A healthcare organization’s revenue cycle can quickly become disorganized if there aren’t effective practices and procedures being utilized across all departments. A clean and methodical charge reconciliation process is an absolute necessity because it enables fast and accurate charge capture and the resolution of any pending charges. Because of how extensive and complicated a hospital’s revenue system can be, charge reconciliation must happen on a daily basis.
Many healthcare organizations are using outdated and archaic processes to capture and reconcile their charges. This most often leads to staff having to take up to several hours per day to generate and review reports for clinical events across every patient encounter. This substantially increases your staff’s workload and has a direct impact on your revenue integrity.
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What is Charge Reconciliation?
Charge reconciliation is the process of comparing your billable clinical events from each department to the actual charges appearing in your billing system.
Why Is It Important to Reconcile Charges?
Chasing around paper trails all day instead of investing in a proper charge reconciliation process can have a severe impact on your healthcare organization’s operations. It pulls staff away from their primary responsibilities to focus on manual administrative tasks that they often consider unnecessary. These employees don’t have the bandwidth to compile the previous day’s charges and manually reconcile them against their billing records. This dated approach to charge reconciliation leads to substantial errors in billing.
These claims errors manifest in the form overcharging and undercharging. With overcharging, the claim reflects expenses that aren’t justified by the care delivered. The provider is automatically dinged as being non-compliant, which leads to more expensive costs and lost revenue that must be reimbursed to the payer. For example, if the patient’s paying entity is CMS, and a provider was found to be overcharging, CMS can legally request to be reimbursed for any overpayment, as well as add on additional penalties, fines, and more.
Undercharging means that hospitals delivered care that isn’t included in the bill and thus won’t be reimbursed for it. That’s missed revenue, which means the provider can’t recoup the full expenses it incurred with that encounter and won’t have the needed resources to pay its bills or invest in new equipment, additional staff, etc.
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How Often Do I Need to Reconcile My Charges?
Having a daily charge reconciliation process allows a healthcare organization to minimize potential revenue leakage or compliance exposure, which stabilizes your revenue cycle and overall financial performance. And daily reconciliation enables staff to quickly identify and address issues before they grow in severity or impact.
With the correct software and staff training put into place, a daily charge reconciliation process will allow users to monitor all charges and accurately project the revenue due to the organization.
What are the Benefits of Daily Charge Reconciliation?
If you have an automated daily charge reconciliation process, you’ll have decreased billing time, faster revenue collection, and improved preparation for audits. In a 2019 study, The Center for American Progress found that U.S. billing and insurance-related costs ranged from 2% to 5% for traditional Medicare and Medicaid, and upwards of 17% for commercial insurers. A lot of these billing-related costs can be mitigated through effective charge reconciliation.
How? With an automated charge reconciliation process, your staff doesn’t waste valuable time manually compiling and comparing data. By recouping that time, you’ll save on the added costs of administrative time and charge lag that could have ended up costing your facility thousands of dollars per incorrect bill.
Daily charge reconciliation also helps to reduce denials and thus minimize the need for appeals by proactively identifying potential issues prior to billing. Without having to go back and correct mistakes, you’ll charge the first time correctly and essentially eliminate incorrect bills, bringing revenue in the door at a much faster rate for improved cash flow.
As the frequency and scrutiny of payer audits have grown over the past decade, so has the need to be prepared for them. And while healthcare audits can provide massive benefits for your hospital’s internal and external operations, a lack of a comprehensive charge reconciliation program can lead to persistent compliance exposure and subsequent regulatory scrutiny via OIG, MAC and RAC audits. When these audits reveal ongoing accuracy issues, the resulting penalties can run into the hundreds of thousands of dollars, further hindering your organization’s financial performance and even its reputation.
Should I Use Automation?
The short answer is yes, healthcare organizations can trust automated systems and should be moving their processes in a more advanced direction, but it takes proper planning, set-up and ongoing staff training to implement an automated system well. A common misinterpretation of an automated system is that it can do everything without any direction. While automation can reduce manual efforts, it requires human intervention to truly deliver value. Finding a technology partner who understands your current challenges and has supported similar organizations and achieved their desired results is a key first step.
Who Should Be Involved in Daily Charge Reconciliation?
A common problem that arises is that any charge reconciliation system will still need to managed by knowledgeable staff in each department. The same resources who were previously tasked with manually reconciling data will be key to assessing how to best establish the needed automation, reporting and other functions. No two departments operate the same way, and charges can be added in different ways, so getting this firsthand insight is crucial to establishing and managing your new system.
In addition to departmental ‘owners’ for the new system, a dedicated superuser will need to be delegated to train and educate the clinical staff that will be using the automated charge reconciliation software. This person will need to be skilled in both clinical and financial departments, while also possessing in-depth knowledge of what services a hospital offers and how & where charges can be applied on any given day.
It’s critical to continue streamlining and honing all aspects of your revenue cycle. Look into implementing an automated daily charge reconciliation process through automated software and continue to train departments in these new programs.
Charge Reconciliation Frequently Asked Questions
Proper charge reconciliation prevents inaccurate or missing charges from patient encounters, which in turn helps prevent compliance risk and lost revenue. Without it, hospitals face revenue leakage, higher claim rejection rates, non-compliance issues and potentially severe penalties.
Charge reconciliation should ideally be performed on a daily basis. This allows for quick identification and resolution of discrepancies, reducing the time and effort required to retrace steps when an error occurs.
Not reconciling charges properly can lead to missed or inaccurate charges, which then contributes to claims that overcharge or undercharge for the encounter. Undercharging leads to revenue leakage, while overcharging can result in denied claims and non-compliance penalties. Additionally, it leads to increased administrative time and costs, and potential issues during regulatory audits.
Yes, automation can greatly improve the efficiency and accuracy of the charge reconciliation process. However, it’s essential to note that while automation handles most tasks, human intervention and management is still crucial to the successful use of the tools and achieving the desired results.
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