The 2% Solution to Avoid Undercharging


Learn the three steps that help healthcare leaders to avoid undercharging achieve optimized financials.

According to the Healthcare Information and Management Systems Society (HIMSS), charge capture errors or missing charges should occur on less than 2% of accounts or claims as a best practice standard. And, as we know, that 2% can equate to millions of dollars per year for a typical health system.

Charge capture errors aren’t the only inaccuracies that can be hazardous to your hospital’s financial health, however. Add up the healthcare regulatory compliance fines related to non-compliance and settlement costs associated with overcharging, and a hospital could be looking at a significant impact to revenue at a time when margins are eroding.

Three steps to help ensure accurate charge capture

So, how can you ensure that your charge capture is accurate and you’re being reimbursed appropriately for your medical services? Here are three important steps that you can take right now:

1. Perform a Charge Capture Audit

How effective are your existing charge capture processes and controls? Could they be more efficient? More effective? What about inter-departmental communication and collaboration? Are you missing opportunities to implement improvements that could enhance productivity, profitability, cash flow, and compliance?

A Charge Capture Audit can help you answer all these questions. Typically, this should take less than five days, with the input of three skilled audit professionals (although this can vary, depending on the size of the department and the extent of the audit). The process involves reviewing and evaluating the groups and individuals responsible for monitoring, tracking, and reporting charges to identify deficiencies and opportunities for improvement.

2. Assess Your Clinical Documentation

clinical documentation assessment can show trends at the individual coder and physician level to help uncover specific sources of undercoding or overcoding and identify where and what kind of training updates will be most beneficial – both to stay on top of regulatory compliance updates and to avoid leaving money on the table.

A meaningful clinical documentation assessment should include thorough data analyses, which should enable you to recognize coding and reporting trends within individual areas of your organization. It should also include an on-site examination of records, and an executive-level summary of findings, including recommendations related to personnel, process improvements and training.

3. Get Updated

Recognizing what, where, why and how specific issues are affecting your revenue cycle is critical for organizations seeking to make improvements. But awareness is nothing without remedial action. And the first part of any effort to remedy charge capture issues is to update your charge capture policies and procedures – or draft new ones to confirm that:

  • All patients scheduled were accounted for
  • Procedures provided were charged and entered into the department system
  • Charges entered into the department system are promptly transferred over to the billing system.

Keep in mind that policies and procedures are not the same thing. A sample policy might read, “The policy is to reconcile charges applied to an account and ensure that charges are captured within three (3) business days after the patient is discharged.” But the associated procedure would be written with more specific directions, for instance:

  • Run reports
  • Run the Access database and query reports to validate data
  • Save report to an Excel file and print out “Patient Name” or “OR Time”
  • Review document to ensure that intra-op has proper documentation of wasted items with reasons
  • If changes must be entered, reprint document and send to Medical Records
  • Run reports again and reconcile with:
    • Error report
    • Surgery interface charge error list
    • Charge interface report

The other, equally important component of remedial action is to re-train staff on the new policies and procedures to make sure that everyone can demonstrate knowledge of the policies and procedures, follow them and be responsible and accountable for accurate and timely charge capture. This is especially important for those coding and compliance staff members who have been in their positions for so long that they believe that they don’t need additional training. These are the people who may be so adept in an antiquated procedure that they will continue to do it, even when a new, more efficient one becomes available. They may be so accustomed to doing something incorrectly that they do not realize its impact – which could be significant.

Improve efficiency and optimize revenue

With “optimize revenues” on every hospital executive’s list of KPIs, these three steps offer CEOs, CIOs and CFOs, as well as Revenue Cycle, Centralized Business Office and Patient Financial Services leaders a clear way to help achieve results. All three could be performed by your organization’s internal charge capture committee. Often, however, a third-party vendor who has performed many of these audits and assessments, who has experience writing policies and procedures, and who has trained multiple professionals for many different organizations can deliver greater efficiency – without any inherent biases.

The medical coding, compliance and hospital and physician revenue cycle services available to help you tackle these three to-dos efficiently and effectively are tremendous – and offer great benefits to organizations that pursue them.

Learn how our Coding and Compliance Advocate services can help optimize revenue and reduce compliance risk for hospitals, health systems, and medical practices of all specialties.

1HIMSS Financial Systems Revenue Cycle Task Force (2009-2010), “Revenue Cycle Management: A Life Cycle Approach for Performance Measurement and System Justification,” March 2010

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