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How Auditing Helps Health Systems Avoid the High Cost of Poor Charge Capture

By Bess Ann Bredemeyer  
   December 28, 2017

If your organization relies solely on automated solutions for auditing charge capture, you may suffer from the pitfalls of undercharging and overcharging. Learn how the expertise of human reviewers can augment the audit process.

Inaccurate charge captures can have a dramatic impact on a hospital’s finances and contribute to unnecessary cost and inefficiency in the healthcare system at large. Provider organizations looking to improve their performance should know that overcharging can be as damaging as undercharging.  But taking a one-size-fits all approach to charge capture can be as bad as doing nothing at all.

Today, many providers rely solely on automated solutions to perform charge capture audit, but they should consider all the pros and cons of this approach. Here’s a look at the pitfalls associated with undercharging and overcharging, and how savvy hospitals can apply the professional expertise of human reviewers to augment their charge capture auditing efforts.

While undercharging prevents hospitals from being paid sufficiently for their services, overcharging can create expensive non-compliance issues that also impact revenue. Overcharges must be reimbursed to the payer. If that payer is the government, there may be associated fines, interest, and penalties.

Overcharging may also push additional hidden costs to the hospital in the form of time spent responding to auditors, rather than performing regular work tasks. Additionally, the organization may have to hire outside counsel and an auditor, compounding costs.

In the regulatory audit results1 of a Missouri hospital released by the Department of Health and Human Service (HHS) Office of Inspector General (OIG), OIG discovered billing non-compliance in 46 of 253 claims, or approximately $414,000 in overpayments. Similarly, an audit2 of a Utah hospital revealed billing non-compliance in 49 of 232 claims, or approximately $173,000 in overpayments. Based on the sample results, the OIG often extrapolates an overpayment estimate for the audit period.

What generates charge capture errors?

So, how can charge capture errors be caught quickly? The answer is neither obvious nor simple. There are three main causes:

  • Computer glitches. An improperly managed software installation or conversion can inadvertently duplicate charges. Hardware errors and electromagnetic interference can corrupt software and lead to misapplication of credits. Programming errors can also cause these types of problems. Despite these issues, the system may appear to function properly. However, if not addressed quickly, the sources of charge capture problems can become increasingly difficult to trace and correct.

  • Insufficient or incorrect coding training. Doctors and staff members are not sufficiently trained on medical coding intricacies. It is not enough to simply map a service to the right code. Some services encompass multiple medical codes, while others must be carved out of a flat-rate (daily or procedural) payment and paid additionally.

  • Human error. Any time humans are involved, there is potential for error. For example, if the person responsible for recording charges does so in the middle of a busy emergency department, he or she might check off items that are expected but do not actually occur, leading to an overcharge. Alternatively, he or she might forget to check a key item, leading to an undercharge.

The benefits – and pitfalls – of automated audit systems

Many hospitals have purchased auditing systems to catch problems with charge capture accuracy. Unfortunately, such systems are not foolproof and may lull hospitals into a false sense of security.

Even sophisticated automated solutions cannot replace the human ability to recognize an issue that is technically correct, but fundamentally flawed. A computer will identify and correct what it is told to identify. A human being can recognize connections between charges that may appear correct individually, but that make no sense together. Unless a knowledgeable person audits the system, its accuracy remains in question. Mechanized results that are double-checked by a trained professional can reveal far more than the mechanized system alone.

Bottom line: In-depth charge capture audit services performed by knowledgeable, live professionals are the best way to improve charge capture and mitigate compliance risks.


1“Medicare Compliance Review of Missouri Baptist Medical Center for 2011 and 2012,” Office of Inspector General, Office of Audit Services, Centers for Medicare and Medicaid, January 2015. 2“Medicare Compliance Review of Utah Valley Regional Medical Center for 2010 and 2011,” Office of Inspector General, Office of Audit Services, Centers for Medicare and Medicaid, January 2015.

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