Integrity in policy: The fundamentals of charge reconciliation policies

Charge reconciliation is a revenue integrity paradox: It’s a fundamental revenue integrity process, but it’s rarely performed and owned solely by revenue integrity staff. Instead, charge reconciliation often relies on clinical staff, and all too often it can fall to the bottom of their to-do list. But, as revenue integrity professionals know, skipping charge reconciliation has a negative effect on clinical departments—hitting revenue, affecting productivity metrics, and even exposing the organization to compliance risks.

Clinical departments need clarity on charge reconciliation expectations, and revenue integrity needs consistency and accountability across departments. Clear, tested policies and workflows are essential to supporting the needs of clinical departments and revenue integrity—and to helping ensure that hospitals capture complete, appropriate reimbursement.

A matter of policy

Although it’s understood that every clinical department must reconcile their charges, having it in a policy makes a world of difference, says NAHRI Advisory Board member Erin Brearley Cutter, MBA, CPC, COC, CHRI, CRCR, senior revenue cycle consultant at Integrated Revenue Integrity in Sturbridge, Massachusetts. Prior to joining Integrated Revenue Integrity, Cutter led revenue integrity programs at several health systems where she developed and implemented charge reconciliation policies.

All charge reconciliation policies should contain certain key elements, Cutter says. These include:

• Departments’ roles: The policy should define the specific roles and responsibilities of the clinical department and revenue integrity, as well as any other departments that may be involved, such as finance.
• Reports: The policy should define the reports that will be used for charge reconciliation and include an addendum or work instructions explaining how to run the reports.
• Timing: The policy should specify the cadence of charge reconciliation. Clearly state whether the department is expected to reconcile charges daily, for example, or weekly.

Charge reconciliation policies ensure consistency across the organization, but they don’t need to look the same for each department, Cutter advises. Often, flexibility based on a department’s volume of patients or charges creates the most consistent results overall. For example, an ambulatory clinic may have a small enough schedule that they can look at every patient seen on a particular day and ensure the charges dropped are correct based on the services each patient received, she says. However, a lab might have hundreds or even thousands of charges in that same time period, so it might not be possible to reconcile every single one.

Consider the department’s resources and how charges are generated as well, Cutter notes. What is the department’s staffing like? Does the department have a charge capture analyst or staff members who can spend time reviewing charges? How do the department’s charges drop? For example, robust reconciliation is more important in departments where charges are entered manually by a person, but less important in instances such as labs where all charges drop automatically, she says.

“I think that's important to recognize when there needs to be some flexibility for the departments in terms of how they reconcile,” Cutter says. “For some departments, that may be that they reconcile every patient, and for other departments that may be that they're doing exception-based reconciliation—so maybe they're looking at patients that don't have any charges, patients that have been checked in or discharged but didn't have any charges generate.”

A charge reconciliation policy should typically state that every department is responsible for its own charge generation and must have a mechanism in place to reconcile their charges, according to Cutter. The policy should also specify that revenue integrity will provide support if a department needs support with charge generation and reconciliation, such as helping to configure charge reports or discovering why an expected charge is not present.

“The departments are ultimately responsible, and then it also helps to have some sort of oversight from a revenue integrity perspective,” Cutter explains. “Maybe the departments are responsible for daily charge reconciliation, but the revenue integrity department is doing a monthly look at revenue by day, revenue by patient, and looking for any anomalies that might mean that the department either isn't reconciling or isn't noticing an issue that could be present.”

Defining roles

In theory, charge-generating departments own charge reconciliation, usually with some level of support from revenue integrity. In practice, though, responsibility can get murky. Defining each department’s roles and responsibilities is a delicate art. If a policy is too strict and overly detailed, it can pose practical challenges. But if a policy is too loose, revenue integrity, in particular, can find itself taking on tasks that go beyond its scope and strain its resources.

“There's a balance to be had between making your policy so specific that it means you don't have flexibility, but also making the policy specific enough so that it's clear whose responsibility is whose,” Cutter says. “But I have absolutely also experienced that scope creep where the department maybe doesn't know how to follow up and so you're helping them.”

Erin Heimerman, RHIA, director of revenue integrity, hospital and professional charge capture at M Health Fairview in Minneapolis, Minnesota, says at her organization revenue integrity has oversight and governance of charge reconciliation as well as providing subject matter expertise. “Our role is to design the framework, define standards, provide tools and reporting, and monitor compliance, while operational ownership of reconciliation remains with the clinical and operational departments closest to the point of care,” she explains.

At the simplest level, a charge reconciliation policy should clearly define that clinical departments are ultimately responsible for charge reconciliation and that revenue integrity is available to assist. Beyond that basic definition, it depends on the organization’s structure and preferences for defining roles on a more granular level. For example, if revenue integrity is playing a supporting role, they might run key reports on a weekly or monthly basis, then follow up with departments if they see anything that looks concerning, Cutter says.

If a department is struggling with charge reconciliation, don’t just take care of it for them, even when that may seem quicker and easier. In the long term, that won’t solve the root cause and will only shift work to revenue integrity that the department is not equipped to take on. Instead, connect with the staff member who is responsible for reconciling charges and talk through the problem with them, Cutter advises. Help them fix the issue and show them how to correctly reconcile charges and run charge reports so they will be empowered to take ownership going forward.

Cultural shift

Ensuring charge reconciliation policies are followed is often challenging. At many organizations, enforcement and adoption of the policies is inconsistent, and revenue integrity departments often have their work cut out for them when pushing for change. Heimerman says that this year, her organization’s charge capture team is conducting a systemwide charge reconciliation “health check” to refresh the policy and seek support from executive leadership on policy adherence.

Even the most well-written policy won’t be effective if it doesn’t have broad support and buy-in. As with any other initiative, support from the top, including the C-suite, is necessary to set a precedent and influence the organization’s culture. Fortunately, hospital leaders, particularly CFOs, have become more aware of the importance of charge reconciliation.

“Organizations have been moving this way somewhat organically, as there's been more and more financial pressure put on hospitals and healthcare organizations,” Cutter says. “It seems like there's been almost a natural shift where the CFO or others in chief roles will recognize that the departments need to be responsible for their own revenue.”

Accountability and monitoring

Even if an organization’s C-suite is less engaged, revenue integrity can still grow support and build accountability. Cutter recommends creating a process, embedded in the annual chargemaster update, that requires a department to confirm that they have a charge reconciliation policy, they review their chargemaster regularly, and they believe their charges to be accurate. A similar sign-off method can be embedded in the budget process, she notes. When a department is reviewing its budget with finance, they typically confirm that they are responsible for their budget and expenses; this process can be amended to include confirmation that they are also responsible for capturing and reconciling their charges.

If a department is particularly resistant to owning charge reconciliation, an internal audit can help identify pain points and opportunities, according to Cutter. For example, conduct an audit of a week’s worth of charges and find missing items. Then, run some calculations to extrapolate what that means in terms of missing charges over a year.

“Then you have real numbers that you can bring to the managers and directors of that department, and potentially the C-suite if they have to get involved,” Cutter says. “That way it's not you just saying. ‘You need to reconcile your charges for the sake of reconciling your charges.’ And if they don't have resources in place, then they can use those numbers to help support potentially shifting staff around, getting staff to do that reconciliation, or getting systems in place to help them reconcile in a more automated way.”

Staffing constraints is one of the primary pain points and a common reason clinical departments push back on charge reconciliation policies, Heimerman agrees. Clinical staff might also not understand why it needs to be their responsibility and may feel other departments, such as coding, should be able to handle it. Over the past two years, Heimerman says that the M Health Fairview revenue integrity team has worked to address these issues.

“[We] developed and rolled out our Operational Revenue Integrity (ORI) program to leaders of revenue-generating departments to educate them on their role as business owners in ensuring the integrity of their revenue and help them understand the ‘why.’ The program starts with an intake form—which routes to CDM and charge capture staff to develop custom content for that leader’s department, service line, roles/licensures they supervise, etc.—and is broken into three sessions: CDM, charge capture, and charge reconciliation,” she says. 

After completing the ORI training, clinical departments receive ongoing feedback from the charge capture team on late charges, missing charges, and open encounters. The charge capture team also plans to start providing feedback on charge reconciliation policy adoption, Heimerman adds.

In her previous roles at hospitals, Cutter helped build relationships with clinical departments by setting up quarterly revenue integrity meetings with them. During the meetings, the revenue integrity analyst assigned to the department would meet with the department’s clinical leaders; representatives from patient financial services or finance would attend on an ad hoc basis depending on the agenda. The revenue integrity analyst would discuss financial and charging data and updates, and the clinical leaders shared updates such as the addition of new services or new physicians who had joined the department.

“When we rolled out the charge reconciliation policy, we brought it to that meeting, introduced it to them, and then we set up separate sub-trainings or subcommittee meetings where we would go over the process with the folks who were actually going to be doing charge reconciliation for that department,” Cutter says.

Organizations should have some monitoring mechanism in place to ensure that clinical departments are following charge reconciliation policies. At M Health Fairview, charge reconciliation is monitored through a combination of automated reporting, targeted audits, and performance monitoring, according to Heimerman. Key indicators such as reconciliation completion rates, charge lag, variance trends, and error root causes are regularly reviewed.

“The revenue integrity charge capture team is currently working with our analytics team to develop a Power BI^® dashboard that will show how often each department is reconciling. We’ll then use that to follow up with departments who are not reconciling daily,” Heimerman says.

Integrity in policy

Charge capture policies support accountability and accurate revenue—and help reduce work in the long run. Overcoming organizational barriers and shifting culture isn’t an easy task, but it should be a core priority for revenue integrity.

“Even doing a little bit is better than not doing anything,” Cutter says. “Find where your biggest opportunity is and start there.”