tracking:

• Review payer responses from previous week
• Track movement from "Sent" to "In Review"
• Identify claims stuck in "Pending"
• Follow up on pending claims

Monthly Tracking:

• Analyze claim aging by payer
• Identify slow-paying payers
• Track average days to payment by payer
• Create aging report (0-15, 15-30, 30-45, 45+ days)

Problem Claims:

• Any claim in "Pending" > 20 days: Follow up
• Any claim in "Denied": Analyze for appeal
• Any claim in "Hold": Contact payer
• Duplicate claims: Investigate cause

Using Clearinghouse Portals

What Clearinghouse Portals Provide:

• Claims submitted report
• Claims approved report
• Claims denied report
• Claim aging analysis
• Custom reporting
• Drill-down detail by payer
• Export data for analysis

Best Practices:

• Access portal daily
• Set up custom reports
• Schedule automated reports
• Review weekly summary
• Export data monthly for analysis
• Train staff on portal access

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Integration with Practice Management Systems

PMS and Clearinghouse Integration

Types of Integration:

1. Direct Integration (Best)

• PMS directly connected to clearinghouse
• Automatic claim generation and submission
• Real-time status updates
• Automatic payment posting (optional)
• No manual steps
• Fastest, most efficient

2. Batch File Integration

• PMS generates EDI 837 file
• File transferred to clearinghouse
• Usually done daily or weekly
• Still automated
• Slight delay vs. direct

3. Manual File Upload

• PMS exports file
• User logs into clearinghouse
• Uploads file manually
• Least automated
• Error-prone, not recommended

Key Integration Functions

Automatic Claim Generation:

• PMS creates EDI 837 from entered data
• Includes all claim details
• Validation built-in
• Ready for submission

Electronic Submission:

• Direct connection to clearinghouse
• Immediate transmission
• No manual steps
• Confirmation within seconds

Real-Time Status:

• PMS shows claim status in real-time
• Updated throughout day
• Accessible to staff
• Reporting based on current data

Automatic Payment Posting:

• Clearinghouse receives payment details
• Automatically posts to PMS
• Matches claims
• Updates patient balance
• Reduces manual work

Eligibility Verification Integration:

• Eligibility request from PMS
• Direct payer connection
• Real-time response
• Displayed in PMS

Selecting PMS with Good Clearinghouse Integration

Questions to Ask Vendor:

• Which clearinghouses do you integrate with?
• Is integration direct or file-based?
• How often is status updated?
• Can I use different clearinghouse if needed?
• What if clearinghouse has outage?
• Do you support multiple clearinghouses?
• How is payment posting handled?
• What about ERAs (electronic remittance advice)?

Best PMS Options for Integration:

• Athena: Excellent clearinghouse integration
• NextGen: Strong integration capabilities
• eClinicalWorks: Good integration options
• Medidata: Solid integration
• Epic: Excellent (enterprise-level)

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Security and HIPAA Compliance in Electronic Claims

HIPAA Security Requirements for Electronic Claims

Administrative Safeguards:

• Access controls and user authentication
• Audit controls and logging
• Workforce security policies
• Encryption and password standards

Physical Safeguards:

• Secure transmission (VPN, encryption)
• Workstation security
• Facility access controls

Technical Safeguards:

• Encryption in transit (TLS/SSL)
• Encryption at rest
• Audit logging
• Access controls
• Data integrity measures

Secure Claim Transmission Methods

Secure EDI Transmission:

• SFTP (SSH File Transfer Protocol)
• Encrypted connections
• Direct peer-to-peer between your system and clearinghouse
• Not UNSECURED FTP

SFTP Best Practices:

• Use strong encryption
• SSH key-based authentication (vs. passwords)
• Audit logs for all connections
• File integrity verification
• Regular key rotation

Web-Based Submission:

• HTTPS (secure HTTP)
• Encrypted connection
• Username/password authentication
• Multi-factor authentication (recommended)
• Session timeout for security

Email Submission:

• NOT recommended for claims
• If used: Encryption required
• PGP encryption standard
• Never send unencrypted
• Limited to small volumes

Data Encryption Standards

In Transit (Transmission):

• TLS 1.2 or higher minimum
• 256-bit encryption
• HTTPS for web-based
• SFTP for file transfer
• No unencrypted transmission

At Rest (Storage):

• 256-bit AES encryption minimum
• Database encryption
• File encryption
• Backup encryption
• Key management

HIPAA Compliance Checklist for Electronic Claims

Administrative: ☐ Written privacy policy for claims ☐ Business Associate Agreements (clearinghouse, software vendors) ☐ Training on HIPAA requirements ☐ Access control procedures ☐ Incident response procedures

Physical: ☐ Secure workstations for claims entry ☐ Screen privacy ☐ Locked offices/areas ☐ Computer physical security ☐ Clear desk policy

Technical: ☐ Encrypted transmission (SFTP/HTTPS) ☐ Encrypted storage ☐ Strong access controls ☐ Audit logging enabled ☐ Regular security updates ☐ Secure password standards ☐ Multi-factor authentication

Monitoring: ☐ Regular audit log review ☐ Monitoring for unauthorized access ☐ Annual risk assessment ☐ Security incident tracking ☐ Compliance audits

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Frequently Asked Questions About Electronic Claims Submission

Q: What if the clearinghouse goes down or has technical issues?

A: Outages are rare but do happen. What you should know:

• Clearinghouses have 99.9%+ uptime
• Some have multiple data centers for redundancy
• Your claims are queued and retry automatically
• Usually no lost claims
• Better to use clearinghouse than direct submission (backup systems)

Best practice: Have contingency plan (backup clearinghouse access if possible)

Q: Can I submit claims directly to Medicare without a clearinghouse?

A: Yes, Medicare has direct submission option:

• CMS WebPOST
• Clearinghouse integration (most common)
• Direct electronic submission to MAC

Most practices still use clearinghouse because:

• Easier (one connection for all payers)
• Same EDI 837 for all
• Better reporting
• Cost-effective

Q: How long should I keep copies of submitted claims?

A: HIPAA and CMS requirements:

• Keep EDI records: Minimum 5-7 years
• Keep acknowledgements: Minimum 5-7 years
• Better: Keep indefinitely (digital storage cheap)
• Clearinghouse usually stores automatically

Best practice: Keep indefinitely for compliance and audit trail

Q: What does "EDI rejection" vs. "claim denial" mean?

A: Different things:

• EDI Rejection: Clearinghouse rejects the EDI file format/structure (won't even send to payer)
• Claim Denial: Payer receives claim but denies payment for coverage/medical necessity reason

EDI rejection usually happens immediately; claim denial happens after payer review.

Q: How do I know if my PMS is generating valid EDI 837?

A: Test options:

• Run EDI validation software
• Submit test claims to clearinghouse
• Review payer acceptance rate (should be 90%+)
• Check for EDI rejection messages
• Clearinghouse may provide validation report

Best practice: Run validation testing when first setting up

Q: Can I use multiple clearinghouses?

A: Yes, but usually not recommended because:

• Different reporting systems
• More complex reconciliation
• Duplicate claim risks
• Most practices use single clearinghouse

Exception: If primary clearinghouse has outage, can temporarily use backup

Q: What's the difference between 837-5010 and 837-4010?

A: Version numbers indicate EDI standard version:

• 4010: Older version (still used by some older systems)
• 5010: Current standard (all payers accept)
• 6020: Future standard (in development, not mandated yet)

Action: Verify you're using 5010 (ask your clearinghouse)

Q: How often are clearinghouse fees reviewed?

A: Check contract:

• Many have annual increase clause
• Usually 3-5% maximum increase
• Some have fixed rates
• Negotiate annually for large volumes

Q: What if there's a discrepancy between clearinghouse submission and what payer received?

A: Unusual but can happen:

• Clearinghouse sends to payer
• Payer says they didn't receive
• Usually clearinghouse can resend
• Check with both to investigate
• EDI logs can help troubleshoot
• Usually resolved within 24-48 hours

Q: Can I automate payment posting from EDI 835?

A: Yes, optional:

• Some PMS can auto-post from ERA (Electronic Remittance Advice)
• Requires setup and configuration
• Matches claims automatically
• Reduces manual posting work
• Not all practices use (some prefer manual review)

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Comparing Claims Clearinghouses: Decision Guide

Clearinghouse Comparison Factors

Cost:

• Per-claim fees: $0.50-2.00 (lower for volume)
• Monthly flat fee: $300-1,500
• Setup/implementation: $0-2,000
• Support fees: Usually included

Integrations:

• PMS compatibility (your system)
• Number of PMS integrations
• EHR compatibility
• Eligibility verification included
• Real-time status updates

Payer Network:

• Number of payers supported
• Coverage for your major payers
• International payer support (if needed)
• Government (Medicare, Medicaid) support

Features:

• Claim scrubbing (built-in or add-on)
• Eligibility verification (included or separate)
• Real-time status tracking
• Online portal
• EDI version support
• Reporting capabilities

Support:

• Phone support availability
• Email support
• Portal support
• Training provided
• Dedicated account manager
• Response time guarantees

Reputation/Reliability:

• Years in business
• Market share
• Uptime record (99.9%+)
• Customer reviews
• References available

Clearinghouse Selection Checklist

Step 1: Identify Your Needs ☐ Current claims volume ☐ Projected growth ☐ Major payers you bill ☐ PMS you use (or planning to use) ☐ Budget available ☐ Special requirements (specialties, regions)

Step 2: Initial Screening ☐ Does clearinghouse integrate with my PMS? ☐ Do they support my major payers? ☐ Does cost fit my budget? ☐ Are they established/reputable? ☐ Do they have good support?

Step 3: Detailed Evaluation ☐ Request proposal with total cost ☐ Ask about setup/implementation timeline ☐ Request references from similar practices ☐ Verify uptime record ☐ Test integration with your PMS ☐ Review sample reports ☐ Confirm data security measures

Step 4: Negotiation ☐ Negotiate per-claim fee (if volume supports) ☐ Negotiate implementation fees (may be waived) ☐ Confirm support level ☐ Verify contract terms ☐ Negotiate annual increase cap ☐ Request 30-day trial if possible

Step 5: Go-Live ☐ Plan implementation timeline (usually 2-4 weeks) ☐ Obtain all necessary access credentials ☐ Test with sample claims ☐ Train staff on submission ☐ Verify successful submissions ☐ Verify status tracking works ☐ Verify payment posting (if auto)

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Author Bio

Mark Richardson, CHPS is a Certified Healthcare Practice Security (CHPS) professional with 16+ years of experience in healthcare IT and claims processing. He specializes in EDI implementation, clearinghouse integration, and electronic claims optimization. Mark has helped hundreds of healthcare organizations implement efficient electronic claims submission processes.

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