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Hospital Charge Capture: Why More Rules is Hurting Your Success

The charge capture discipline has grown and matured a great deal since the days of paper-based review processes. Revenue teams used to rely almost entirely on the accumulated knowledge of the personnel performing billing reviews. Better systems and software have made this process much more sophisticated and user-friendly as they continue to mature.

In the last few years, there has been a transformation in the way effective charge capture tools work. Yet, many current solution providers continue to advertise antiquated benefits. We continue to see many vendors touting the sheer volume of charge capture rules residing in their various tools. Like horsepower or seating capacity for a motor-vehicle, the number of rules referenced is offered as a measure of the sophistication and efficiency of the tool. But, the more you know about the latest advances in charge capture data and tools, the more likely you are to recognize that a larger volume of rules doesn't ensure effectiveness.

Thinking about rules as a quantity to simply be “counted up” betrays a lack of sophistication in approach. The fact is, today’s revenue integrity environments require better rules, not more of them.

Thinking about rules as a quantity to simply be “counted up” betrays a lack of sophistication in approach. The fact is, today’s revenue integrity environments require better rules, not more of them. A tool and team using more sophisticated rules will consistently outperform solutions committed to the idea of merely accumulating more rules. The transformation is due to an increased focus on root-cause analysis and remediation, not simply working rules.

Quality Over Quantity

There are several reasons why a larger quantity of charge capture rules doesn't equate to success. One of the most basic reasons is that a focus on accumulating rules often means there’s a disincentive to “clean house.” In many cases, quite the opposite occurs. Vendors are now incentivized NOT TO dispose of outdated and non-compliant rules and replace them with updated logic because they want to tout how many rules they have.

One can think of a rule-base like any storage area in the home — if a garage or basement accumulates material, without getting cleaned up now and then, it becomes awfully hard to find the exact item one is looking for. This problem is compounded by older, obsolete rules that end up contradicting the rules that are currently applicable. This is a simple, but common issue that leads to artificial inflation of a rules database. Stepping out of this problem requires developing better, more sophisticated rules, rather than simply more.

Rules Need to Reflect Reality

Effective rules accurately reflect the complexity of the broader context and specific details of the situation they’re designed to address. Moreover, if your rules are going to help you do a better job of charge capture, they need to reflect the nuanced logic connecting all the variables pertinent to the care your team has delivered. Minimally, this includes the procedures and care provided; supplies and drugs administered; and the patients, payors, and regulations applicable to the specifics of the entire patient stay.

Smart rules that have multiple connection points between chargeable items, compliance guidelines, and payor requirements, make a huge impact in effectiveness. A tool that uses multi-variable rules is vastly more effective than drawing from a “warehouse” of discrete, single-logic rules.

Smart rules that have multiple connection points between chargeable items, compliance guidelines, and payor requirements, make a huge impact in effectiveness. A tool that uses multi-variable rules is vastly more effective than drawing from a “warehouse” of discrete, single-logic rules. One-to-one rules take us back to the days of manual processes, where the individual coder’s experience was everything. In today’s regulatory environment, that’s a recipe for trouble for any revenue integrity team. It will likely mean lost charges, rejections, re-billing, compliance issues – and most assuredly – fail to achieve root cause remediation.

A focus on rule quality and sophistication is one of the key ways to improve your charge capture and overall revenue cycle results.

What Goes Into Quality Rules?

Quality rules reflect the full spectrum of interconnected variables that come into play when reviewing charges and finalizing a bill for presentation. This is where advanced logic comes in.

Advanced Logic

Sophisticated rules with advanced logic account for a number of moving targets in the same encounter. Key variables from the full set include:

  • Patient-class
  • Age limits
  • Procedures
  • Drugs
  • Clinical metrics
  • Payor
  • Departmental information

Developing rules with broader scope and deeper nuance is the best way to continuously remedy root causes for charge capture issues. Simple rules may be sufficient for harvesting low hanging fruit, but errors with more than one contributing cause (which includes most of them) are difficult to discover and solve for with one-to-one rules.

Simple Rule Example:

Missing Drug- this rule only checks for the drug charges which match the administration charge

Complex Rule Example:

Drug Charges Below Therapeutic Dosage- this rule not only verifies the correct drug and administration, but also determines if the dosage charged was correct given patient age.

Considerations For Any Patient Encounter

Below are several of the factors that might be considered for any given patient encounter. Almost all of these will come into play over a normal week’s worth of billing.


Pharmacy is an area of increasing focus due to the continuous escalation of drug costs. Good rules are needed to address the common problem area of translation from charged units of service (units delivered or dispensed) to the billable units of service as described by HCPCS. In general, pharmacy charge capture also benefits from the rules driven by multi-variate logic – especially rules that connect procedures and patient information, clinical metrics, and payor information.

Over and Under Payments

These should be addressed within the scope of the same rule so clients can see a net-net impact of the charge capture discovery. Discrete measures in these areas frequently inflate the overall financial impact of errors and rule(s). Both over and underpayments are of course often costly — underpayment in revenue; overpayments in compliance.

SAF Data (Limited Data Set) & Historical Analysis

Evidence and experience should drive rule development. The first place to look in examining the validity of your current ruleset is in the performance of these rules in terms of rejections and re-bills. Good tools have evidence-based explanations for rules and provide you with guidance. The tool should identify a variety of proven coding approaches and recommend the most complete and accurate solution. Here too, the recommendations are based not on one-to-one rules, but a full assessment of variables: the physician dictation, allowable amount by procedure or package, organizational variables, and government regulation. It’s not uncommon to have multiple resolutions, but excellent historical analysis will lead users to the very best one.

Reporting and Timing

Being flexible and granular with the timing of reports is another way to improve accuracy with rules and billing. Pulling reports too early or late to make your minimum-days deadline may mean that errors go unrecognized. With the right timing of reports, rulesets applicable to both the full encounter and date of service (DOS) enable you to catch errors at various points in time. Sophisticated rules evaluate both, and compare. Further cost savings can come from building out rules so they run prior to other scrubbers, reducing the potential for redundant work.


At a high level, there are two kinds of experience contributing to the sophistication and success of charge capture tools’ rulesets. First and foremost is domain knowledge: knowing the facility, the personnel who practice there, the common procedures and packages, typical patient populations, and the financial and clinical ecosystem. That knowledge is usually shared among revenue cycle leaders, charge capture personnel, and tool vendors and consultants.

The other kind of experience needed is more specialized — the ability to translate all of that domain knowledge into a tool that can easily blend a facility’s methods with best-practices gleaned from other similar facilities. You also want to have experts that help design those tools elegantly enough to offer a user experience that’s both intuitive and flexible.

Making Maintenance Easier

One other hallmark of having quality rules versus a large quantity of rules is something we’ve already hinted at: it’s much easier to maintain. A tool designed to house as many rules as possible will offer significant challenges for upkeep, and often leads to a general slackening of the “will” for maintenance activity.

False Positives

One key measure that gives you a baseline of any ruleset is the frequency of false positives. False positives hamper the overall efficiency of your charge capture and bill preparation processing, and are also a sure sign you have too many rules with insufficient sophistication. Good rules drive efficiency and enable teams to get to root causes, which initiates a virtuous cycle of rule quality and improved results.

Audits Tell the Story

Both the short and long-range evaluation of your ruleset efficiency can be most reliably measured through charge capture auditing. We offer a handy guide, How to Design a Hospital Charge Capture Audit, that can be used to help inform your overall charge capture strategy.

Finding and fixing problems is good, but the measures that guide your overall effort shouldn’t be a volume of fixes, any more than your evaluation of a charge capture tool is the volume of rules it contains. Fewer, better, deeper, stronger rules can bring your team to a place where you’re working proactively to actually anticipate change, and then plan strategically — rather than constantly being forced into reaction mode. We’re sure you’ll agree, that is a great place to be.

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