A charge audit is a critical review process that evaluates the accuracy, completeness, and compliance of charges captured and billed by a healthcare organization. It ensures that services rendered are properly documented, coded, and charged in alignment with payer guidelines and regulatory requirements. By identifying discrepancies such as undercharging, overcharging, or missed charges, charge audits help improve revenue integrity and reduce compliance risks.
For health systems, regular charge audits can lead to optimized reimbursement, enhanced operational efficiency, and stronger financial performance.
Types of Charge Audits
There are several types of charge audits that healthcare organizations can implement, each targeting specific areas of the revenue cycle to ensure accurate and compliant billing. These audits focus on different settings, services, and regulatory requirements, helping to uncover missed revenue opportunities and reduce the risk of overpayments or penalties. Below, we’ll explore common charge audit types, including a look at recommended audit frequency, common findings and root causes of common issues.
- Outpatient & Inpatient Charge Capture Audit
- Emergency Department (ED) Charge Audit
- High-Cost & Supply Audit
- Facility Charge Audit
- Medicare & Medicaid Compliance Audit
Outpatient & Inpatient Charge Capture Audit
Recommended Audit Frequency: Every 6 months
An Outpatient & Inpatient Charge Capture Audit focuses on the accuracy of charges for both outpatient and inpatient services. This audit compares documented services against billed charges, identifies any discrepancies or missed charges, and ensures that all patient services are accurately captured and reimbursed.
Common Findings
- Uncaptured charges
- Issue: Services provided but not documented or billed, leading to lost revenue
- Root Cause: Clerical errors or inadequate charge capture processes
- Over or undercharging for procedures:
- Issue: Services being billed incorrectly, either at a higher or lower rate than intended, which can result in compliance issues
- Root Cause: Complex billing protocols, charge capture protocols, or variations in department practices.
- Lack of consistency in charge capture:
- Issue: Inconsistent application of billing protocols across departments, leading to potential discrepancies and inaccuracies
- Root Cause: Disconnect between the clinical documentation system and the charge capture system
To learn more about Outpatient & Inpatient Charge Capture Audits, please schedule a free consultation here.
Emergency Department (ED) Charge Audit
Recommended Audit Frequency: Every 6 months
Given the fast-paced environment of emergency care, it is essential to audit ED charges regularly. An Emergency Department (ED) Charge Audit ensures that services such as diagnostics, consultations, treatments, and procedures are accurately coded and billed, to mitigate denials and reduce the risk of lost revenue.
- Missed charges for diagnostic services
- Issue: Tests and procedures performed in the ED not being captured or billed correctly
- Root Cause: High volume and a fast-paced environment can lead to missed or inaccurate charge capture, especially for diagnostic services or treatments
- Misuse of low-level codes
- Issue: ED visits often being undercoded, especially for complex cases that require more comprehensive services
- Root Cause: Workflow issue, coder misinterpretation, lack of ED-specific training, overreliance on EHR templates or auto-populated fields, failure to capture procedures or ancillary services
- Misuse of high-level codes
- Issue: ED visits being overcoded lead to an increase in denials and administrative burden
- Root Cause: Workflow issue, coder misinterpretation, lack of ED-specific training, overreliance on EHR templates or auto-populated field
- Improper coding of triage and patient intake services
- Issue: Services related to patient intake or triage not being accurately documented and coded
- Root Cause: Lack of standardized charge capture protocols
To learn more about Emergency Department (ED) Charge Audits, please schedule a free consultation here.
High-Cost Item & Supply Audit
Recommended Audit Frequency: Every 6 months
Certain high-cost items, including implantable devices, specialty medications, and surgical supplies, warrant close examination. A High-Cost & Supply Audit ensure that charges are appropriately documented, accounted for, and billed – protecting revenue and reducing the risk of high dollar errors.
Common Findings
- Incorrect documentation for high-cost items
- Issue: Supplies, implants, or other high-cost items not being accurately documented or billed, leading to undercharging
- Root Cause: Inaccurate tracking of high-cost items, such as implants or specialty medications, can lead to missed charges or errors in documentation
- Billing discrepancies for surgical supplies
- Issue: Inconsistencies in how surgical supplies are documented and billed, often resulting in overbilling or missed charges
- Root Cause: Lack of standardization in billing procedures
- Failure to track usage accurately
- Issue: High-cost items not being properly tracked and documented at the point of use, leading to missed charges or billing errors
- Root Cause: improper inventory management and reconciliation processes
To learn more about High-Cost & Supply Audits, please schedule a free consultation here.
Facility Charge Audit
Recommended Audit Frequency: Annually
Facility charges, such as room fees, medical supplies, and equipment usage, should be reviewed to ensure they align with the services rendered and documented in the patient’s medical record. A Facility Charge Audit helps mitigate underbilling or overbilling and ensures that charges reflect the actual care provided.
Common Findings
- Incorrect facility charges
- Issue: Misapplied room charges or billing for supplies and equipment that were not used during the patient’s stay
- Root Cause: Missing or incomplete documentation
- Overbilling for services rendered
- Issue: Billing for equipment and supplies than were actually provided, which can lead to patient disputes and payer challenges
- Root Cause: Misunderstanding of billing guidelines
- Missing or inaccurate documentation
- Issue: Facility charges lacking the necessary supporting documentation, which can result in denials or delayed payments
- Root Cause: Poor internal controls or workflows
To learn more about Facility Charge Audits, please schedule a free consultation here.
Medicare & Medicaid Compliance Audit
Recommended Audit Frequency: Annually
For facilities serving Medicare and Medicaid patients, compliance audits are crucial to ensure that claims meet the stringent requirements set forth by federal and state programs. A Medicare & Medicaid Compliance Audit helps minimize the risk of audits from government agencies and ensures proper reimbursement for services rendered.
Common Findings
- Non-compliance with payer rules
- Issue: Failure to adhere to Medicare and Medicaid billing requirements, including the use of correct codes or submission deadlines
- Root Cause: Lack of understanding of payer-specific requirements
- Documentation not aligned with payer expectations
- Issue: Discrepancies between what is documented in the medical record, and what is required by Medicare or Medicaid guidelines for reimbursement
- Root Cause: Failure to properly document services
- Failure to properly submit claims in compliance with audit guidelines
- Issue: Claims not submitted in accordance with Medicare or Medicaid requirements, leading to delayed or denied payments
- Root Cause: Ineffective training for coders and clinicians
To learn more about Medicare & Medicaid Compliance Audits, please schedule a free consultation here.
Charge Audits in Action – Case Study
Managed Resources recently completed a clinical charge audit of a large U.S. medical center with over 350 beds. After implementing a new EMR system, our client began to experience issues with the Level of Care (LOC) charged, prompting financial and compliance concerns. After reviewing 170 accounts post-EMR transition, Managed Resources discovered a significant error rate (33%), and percentage of errors resulting in revenue loss (63%).
Issues discovered in this clinical charge audit included instances of undercoding and overcoding, resulting in inaccuracies and revenue loss. Our Clinical Charge Audit Case Study can be viewed or downloaded here.
About Managed Resources, Inc.
Managed Resources, Inc exclusively employs Registered Nurses (RNs) for all charge audit reviews. Our Clinical Charge Audit Team is fluent in multiple EMR systems (including Epic and Cerner), and hold credentials including: CCS, CHFP, CRCR, CCFA, CCDS, and CDIP. They possess clinical experience across multiple settings, ensuring a comprehensive understanding of various electronic medical records and clinical environments.
To learn more about Managed Resources’ Charge Audit Services, please schedule a free consultation here.
