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The Importance of Tracking Clearinghouse vs. Payer Rejections

Despite every practice’s best efforts and best practices, not every claim is 100% clean of errors when it is first submitted – and that is OK because an effective and efficient clearinghouse should be able to help you catch many of these errors before the claim is ever sent to the payer.

Even if your clearinghouse catches a majority of errors, it is essential for all practices to know if a claim was rejected by the clearinghouse’s edits or by the payer’s edits. This knowledge is important to a healthy bottom line because rejections slow down revenue.

Given the choice between the two types of rejections, I always think that it is preferred to have your clearinghouse catch claim errors rather than the payer. At this point, people often ask me why one type of rejection is better than any other. The answer is simple – time. If you submit a bad claim to a clearinghouse – a good vendor will edit it and, if there are any edit errors, they will let you know very quickly—within minutes. Otherwise, it will take some time (possibly days or weeks) for the claim to go out to the payer, fail payer edits, and then return to you for your review. All of these steps take time, which slows down your revenue stream.

So, how can you tell how your practice is faring in the battle of clearinghouse rejections vs. payer rejections? There are some basic statistics that you can look at for information about rejection trends – some clearinghouses even provide tools that crunch the numbers for you. Regardless of whether you are running the numbers by hand or if your clearinghouse is supplying them, you should look for some key stats.

One of the first things to look for in your rejection rates is if a provider (or two or three or more!) is associated with significantly more payer rejections than clearinghouse ones. If any specific provider sticks out when you run this analysis, you may have a better idea about the root of the rejections problem. Perhaps the doctor handles many in-hospital visits and is consistently missing a key piece of information payers need to process the claim. With this knowledge, you can work with that provider to correct the minor issue, which can ultimately lead to huge revenue gains.

Another option for determining where rejections are coming from is by reviewing which individual payers have high rejection rates. Payers with significantly higher rejection totals than your clearinghouse’s average are slowing down your revenue. You can take these payers and do further research. It might be the case that the payer’s member ID format changed recently and your staff needs more information and training on the new format.   

Will you ever achieve 100% clean claims? Not likely, but that is OK. With the proper tools and a good clearinghouse, you can understand more about rejection trends and what factors you can research to help you get close to that goal. Aim for the stars and settle for the moon!