The importance of charge capture audits

by Roberta Peters

As hospitals and health systems seek to improve financial performance, it becomes increasingly important to identify which elements of the revenue cycle are performing well, and which areas have opportunities for improvement.

For most providers, charge capture is a prime candidate for potential issues. 

To identify and address those issues, providers will often conduct a charge capture audit. If done correctly, charge capture audits can deliver substantial improvements in terms of capturing lost revenue, ensuring compliance, and improving overall financial performance.

What is charge capture and why is it important?             

Charge capture involves the documentation, posting, and reconciliation of all charges for services rendered during a patient encounter. This includes labs, therapies, diagnostic services, pharmacy, and all aspects of patient care delivery such as procedures and diagnoses.

A primary goal of accurate charge capture is ensuring revenue from specific elements of care, but incorrect charge capture also impacts financial performance in other ways. Charges play an integral role in ensuring accurate coding, as they not only reflect the individual services rendered but also support the use of specific revenue codes, such as DRGs (diagnosis-related groups) and HCCs (hierarchical condition categories), that drive payment.

How and why does the charge capture process fail?

Despite the direct impact of charge capture on revenue cycle performance, almost all providers likely have some form of inefficiency or opportunities for improvement in their charge capture process. Charge capture issues can come from a variety of sources.

Staff-based factors

• Clinicians are often responsible for charge entry, yet they often lack an understanding of its importance
• Charge capture is also managed by administrative and point-of-service roles, which can be subject to high turnover and poor training.

Organizational and process-based factors

• Responsibilities for charge capture are often decentralized across departments, which makes it hard to review and report on performance.
• Organizations often lack formal policies and standards for charge capture.
• Manual reconciliation of charges on a daily basis is very time-consuming and often gets bypassed.

How to approach a formal charge capture audit?

Charge capture audits should be focused on reviewing the internal controls around the existing processes. It should provide an assessment of current processes for initial charge capture, tracking of charge accuracy and reporting on overall effectiveness across all encounters. This should help isolate where issues are occurring so you can identify the process or system improvements needed to address issues.

Who should be involved with establishing a charge capture audit process?

Given the unique nature of how charges are input, the team overseeing your charge capture audit should include stakeholders from your financial, IT, and clinical departments. This will provide valuable, relevant insights into the current state from a user and system perspective. It will also assist with assessing root causes and developing corrective steps and implementing the necessary improvements.

What should be expected from a charge capture audit?

Upon completion, a charge capture audit should provide actionable insights into the following:

• An understanding of the current state of charge capture at a department level, including the systems, processes and personnel involved.
• A summary understanding of charge capture deficiencies, which can include failure to post charges, posting charges after the billing cycle, charging for incorrect service(s), charging the wrong patient or multiple accounts, service not listed on charge sheet/charge screen, and failure to reconcile charges or review error reports.
• A summary understanding of interdependencies that contribute to erroneous charge capture, such as how one department’s role impacts performance later in the process.

Next steps

Upon completion of a charge capture audit, the team should compare their results to industry best practices in charge capture accuracy. This helps establish context for how prevalent certain issues may be and where you should focus your efforts. After this, you can prioritize issues to pursue.

An action plan to implement the necessary process improvement steps should be developed, agreed upon and enacted to improve the charge capture practices. This may include process improvements, staff training or adding new technology.

Finally, after the corrective actions have been taken, the team should re-audit the system to assess the impact on charge capture performance. If substantial deficiencies remain, the team should troubleshoot the root problem to continue addressing issues in each appropriate department or process until the desired results are achieved and you can consistently ensure accurate capture.

A successful charge capture audit process is not easy, but by providing a full picture of how & where you're failing to accurately capture all charges, you can improve revenue integrity across your organization.