The Top 4 Ways Hospitals Lose Revenue

MedCom Solutions has provided hundreds of chargemaster reviews for our clients for over 30+ years. In that time, there has been an accumulation of knowledge around hot spots where hospitals are prone to losing revenue if they aren’t paying particular attention. These are some of the main areas where MedCom has focused on early detection and ongoing maintenance for our clients to recover reimbursement and prevent revenue erosion. 

1. Prices are below commercial payment rates

A simplistic statement, yes. But how to measure this? The first step is to compare chargemaster prices against known contract payment rates. Most payors have a contract clause stating they will reimburse at the “lesser of” billed or contract rates. Once data evaluation is complete, establish and implement, as needed, a defensible pricing policy to maintain all chargemaster prices above the maximum reimbursement rate. 

Next, review 835 payment data against specific contract rates to test that all payments received align with payor contract terms. When remittance does not match the contract, inquire with the payor to seek reasoning. Following up on short-paid claims may take time, but it ensures full cash receipt for services rendered.

2. Chargemaster contains old and invalid codes

Not only are the invalid codes active, but they also have usage. Not implementing timely updates for CPT and HCPCS codes seem like an innocent mistake, and it can be easy to do if no one is tasked with watching out for regulatory changes. However, consistently using out-of-date codes can cost your hospital hundreds of thousands in lost revenue.   

Schedule regular chargemaster reviews to check for out-of-date codes. Review the CPT and HCPCs codes to verify that only valid codes have usage. Next, confirm that modifier and revenue codes are accurate.

3. Inaccurate connections between order systems and chargemaster

Whether the systems are “compatible” or “incompatible,” there is a significant chance that gaps exist between order systems and charge data.

Are you checking to ensure that when a tech orders a radiology test, it accurately posts to the patient bill? There are several ways to reconcile linkages between multiple structures. However, reconciliation must take place. In the absence of verification, someone in the laboratory may signal that a test occurs and the order screen links to nothing, or even worse – it triggers the wrong charge. Errors like this often happen and generally remain undetected but are a significant source of inaccurate reimbursement and underpayment for services rendered.

4. Overlooking supply charges

Do you know what supplies are making it to the patient bill? Of these, do you know which are paid? And how? 

There is often a large amount of “dead revenue” tied up in charging for routine supplies that the hospital should not separately report. These charges also clutter the chargemaster and take time to manage effectively. They garner no reimbursement and have no purpose on the patient bill. Removing these from charge practice is a must to save time and wasted gross charges. Additionally, ensuring that cost information is accurate for all reimbursable supply data is paramount.   Accurate cost information confirms that the markup will reflect the appropriate price. Many commercial payors that will reimburse for supplies do so on a percent of charge basis, so accurate cost data is critical to ensuring that you at least break even.  

There are several other places to look for broken processes and recover lost revenue within a hospital or health system. What is essential is a systematic process for review and a continual process for improvement. Need help getting started? Let MedCom help by performing a Revenue Integrity Assessment, which covers all of the bases for identifying substantial gaps in charging and revenue leakage. 

Discover What’s Holding Your Organization Back

MedCom’s consulting process and Chargemaster software solutions have saved hundreds of millions of dollars for healthcare organizations for over 30 years.

Proven to reduce denials, enhance revenues and sustain results, MedCom specializes in OR Charge Optimization and 835 Payment & Denial Trending Analytics in addition to a variety of CDM Management and Charge Capture Services.

Learn more about our solutions or visit our homepage or contact us today!