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We recently did a podcast about missing charges, which never got into the billing system and disappeared into the void. We left off in the last podcast with this lingering question: “Are we making too big of a deal out of this?” In other words, is this a big issue or something that people should be concerned about, or is this essentially making a mountain out of a molehill?

Lost Claims in Percentages

We went through some data and talked about the average rate of missing claims. Even though that’s a single-digit percent on average, it’s a pretty significant single-digit percentage, meaning 6% is the average of claims that go missing. That’s a staggeringly large number. 

We also talked about the best-case scenarios that we’d seen down in the 1% range. We’re talking about huge numbers here, so it’s not a minor issue. Of course, given that you have already rendered services and all the costs have occurred, we’re just talking about lost revenue, which means it would drop purely to the bottom line.

If this is such a big problem, why has it not been solved? One of the biggest reasons, and perhaps the most significant reason, is that it’s easy to ignore a problem that hasn’t crossed your radar. 

The Issue with Unentered Charges

Many business issues are glaringly evident in the sense that somebody individually runs into it, they run into it frequently, the whole team runs into it, data is staring you in the face that says, “Hey, you’ve got a big problem. Here’s the magnitude of the financial issue.” That’s not the case here because the claims essentially went poof, they rendered care, but they never got into the billing system. Therefore, nobody can easily quantify how much is missing.

It’s not as though we can say, “Okay, we’ve got 47 million in accounts receivable outstanding, and that’s growing.” That’s obvious and visible. You can calculate this easily, and you cannot get away from it. However, there are thousands or tens of thousands of patient encounters that are not getting submitted. And not only are they not getting submitted, but they’re not even in the billing system. 

Therefore, you can’t even see an unsubmitted charges list or increase your payment cycle because they don’t exist in the system as data. That’s probably the number one reason. It’s easy to ignore something that’s not quantified or easily visible as it’s almost impossible to focus on something like that.

Resources Stretched

There are many other reasons, though, as well. For the most part, teams are wholly overloaded as healthcare has gotten more competitive over the past years. Organizations have to string resources together more thinly. There aren’t many resources just looking for problems to solve or even to know that this is a problem they would research. 

Most organizations don’t have an analytics person or a team of analytics people who are doing this type of thing. Usually, someone in the organization directs most analysts, a business intelligence division, and others to identify or quantify or provide data or output and report things like that that somebody focuses on and understands. 

Therefore, you’re back to that catch 22. The analysts aren’t going to go looking for a problem that they don’t know exists because somebody from an operations standpoint would have to know where to go looking for and direct them that way. If no one comprehends the negative impact of the problem, they’re not going to send an analyst looking for it, even if they know they have a glaring issue. 

Again, you’re caught in that web even if you do have analytics people. Frequently, you’re missing analytics people, or they’re short-staffed—similarly, with the same kinds of problems.

It may even be that, at some point, somebody tried to do some form of a charge reconciliation, and it got close enough. We found around 90% of these. There was some reasonable belief that we hadn’t completed the reconciliation, and once we finished it, we would see that we’d caught everything. 

Maybe, there was some problem in the analysis, and somebody could identify the investigation’s situation. Therefore, he thought, “Ah, this is the reason why we don’t see all of them,” not realizing even if you hurdle that, there will still be missing charges, missing patient encounters.

Common billing issues

It’s not surprising there are often system issues even if you don’t interface between a clinical system and a billing system. There are those technology issues. Even if you are billing out of a clinical system, you did not buy those clinical systems for billing, much less analytics. 

The immediate buying decision is typically a clinical workflow, whether it’s an electronic medical record or Radiology Information System or a Laboratory Information System or pathology, whatever it might be. Those are typically not purchased for billing and reconciliation.

Billing departments are slammed. They’re typically entirely overwhelmed with the amount of work they have to do in terms of charges, payment posting, and denials. It’s getting harder and harder every year to be successful in billing. Collections are hard enough, and they kind of focus on collecting what they know about and solving problems only using what they know. Again, there are not many billing department resources to go after this.

Why You Need Change Management

One of the last things that I would point out and think is essential for us to think about, particularly in healthcare, is that I think there’s a culture where people are often afraid to find problems. There’s a blame game that goes on very frequently. People may want to solve problems, but it doesn’t necessarily mean they want to find problems. 

Being the messenger that gets shot is not fun. Frequently, there is a blame culture. I think some of this comes from the fact that we expect healthcare providers like physicians to be perfect. You are not allowed to make a single mistake. You must be perfect. If you make any mistakes, then that means that I don’t even know. I mean, we are talking about lawsuits and all kinds of things. It’s well outside the range of standard human capacity. I think that kind of permeates the culture a little bit, where that then extends to, “Oh, we should all be perfect. We’re intolerant of mistakes.”

Billing often is in a position where it needs to say, “Hey, we’re doing everything right. We’re busting our butts. We’re doing everything that we can do.” In many ways, that’s true. I don’t think I’ve seen many billing departments who are completely lazy and just unwilling to work hard. They are doing everything they know how to do to make sure that everything gets collected. But that doesn’t mean that that is everything that they could do. It certainly isn’t everything from a data and analytics standpoint.

Change Reconciliation Stymied

You’ll typically find situations where some top manager, owner, healthcare provider, a CFO, or executive goes to the head of the billing department or the billing company and says, “Hey, are we having any problems with this?” and the answer is, “No.” Billing will say, “We’re doing great. We’re doing everything we can.” And then what? What does that executive, owner, whomever it may be, do to figure out if that is the case? They don’t have the data to show that that’s not correct. They can’t run the analysis themselves and identify, “Are there a bunch of claims missing?” So again, they vanished. They remain entirely lost in the void.

In most provider organizations, the consistent message that top executive management hears is that nothing is missing. We couldn’t get the data because there are system problems, and we can’t analyze and figure out if something’s missing. If we wanted to check, we couldn’t because the systems don’t allow us to do that. Also, we don’t have time. We don’t have the resources. 

I can’t imagine anyone completing this charge reconciliation route successfully because it’s an enormous amount of work. While it isn’t rocket science, it is challenging. And it isn’t easy, partly from a technical standpoint but really from logic and business requirements and digging through and figuring it out. The number of problems in executing charge reconciliation is extraordinary. The complexity is relatively high.

In conclusion

We’ve shared the real reasons why effective charge reconciliation doesn’t happen. To ensure success, you should tackle all of the issues mentioned above if you’re truly interested in locating every missing charge.  It is possible to do charge reconciliation effectively and find all of the missing charges.  The result is significantly higher income without significant additional cost, which means a lot drops to the bottom line.