Filed under Healthcare Clearinghouse

What is a Health Care Clearinghouse?

What is a health care clearinghouse?  Most people hear the word “clearinghouse” and think of commercials featuring shocked sweepstakes winners having their lives changed when strangers come to their door with tv cameras, balloons, bouquets  and big cardboard checks.

However, for purposes of HIPAA (Health Insurance Portability and Accountability Act), a health care clearinghouse is an entity that transforms or translates data from one form to another so that it usable for a particular purpose. A health care clearinghouse is a covered entity under HIPAA.  That means that a health care clearinghouse is governed by HIPAA.

In trying to understand the nature of a health care clearinghouse,  imagine the difficulty you have traveling abroad and not speaking the native language.  You will need a translator to in order to communicate.  A clearinghouse can be thought of as a sort of translator.  A clearinghouse can also organize or structure data.  Whereas health data used by a doctor or hospital may be useful to them for documenting patient care, data in that form may not be useful to payors.  Data may need to be coded or presented in a certain way to be usable for a permitted purpose.

Health care clearinghouses can be public or public or private entities.  As HIPAA considers a clearinghouse, the entity most often is one of the following:

  • a billing service
  • a repricing company (which takes the bills, matches them up with the insured’s contract with the hospital, and adjusts them to the pre-negotiated price).
  • a  community health management information system or community health information system and “value-added” networks and switches, that does either of the following functions:

(1) Processes or facilitates the processing of health information received from another entity in a nonstandard format or containing nonstandard data content into standard data elements or a standard transaction.   A key objective of HIPAA was to require national uniform methods and uniform codes for the exchange of electronic information between health care providers and health plans.

(2) Receives a standard transaction from another entity and processes or facilitates the processing of health information into nonstandard format or nonstandard data content for the receiving entity.

Health care clearinghouses make data user-friendly for particularized purposes.  Most often, clearinghouses are trying to convert data for billing purposes, price comparison and cost-effectiveness analysis.  It’s reasonable to speculate that health care clearinghouses will have an enhanced role to play in a post Affordable Care Act world, because costs and benefits of particular treatments and efficient use of resources will become even more important.

Although you have not won a sweepstakes by reading this post, you now know what a health care clearinghouse is, how it functions, its purpose and why it’s important for clearinghouses to understand HIPAA’s requirements.

If you need assistance understanding HIPAA’s applicability to your organization, contact me: or leave a comment below.