Charge Capture and Reconciliation for Strong Revenue Cycle Management

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In today’s competitive market, it is important to get credit for the work that is being completed within the healthcare continuum. The work effort within a healthcare organization or provider organization is measurable – a lab test performed, an imaging study, an office visit, a surgical procedure. Whether it be a surgery, an inpatient or outpatient hospitalization, a diagnostic test or a therapeutic intervention – the provider needs to capture the revenue and bill for the service. So how does one verify that all of the care given translates into billable revenue? 

Step 1: Determine the Charge Capture Method 

The first step is to determine how the charge will be captured. Examine how the clinical system or EHR module is being used for charge capture and make sure that all billing codes have been entered.  

If unsure, create or run a report to verify that every test, procedure, visit, etc has a billing code(s) attached that is valid and accurate within the system.  

At least annually, complete a review of all billing codes to make sure the attached cpt or hcpcs codes have not changed or been updated. In addition, make sure the pricing is accurate. If there is not a billing method within the clinical system, then document a manual workflow for charge capture. 

Step 2: Verify Charge Accuracy 

Once you are certain that all charges are being captured within the clinical system, the next step is to review the billing side of things. Charge Accuracy can be defined as: the capture of revenue and billing codes for all performed procedures, tests or services on the date of service they are performed – e.g. Did all charges created by the clinical system post to the financial billing system? 

There are 5-6 key items needed for posting charges in patient accounting:  

  • patient account number 
  • date of service 
  • billing code (cpt, hcpcs) 
  • quantity 
  • charge 
  • provider (for professional billing only) 

Also, If any of the billing data is rejected for any reason, then a responsible individual(s) needs to be assigned to correct the reason why the charges did not post accurately. These should also be corrected immediately (within 1-2 business days) so that they post on the account and are sent to Coding for review. Some of the reasons charges may reject at the time of posting in patient accounting include: 

  • incorrect account chosen for that service date/range of dates 
  • incorrect date of service sent with the billing code 
  • inactive or invalid billing codes 
  • inactive or invalid provider 

Step 3: Perform Coding Review 

Whether the billing be institutional or professional, the accounts or charges need a diagnosis entered. This can be at the account level (for institutional billing) or at the transaction level (for professional billing). Also, there may be surgical procedures that need to be coded by a certified coder.  

Another function of Coding is to run the accounts through an encoder for compliant coding edits. At that time, the coders may need to add or remove procedure codes, CPT/HCPCS codes and/or modifiers to complete the process of compliant coding and billing. Regardless of the circumstance, coding review is a critical part of medical billing and directly drives compliance and reimbursement. 

Step 4: Establish Metrics 

A metric in healthcare billing is a measured statistic designed to benchmark accuracy and timeliness as they pertain to the revenue cycle.  There are a few key metrics worth mentioning as they relate to Charge Capture. 

  • Late Charges: Each clinical system must enter charges in a timely fashion, 3 days is a common metric. If charges are entered past that date, they are considered “late charges” and they may result in having to refile claims that have already gone out to payers. This in turn can result in denials for duplicate claims. Days Not Final Coded: Coding must code accounts, usually within 4 days of service date or discharge. Anything past the 4-day standard is considered “days not final coded (DNFC)”. 
  • Days not Final Billed: Next, bill cutoff must occur, and claims must be created. Each day that the bill cutoff cannot occur due to billing flags that need attention are called “days not final billed (DNFB)”. This could include items such as missing guarantor data or missing subscriber information, etc.  
  • Clean Claims: The Clean Claim rate means that when the electronic claims are sent to the clearinghouse, they should not flag again for incorrect diagnosis or missing charge or insurance data. If that occurs, then a biller has to intervene. So having a clean claim rate under 5% is ideal. 
  • Denial Rate: If accounts are coded accurately with all required billing information, then they ideally will not be denied. According to the Healthcare Financial Management Association (HFMA), the average denial rate is 5-10% of total billed charges overall, but the goal should be less than 10%.

Step 5: Measure Progress 

Since each of these steps is measurable, progress toward overall revenue cycle “good health” can be monitored. Once the methods for charge capture are documented and the metrics established, a baseline can be created and then measured against the national average to see improvements. This can then be reported and trended for areas of improvement.


By verifying charge capture methods, measuring charge accuracy, verifying accurate coding and monitoring key charge-related metrics, a healthcare organization is planting the seeds for a strong revenue cycle and maximum charge capture and reimbursement. 


About the Author:
Dawn Osborn, MHS, RHIA, CPC, MT

Healthcare Information Technology Consultant, CereCore

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