Our revenue transformation projects over several years continue to show that hospitals lose as much as 1 percent of their potential annual net revenue due to various issues associated with charge capture. To put this in perspective, a hospital with $500 million in annual net revenue would lose $5 million. Even a loss of half of 1 percent would translate to $2.5 million, much of which will never be recovered. These losses are not trivial.
Numerous variables affect charge capture. The operational reality is that, regardless of payment structure, healthcare organizations should strive to consistently and accurately capture the charges incurred for services provided.
There are many reasons why most healthcare organizations struggle to capture all charges incurred, putting themselves at risk for significant losses:
- Charge capture processes are complex and susceptible to breakdowns.
- Accountability is decentralized across many departments, with numerous individuals having a role in the process.
- Different systems may be involved, creating additional interfaces and handoffs.
- Limited tools and metrics may be available to identify missed charging opportunities, especially in high-volume areas.
- Payer guidelines and requirements are constantly changing.
- Clinicians primarily are focused on providing excellent care and often do not have a full understanding of revenue capture and the broader revenue cycle.
Addressing such a variety of potential root causes requires a holistic approach. Many organizations, from large academic medical centers to smaller community hospitals, do not have a holistic model in place and, therefore, are losing significant reimbursable dollars each month.
The Holistic Approach
Historically, charge-capture initiatives have centered on regular reviews of the charge description master (CDM). While a CDM review is important, a more dynamic and interdisciplinary approach to charge capture would include representatives of clinical departments, payer contracting, IT, and revenue cycle. An effective, holistic charge capture approach will incorporate processes and tools.
Charge capture processes. The complex nature of accurately capturing charges presents multiple opportunities for process breakdowns. Just as the stakeholders are an interdisciplinary group, the process breakdown areas typically are varied and interdisciplinary. Solving these breakdowns requires detailed root-cause analyses to develop a plan of action to improve performance and mitigate future revenue loss. Process breakdowns can involve:
- Missing or incomplete documentation
- Documentation that does not meet payer guidelines
- Clinical or department staff who do not record the appropriate charge for the service being provided
- Untimely or incomplete updates to the CDM
- Inconsistent or unknown organizational charging policies
- Inconsistent charge reconciliation processes to serve as a check-and-balance within each service department utilizing the HIS application and the billing scrubber
Charge capture tools and reporting. It is critical that organizational leaders have reporting in place to quickly and accurately assess their organization’s charge capture performance and to identify opportunity areas. Reporting should inform stakeholders about key measures and should be used to prevent or mitigate the following:
- Reimbursement loss
- Billing and claim-edit failures
- Late charging
- Claim denials and unrecoverable payment
- Claim audits with takebacks
Organizations also can supplement optimal charge capture processes by leveraging algorithmic and monitoring tools designed to identify and prioritize the implementation of charge capture improvements. The key is customizing these tools to your organization and payer requirements to minimize “false positives” and rework.
The Stakes Are High
Charge capture is not an area that any organization can afford to assume is working well. A holistic model and approach to charge capture is crucial for organizations to be able to safeguard payment due to them for services rendered, monitor charging practices, engage clinical and financial teams, and best prepare for the future.