Take charge of revenue opportunities

Healthcare Financial Management, June, 2005 by John Napiewocki, Laura C. Dowling

Chances are, basic mechanisms for capturing charges at your organization are well understood and widely implemented. When you hear about this area of the revenue cycle, your response is likely to be little more than "been there, done that."

Yet such an attitude toward charge capture risks missing significant financial and nonfinancial benefits. A fresh and well-focused look at capturing charges can reveal myriad opportunities to enhance revenue, streamline billing processes, reduce administrative burden on clinical staff, and reduce reliance on highly specialized resources to "fix" bills and hunt for missing or unreported charges. Revisiting charge capture mechanisms with an eye toward improved collaboration among all departments that intersect with the revenue cycle and better integration among disparate information systems that service it can yield significant rewards.

Current Processes

The obvious purpose of capturing charges is to make sure that resources used to treat a patient are identified, quantified, and eventually make it onto the right bill and are submitted to the appropriate payer. Accurate and efficient charge capture means depending on many people with various responsibilities and skill levels, and whose reliability is often adversely affected by high turnover and conflicting priorities. It can mean working with disparate information systems that may have interface challenges, or where no interface exists leading to data being manually transferred from one system to another. Both situations can create opportunities for charges to be captured incorrectly or not at all.

Some hospitals have taken the approach of trying to capture every possible charge in an effort to increase revenue. Most often, they find this practice both inefficient and ineffective. Nurses and other staff working directly with patients are generally willing to accept responsibility for a certain amount of charge capture. Asking them to account for every bandage or scalpel blade, however, is an onerous task that they will quickly grow to resent. Since Medicare and most other payers base payment on a patient's length of stay or diagnosis related group, trying to track each bandage or blade is generally an inefficient use of staff time with no noticeable affect on net revenue. Indeed, an operating room nurse caught up in checking off a multitude of surgical supplies may overlook significant--and often separately payable--items such as implants.

A Philosophy of Collaboration

Collaboration among all departments that intersect the revenue cycle is needed to make charge capture efficient and effective.

* How much detail is enough to provide benefit and maintain compliance?

* Who should be responsible for capturing charges?

* What reconciliation processes are needed to ensure that high-ticket items such as implants make it onto the bill?

Answers to these questions will come through examination of current practices, a clear vision of the desired future state, and a collaborative plan for navigating from the former to the latter. Experience shows the following charge capture guidelines are particularly useful:

Charge capture should be done by the people closest to care delivery. Charges are most accurately captured By nurses or other personnel who work directly with patients at the point of service. Attempting to re-create likely care scenarios after the fact and separating out the charges is a tedious task, consuming the time of highly knowledgeable, and therefore highly compensated, health information management and/or business office personnel. These individuals' time would be better spent in getting clean claims out the door in a timely manner.

Charge capture should be streamlined to be a manageable administrative responsibility for clinicians. Consider the experience of one hospital that attempted to increase revenue by expanding a department's chargemaster to include hundreds of line items of supplies, procedures, and level charges. The complexity of the forms required to set the level and identify supplies and procedures meant that the charge capture function fell to the HIM department. In addition, the facility discovered that less than 50 percent of the total line items were actually being used. A financial analysis was performed that allowed the department to decrease its chargemaster to less than 50 line items while maintaining its current gross to net revenue ratio. The streamlined chargemaster also allowed for transition of the charge capture function back to the department staff.

Weigh the administrative burden of capturing charges against its financial benefit. More detailed charge capture does not necessarily deliver higher net revenue. Some hospitals believe their charge capture mechanisms are working properly, only to discover on closer examination that even though many charges are getting onto the bills, the level of effort required to capture them is burdensome to both clinicians and financial staff. In such circumstances, some hospitals find it beneficial to consider things such as introducing consolidated charge tickets. For example, a major ear-nose-throat charge ticket might list implantables, surgery supply items, and other routine charges bundled into "virtual packs" for specific procedures, such as laryngectomies, parotidectomies, and radical neck dissections. By adopting appropriate chargemaster policies and streamlining the chargemaster, updates to the line items can be accomplished effectively and efficiently.