What is the Difference Between a Clearinghouse Rejection and a Payer Denial?
Have you ever received a notification that your claim has been rejected by a clearinghouse? Have you received an EOB in the mail or an ERA in your electronic health record system that has a big fat $0.00 on it?
After receiving these notifications or frustrating notices, what is your response? Do you or your office staff know the difference between the two and do they know how to handle the process for fixing the issue?
Rejections and denials are some of the most common reasons providers outsource their billing, and for good reason. They take up a tremendous amount of time and resources to figure out and fix. However, the payout for having a valuable biller who can quickly see the notification of a denial or rejection and resolve the issue to payment can be extremely profitable for your practice.
In this blog we would like to help educate you on the difference between a clearinghouse rejection and a payer denial. These situations require two totally different courses of action that can lead to resolution. This blog will operate as a primer to help you understand what you need in your “billing toolbox” to fix these pesky notifications.
What is a payer denial?
A payer denial or claim denial is when an insurance company receives a claim for payment and refuses to pay for the services for a claim. This is different from when a claim processes toward a deductible and the patient owes money for a service. A denial means that you cannot collect money from the client and the insurance company is not going to pay for the service until certain conditions are met.
Yes, this is a hard reality to endure, but fortunately there are plenty of options for resolution which we will cover in this article.
The types of issues that can initiate a claim denial can range from a credentialing inconsistency, miscoding a service, coordination of benefits, or any number of other issues. A payer denial is going to take time and energy to investigate, research, and then resend the claim in a very specific way in order to render payment.
Sometimes resolving claim denials requires the involvement of the patient and can take a lot of time to fix.
What is a clearinghouse rejection?
A clearinghouse rejection or claim rejection is when the clearinghouse looks at a claim and sends it back to the provider for editing. The term “rejection” has some negative connotations, but a rejection is preferable to a denial most of the time. A clearinghouse is a company that reviews and translates information in one form in order to make the information readable to another organization. One of the functions of a clearinghouse is to make sure that your practice is not sending claims to the insurance company that will deny for small reasons such as a misspelled name or incorrect address.
Oftentimes, a claim or clearinghouse rejection is due to a small and often fixable issue that can be easily adjusted and then resent to the insurance company. The issues that can initiate a rejection are name misspellings, incorrect addresses, incorrect insurance IDs, or any other demographic inconsistency that the insurance would have flagged.
The value of a clearinghouse is that they catch small issues and save you precious time that you would have spent fixing the issue and then waiting for payment from the insurance company.
What should you do if you receive a payer denial or a clearinghouse rejection?
The initial steps to resolving a payer denial or a clearinghouse rejection are similar but the course of action you take will diverge at some point.
The initial response you should have is to breathe and know there are options to resolve whatever the issue is that has caused the rejection or denial. Every rejection or denial always comes with a reason. Be sure to read that reason and understand what the clearinghouse or insurance company is saying is the reason for the rejection or denial.
The next course of action is to interpret the rejection reason or denial and take the appropriate action that is recommended based on the clearinghouse or insurance company’s guidance.
For example, let’s say a rejection comes back because the name on the claim didn’t match the name that the insurance card or insurance company has on file. Once you know that information then you can look up the name on the insurance card, correct the claim, and resend the claim to the insurance company. You can wait 24-72 hours and if you don’t see another rejection you can assume the claim was accepted for processing.
Another example would be if you receive a payer denial letter due to coordination of benefits. In this case you would contact the patient or client and ask them to contact their insurance company to see if they are showing a competing insurance company on file. If there isn't, only the client can fix the problem. If there is, then you can obtain the new insurance information from the client and resubmit the claim according to the rules of primary and secondary insurances.
Conclusion
Clearinghouse rejections and payer denials should not be a cause for panic but so often do. If you are finding yourself in a situation where every claim is being rejected or denied and are feeling overwhelmed, you can reach out to Practice Solutions. We would be happy to learn more about your practice, understand your problem, and see if our services can be of value to you to solve the problem with your claims. If you find that your time is constantly stuck in researching and fixing claims it may be time to reach out and outsource your billing. Give us a call and let us give you your time back.
Understanding the difference between a clearinghouse denial and a payer denial is essential to effective claims management. While denials can often be quickly corrected and resubmitted, denials require more thorough investigation and appeals processes. For those juggling multiple priorities, simplifying other aspects of life can be helpful. There are companies that say we buy ugly houses and offer a simple way to sell real estate without complications, allowing you to focus on important matters like insurance claims and administrative tasks.
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