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Improving Your Charge Capture Process

Aug 17, 2007
The revenue cycle of a physician group can be an amazing process. Especially when the process is simple, efficient and measurable. Unfortunately in many cases the management of the revenue cycle is not simple, efficient or measurable. How well does your group manage the revenue cycle?

There are 3 major components of the revenue cycle. Charge capture which includes the gathering of procedure and diagnosis codes. Claim processing which ensures the claim is formatted with the correct charges and patient demographics and sent to a clearinghouse. And lastly, collection of funds, from both payers and patients.

Process Engineers have a saying that pertains to the flow of a process, "Garbage In Equals Garbage Out". In other words, if you do not perform the first step of the process well, the following steps will not have a good result. For this reason we will focus this discussion on the first step of the process,charge capture.


The first step to improving your current charge capture process is to DEFINE it. I know you are thinking is this a joke? No. This is not a joke. I can not be more serious. It is the most important step you can take. Taking the time to define your process from beginning to end will allow you to quickly identify points of weakness, breakdowns in communication and immediate opportunities for improvement. Defining your process can be achieved through the use of a process flow chart.


This step may sound easy, but potentially, this is where you will have the most difficult time. The reason you will have a difficult time is that most practices do not have the ability to measure their charge capture process. The important thing to remember here is what the process is trying to accomplish,and that is to capture the appropriate procedure and diagnosis codes then ensure they are delivered to the next step of Claims Processing. Below are some basic examples of measures this process should provide.

Example Measures:
* Number of Encounters = billable patient visits
* Number of Bills Submitted = bills submitted by physician (should equal patient visits)
* Physician Time = time spent on charge capture activities (filling out index cards, justifying codes, etc..)
* Lost Bills = number of encounters minus number of bills submitted
* Coding Errors = number down/up coding Events
* Cost of Coding Errors = dollar amount associated to coding errors.
* Cost of Lost Bills = dollar amount associated to lost bills


This is where the fun begins. It is very important that you follow where the data leads you. Don't fall into the trap of thinking you know the problem. Yes, there will be some obvious issues that jump out at you and you need to take action on them. But, you can't afford to stop there. You may have a severe process issue that is costing your practice money and it is imperative that you keep digging.

One of the most common tools for analyzing your process is a Cause and Effect Diagram. This is a simple tool that will allow you capture all the potential causes for a particular effect. Causes are categorized by using the Six M's: Man, Machine, Method, Mother Nature, Materials, and Measurement.

Effect = Lost Bill
Potential Causes of Lost Bill:
* Man: 1) physician misplaces index card, 2) billing offices misplaces index cards
* Machine: 1) fax transmission failed 2) scanned image corrupted
* Measurement: 1) manual reporting of activity, 2) incorrect manual reconciliation
* Method: 1) current process does not validate receipt of transmission of bill 2) Process does not regulate security of index cards.


Now that you have analyzed your process it is time to implement changes to that process. This can range from simple tweaks to a complete overhaul of the process. Once again, let your findings lead you to develop a step by step plan that outlines each of the changes you want to make. For instance, you may determine from your analysis that a primary reason for lost charges is that you are currently on a paper based index card system and that bills are lost due to physicians and/or billing office staff misplacement of the index cards. Your primary improvement action could be as simple as providing a secure lockbox at the hospital for the physicians to drop their index cards or it may be a complete overhaul of the process to include implementation of an electronic charge capture system.

Each improvement action should have an assigned accountable owner. Each improvement action should also have projected start and end dates. It is vital that you have tollgate reviews during the improvement phase to mark the progress of change implementation.


Process improvement is a never ending adventure. You must constantly measure your performance. This will be much easier now that you have defined your measurements. You can utilize simple tools like trend charts to measure data points prior to your improvements and then trend your performance after the improvements. This is such an important step because it allows you to determine very quickly if you are driving toward your expected outcomes. You may need to revisit your analysis and improvement actions to determine where the process still needs to be tweaked or if you need to contact your boss and ask for a raise because you just saved the company money and improved revenue.

In summary, charge capture is the most important step in the overall process of the revenue cycle because it is the first. If you put garbage in the first step of the revenue cycle you will get garbage out of the last step which is collections. Improving your charge capture process can be very easy if you follow 5 simple steps. 1) DEFINE your process, 2) MEASURE your process, 3 )ANALYZE your process, 4) IMPLEMENT IMPROVEMENT ACTIONS to your process and 5)CONTROL your improvements for the new process.
About the Author
James Casey is a certified six sigma black belt and project management professional (PMP). He has 15 years experience as a leader in the healthcare and technology industries implementing technology solutions.
To learn more about charge capture technology please visit MediMobile. http://www.medimobile.com
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