Each year, 15 billion transactions occur between more than 900 payers and nearly 900,000 healthcare providers. That’s a lot of data.

Even just a simple update, like a new phone number, can set off a chain of tasks to be completed so providers aren’t denied their due from payers on account of inaccuracies. Managing all of this data is a chaotic line of work undertaken by revenue cycle management (RCM) partners and clearinghouses.

Originally, these groups were established as the data managers and organizers to make both providers’ and payers’ jobs easier. Somewhere along the way, the multipoint data exchange processes started to favor providers over payers, and some clearinghouses became preferred organizations, selected by payers, to be the gatekeepers of data.

Nowadays, the digital age has forced payers to broaden their scope and has opened the doors to other clearinghouses and partners to build their own direct payer connections, allowing them to offer more value to the providers they work with.

The History Behind Preferred Clearinghouses

Over time, preferred clearinghouses rose to status as payers aimed to streamline, standardize, and digitize the incoming data they were receiving from third parties, a well-intentioned effort with unintended consequences.

In the 1990s, HIPAA laws encouraged greater use of digital processes from stakeholders across the healthcare industry. As such, payers started implementing rebate programs, in which they chose a few preferred clearinghouses that were paid a small amount on each claim they submitted electronically. Payers also made preferred clearinghouses the only option for submitting electronic claims through to the desired payer for other clearinghouses and RCM partners.

Sometimes called “the last mile,” these clearinghouses functioned as a moat around payers, being the last and only avenue through which other clearinghouses and revenue cycle partners could process their paperwork.

The result was that other clearinghouses and partners had to jump through hoops, and over hurdles, to meet each payer’s specific requirements. The preferred clearinghouses created a bottleneck of an additional channel for data to flow through, creating inefficiency and adding time to the overall process.

Opening the Floodgates

Legislation aiming to reduce administrative burden in healthcare, and the general egalitarian nature of the internet, have pressured payers to accept electronic data exchange from other organizations.

As more organizations have adopted electronic processing of claims or other transactions— electronic remittance advice, electronic funds transfer, etc.— in recent years, the preferred clearinghouse rebate programs have lost their luster, reducing the value of a preferred clearinghouse submission over another clearinghouse or partner.

Some preferred clearinghouses still hold an elite status, which can be a good thing. These are massive organizations that offer providers, other partners, and payers much more value than just being a pass-through and have thus earned their keep. For example, Change Healthcare processes 12 billion healthcare transactions annually between payers, healthcare systems, individual physicians, and pharmacies. Part of the reason that Change Healthcare can serve all of these entities is that the organization boasts 2,100 direct payer connections— meaning they’ve exhausted nearly all of the possible avenues that exist for anyone to reach a payer.

While Change Healthcare is a significant leader in the administrative transaction landscape, the more impartial landscape enables almost any organization to directly connect to payers.

Opportunities for Direct Payer Connections

Without payers forcing clearinghouses, and providers, to send electronic claims through a preferred clearinghouse, all third parties now have greater flexibility to maximize payer connections and expand direct payer connections, removing the costly and timely hops from transaction processes.

Through direct payer connections, partners and clearinghouses can transact with payers one-to-one, without added layers. While it does require some work and thought, it ultimately delivers an ROI to partners and the providers they work with.

Here’s how Madaket can help:

  • Consolidated Connections. Madaket’s robust workflow engine allows clearinghouses to set up and maintain thousands of unique connections in one place. Eliminating the administrative burden of managing direct payer connections saves time and money and frees them to move away from connecting to payers through preferred clearinghouses.
  • New Routes. As clearinghouses update their payer connections with less expensive or faster options, Madaket’s system allows them to turn on the new connections within hours and days to ensure that claims, remits, and other transactions are leveraging the new and improved routes.
  • Transferred Enrollments. With Madaket, clearinghouses can also re-enroll providers directly to payers that they have previously enrolled with through indirect, preferred connections. These direct enrollments cut time out of the entire process and help providers get paid faster, improving the overall customer experience.

We’re glad to see a more equitable landscape and the opportunity for RCM partners and clearinghouses to build more direct connections with payers. To learn more about how the Madaket platform enables these connections, drop us a line.

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