HIPAA casts doubt on role of claims clearinghouses

Health plans increasingly are refusing to pay certain fees associated with electronic clearinghouses, bringing up the possibility that doctors' burdens may grow.

By Tyler Chin, AMNews staff. May 10, 2004.

Claims clearinghouses emerged as a way for physicians to avoid filling out different forms for different plans, instead allowing them to send claims on paper or electronically and have the clearinghouse translate them to each plan's format.

But some payers, including Harvard Pilgrim, are arguing that the HIPAA electronic transactions rule has reduced the value of clearinghouses because payers and doctors now use national standard formats for electronic transmission of claims, eligibility inquiries, remittance advice and other transactions.

The standardization, for example, means that clearinghouses, which serve as middlemen for electronic transactions, no longer have to convert physician and hospital claims into one of the more than 400 proprietary payer formats that existed before HIPAA became effective in October 2003, said Kimberly Grose, vice president of provider network service operations at Harvard Pilgrim.

While the health plan believes clearinghouses still have an important role to play, it will do business with them only if services are provided for a flat monthly rate rather than on a per-transaction basis. This would reflect administrative savings that the federal government intended the industry to achieve through HIPAA, Grose said. As a result, the plan stopped paying transaction fees to WebMD -- which charges per transaction -- in March.

But WebMD, which operates the country's largest clearinghouse, counters that insurers have implemented HIPAA differently and still require individual claims edits. That means that WebMD can transmit a HIPAA-compliant claim that would meet the standards of one payer's claims adjudication system but that would be rejected by another payer's system, said Roger Holstein, WebMD's CEO.