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Why Work Comp Electronic Bills Need Multiple Clearinghouses

November 3, 2017 by Catherine Montgomery

Here’s a question we often get: “Our office sends our electronic bills to a clearinghouse. Why do so many of them never reach the insurance carrier?”

Clearinghouses claim to scrub and electronically submit bills to all payers, theoretically making them easy to pay. In reality, clearinghouses often mismanage electronic bill delivery, resulting in delayed or outright lost bills. We know this first-hand — not only do we hear constant “lost bill” stories from providers, we’ve had our own bad experience.

This post is a cautionary tale about how providers cannot rely on a single clearinghouse.

Electronic billing protects a provider’s revenue with verifiable bill delivery to payers, which guarantees prompt payment by law. Unfortunately, merely submitting all bills to a single clearinghouse can set off an unprecedented billing nightmare, one that can make providers believe electronic billing for workers' comp just doesn't work. Electronic billing, however, isn’t the problem.

Direct Electronic Bill Routing

In California, payers use one of five different clearinghouses. The Division of Workers’ Compensation (DWC) requires providers that bill electronically to establish a direct electronic route to either the clearinghouse used by each payor or to the payor’s claims administrator directly.

No single clearinghouse is the designated clearinghouse for every payor or claims administrator. When a provider sends all bills to a single clearinghouse, many bills will inevitably need rerouting to a different clearinghouse. This clearinghouse to clearinghouse bill routing is considered indirect electronic billing, and is not compliant per the DWC requirements.

More importantly, indirect electronic billing simply does not work.  

With five different clearinghouses, all using incompatible systems and serving thousands of self-insured employers and insurers (and their respective claims administrators, TPAs and bill reviews), the journey of an electronic bill gets complicated, fast.  Each clearinghouse makes at least nominal attempts to get the provider's electronic bills to the right clearinghouse (often mailing the bill and charging the provider for mailing costs). But all too often, these efforts fall lamentably short.

The result? You guessed it: lost bills.

With indirect electronic bill routing, providers’ bills go missing and untraceable, lost despite being sent electronically. Instead of taking responsibility, the clearinghouse blames the claims administrator for not being electronic billing compliant — a misrepresentation designed to save face with the provider.

Even worse, this indirect routing leaves the provider out of compliance! Technically, the claims administrator is free to reject these indirect electronic bills, because the provider failed to send them directly to the claims administrator's chosen clearinghouse.

By contrast, DaisyBill genuinely and effectively takes responsibility for the direct routing of every bill our providers submit. Instead of using a single clearinghouse, we directly send bills to all five clearinghouses. This allows us to maintain unobstructed electronic connections to every claims administrator. Wherever our providers’ bills need to go, the bills get there quickly and compliantly.

Too often, the clearinghouses mislead providers, claiming the ability to process all the provider’s bills. The clearinghouse assures the provider that bills will be re-routed to each claims administrator’s designated clearinghouse. The unsuspecting provider believes the clearinghouse, just as we did in DaisyBill’s early years.

When DaisyBill first started, we used a single clearinghouse to submit our clients’ bills. Just as with providers, that clearinghouse led us to believe this was the correct way to manage electronic billing. But the lost bills (and bills dropped from electronic form to paper and mailed) piled up quickly. We immediately pivoted and established direct connections with all clearinghouses.

Now, we know better.

Providers need support. They need an advocate with the mission of shepherding their bills to the claims administrator, whatever it takes. Managing clearinghouses, and navigating the obstacles they pose to speedy reimbursement, is an unfortunate necessity. But with a quality, expert electronic billing team behind you, that necessity doesn’t have to be a burden.


DaisyBill is tailor-made to address work comp’s unique challenges using all the advantages of today’s tech. From authorization to billing to appeals for review, we’ve got providers covered. Schedule a free demonstration, and see what DaisyBill can do for your office.

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