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June 2014

Put a Jolt in Hospital Finances
By Lisa A. Eramo
For The Record
Vol. 26 No. 6 P. 16

To electrify a moribund revenue cycle, experts suggest rewiring the charge capture process.

It seems unlikely that entire items and services could fly under a hospital’s radar without ever being captured, charged, and paid. Yet it happens—and more frequently than anyone wants to imagine.

“If you don’t have processes in place, it could happen daily,” says Laura Legg, RHIT, CCS, director of HIM for the Healthcare Resource Group in Renton, Washington. “It’s really scary when you think about it.”

Consider Yale-New Haven Hospital in Connecticut. According to an article published by iSixSigma, the hospital struggled with a roughly 36% charge capture rate for medical/surgical supplies used in its inpatient nursing units. The article states that the hospital had an opportunity to potentially increase gross charges for its top 12 supplies by an estimated $4.5 million. The hospital used Six Sigma principals to improve its charge capture rate to 87.5%.

“It’s a pretty significant issue,” says Marsha S. Diamond, CPC, CPC-H, CCS, coding and compliance manager for outpatient/physician coding for Medical Audit Resource Services. “When you have someone in the hospital for a number of days, you’re depending on nursing and noncoding staff whose primary focus is not on capturing services. Their main function is to be taking care of the patient and not marking an item on a sheet or scanning an item.”

In today’s health care environment, capturing all charges is more important than ever, Diamond says. “We all want to capture the maximum reimbursement that’s possible and get paid for everything that we do,” she says. “The more that carriers and third-party payers are looking at ways to control their costs, we have to look from the facility perspective that we capture and get paid for everything that we do.”

Increasing charge capture also can be a tool to offset anticipated revenue snags with ICD-10. “Even if the facility is able to get their claims coded quickly, there could be a delay on the third-party payer side,” Diamond says. “This is an opportunity for organizations to look for other ways to ramp up their revenue.”

Target Areas
Just how accurate is your chargemaster? Given the number of line items in this massive file, it may seem overwhelming to even approach the question. Experts say focusing on some of the most problematic areas is a good first step.

Hospitals may inadvertently undercharge for certain drugs if those entering the charges don’t pay close attention to the description and the number of units when reporting a J code, Legg says. For example, if a provider injects 500 mg of tetracycline, but the charge description states “up to 250 mg,” then the provider must report two units of that service to fully capture the charge. Otherwise, 250 mg of that drug will be lost.

Quantity descriptions for drugs, which vary widely, can result in significant revenue loss if not closely monitored, Diamond says. “It’s not just about whether you capture the drug; the quantity is often not correct,” she notes.

Important dosage details must be visible to providers while they’re charging for a drug, Diamond says. Character limitations in the chargemaster sometimes make key pieces of information invisible to the end user, which can cause charging inaccuracies. Hospitals either must expand these limitations or ensure that dosing is more prominently placed in the descriptor. Providers must see that information immediately before they charge a certain number of units.

Legg says without a formal charge capture policy, providers may neglect to capture drug administration during highly emotional scenarios, such as emergency surgery for a life-threatening condition or injury. Extra drugs may be rendered during these scenarios, and if someone isn’t carefully monitoring the situation, drug charges easily can be overlooked as staff members work to save the patient, she adds.

Diamond says some hospitals are opting to include a charge capture specialist in high-dollar areas such as the emergency department (ED), radiology, and the operating room to ensure that all charges are captured either on paper or electronically. “Most organizations have found that having this position more than pays for itself,” she says.

Be sure to perform a strategic pricing evaluation at regular intervals, recommends Kim Kennedy, MS, RHIA, senior director for best practices at Accretive Health in Chicago, who adds that simply increasing the prices of all drugs by a certain percentage each year is a poor strategy. All items in the chargemaster should be reviewed separately, she says, and pharmacy items—which can total as much as 200 new entries in a week—should be updated weekly.

Supplies and Devices
If missed, these materials—particularly prosthetics and orthotics—can result in significant revenue loss, says William Malm, ND, RN, CMAS, senior data project manager for Craneware. One or two of these devices often cost far more than any associated evaluation and management service, he explains.

Prosthetics, orthotics, and other supplies and devices often are placed directly into a supply closet without ever being inventoried or catalogued. As a result, hospitals have no way of knowing whether and how often these supplies and devices are used and/or missed, Malm says. “In the ED, people pull something off the shelf and never charge for it,” he notes.

Hospitals must create an inventory of all supplies and devices used throughout the organization, Malm says. Identify those for which the hospital can charge separately, and ensure that staff members, particularly part-timers, have this information. “We have the assumption that everyone is doing it right all of the time. That’s an incorrect assumption,” he says. “As we know more and more, hospitals are cutting back on full-time staff and supplementing them with PRN or part-time staff who may not have the ability to manage the revenue cycle.”

Malm emphasizes that even though it may feel counterintuitive, all providers must think of health care as a business. Every service provided includes costs that must be captured in some form. This often requires careful thought and consideration while services are being rendered.

For example, take a patient who requires a short-arm splint that the provider makes out of casting material. The provider should not simply charge code 29125 for application of a short-arm splint. He or she also must account for overhead and materials, such as casting supplies, ACE wraps, and a sling. Malm says this type of detailed cost accounting typically doesn’t occur, and organizations are cheating themselves out of reimbursement when they don’t track such expenditures.

Operating Room Services
According to Kennedy, the operating room is an area where significant revenue can be lost if hospitals don’t clearly define what’s included and excluded from the room rate. While there’s no standard definition for the room charge, educating staff members on the services for which they can charge separately is critical, she adds. Items that staff members typically forget to charge include implants, time allocation per procedure, and anesthesia time increments.

The Medicare Benefit Claims Processing, chapter 4, section 290.2.2, states that a hospital can begin to bill for observation services, reported with HCPCS code G0378, “at the clock time documented in the patient’s medical record, which coincides with the time that observation services are initiated in accordance with a physician’s order for observation services.”

Observation hours can be missed if there’s a lag between the time of the physician order and the time at which nurses officially change the patient’s status to observation. During this lag, observation hours often aren’t counted even though services may be provided, Diamond says.

“If there’s no formal process for converting the patient from ED to observation, you’re going to have lost charges,” Malm says, adding that providers should explicitly document the time at which they began to provide observation services. Until that time, the patient still is considered an ED patient, and ED charges should be captured accordingly.

Routine Recovery
Hospitals can’t separately charge for postoperative medications and services performed during routine recovery after a procedure. However, they can charge separately if those are unrelated to the procedure, Malm says. For example, services performed to treat a fever or an arrhythmia after a procedure may be separately chargeable. Providers must know the services for which they typically can and can’t charge after a procedure, he adds.

Creating a Charge Capture Policy
A clean and updated chargemaster doesn’t guarantee revenue capture, Malm says. “You can have a perfectly clean chargemaster and still have catastrophic results,” he says.

That’s because accurate charge capture isn’t only about ensuring that the chargemaster is updated to meet ongoing payer and regulatory changes. Hospitals also must examine their internal processes and develop policies and procedures to ensure that individuals know and understand their roles in capturing charges.

Experts say a robust charge capture policy must include, at a minimum, the following essential elements:

• frequent and regularly scheduled chargemaster updates (as well as the delegation of these updates);

• a process for deactivating charges; and

• a list of services and procedures offered by each department as well as a list of who’s responsible for entering those charges, whether it be the provider, HIM staff members, or a combination of the two.

Tips to Improve Charge Capture
Think lost charges may be a problem at your facility? Consider the following tips to improve your charge capture rate:

Update the chargemaster regularly. Ongoing updates are the only way to ensure that charges are current and accurate. Annual updates to the chargemaster must accommodate new, revised, and deleted CPT codes. Even slight changes in a code description can have a big impact on revenue, Legg says. Hospitals also must update the chargemaster each and every time a new service line is added.

Old charges that have become obsolete should be clearly identified so that providers don’t use them, Diamond says. “They can be in there and be inactivated, but it needs to be clear to the provider that it’s inactive and that they shouldn’t be picking that for the charge today,” she explains.

One solution is to group all inactive charges together by including “archive” at the beginning of their corresponding code descriptions. Not only does this improve efficiency because staff members can immediately eliminate those selections, but it also helps decrease the likelihood that a staff member will accidentally choose a charge that will never yield any reimbursement.

Ensure timely charge capture. “If charge capture isn’t done the day the service is rendered, charge sheets get misplaced or put on the bottom of a pile of paper, and charges get lost,” Legg says.

Use common sense. Compare volume of services with charges, Kennedy suggests. Does one seem reasonable in light of the other? Kennedy recently consulted at a hospital where the volume of charges related to pass-through interventional radiology implants was very low compared with the volume of related procedures. On closer examination, she discovered that although the charges had been captured on paper, nobody realized they hadn’t been entered into the system.

Know the pros and cons of charge capture automation. Experts say automated charge capture on the front end (rather than using a charge capture sheet from which someone manually enters charges retrospectively) can be beneficial because charge capture sheets can get lost or be illegible.

However, charge capture automation doesn’t ensure 100% accuracy, Diamond says. Although automation may be more efficient at capturing a charge, it raises the question of whether that specific charge is warranted. For example, a physician orders a chest X-ray. During the X-ray, the radiologist decides to take additional views because something suspicious is spotted. The hospital may miss an opportunity to bill for those additional views if someone doesn’t review the documentation and update the order accordingly, she says.

The same is true for labs. It’s not unusual for a physician to clarify a lab slip verbally and include additional tests that never end up being captured through the chargemaster, Diamond says. For example, this often happens with a positive urinalysis that requires an additional sensitivity culture.

Focus on education and communication. Each department manager must closely monitor the chargemaster and notify the HIM department when changes or updates are necessary. Providers also need to know their role in the charge capture process. A written charge capture policy followed by staff education and auditing are essential. “An effective charge capture audit is aimed at streamlining charge capture processes, allowing the entity and providers to improve communication and collaboration between department areas and enhance profitability,” Legg says.

Diamond says the easiest way to audit the chargemaster is to examine all internal processes related to a particular patient stay, including how the documentation in the record translates to what charges appear on the UB-04. Were all charges included? Was everything charged correctly? Look for patterns in terms of missed devices or an inaccurate number of units for certain drugs. Develop a list of the most common mistakes, ensure that the charge capture policy addresses these errors, and provide education to those who need it.

Any audit must examine whether staff members and providers follow policy-directed internal processes for charge capture, Malm says. Do policies need to be updated to be more clear and consistent? Are new policies necessary so that providers understand their role?

In the current economic environment, now is not the time for hospitals to leave money on the table. A smart charge capture strategy can make significant inroads toward improving a health care organization’s bottom line.

— Lisa A. Eramo is a freelance writer and editor in Cranston, Rhode Island, who specializes in HIM, medical coding, and health care regulatory topics.