How Poor Charge Capture Impacts Your Revenue Cycle Performance

Charge capture in healthcare is the first step in turning care into payment. When a strong charge capture workflow is in place, it converts documented services into accurate, defensible charges, optimizing revenue.

Despite its potential, this mid-cycle step is especially prone to missed or incorrect charges that quietly reduce revenue.

Healthcare consultants sharethat hospitals lose one percent of net revenue annually to faulty charge capture. For an organization with $80 million in revenue, that amounts to $500,000, enough to fund a new ultrasound unit or on-site lab, two potential revenue producers.

More than a medical billing issue, poor charge capture’s revenue-leaking consequences can be found throughout the entire revenue cycle system. Bad charges can cause underbilling, compliance risk, slower cash, and unreliable reports.

Healthcare organizations can use straightforward steps to repair charge capture. A streamlined system relieves clinicians, administrators, and finance leaders while boosting the bottom line.

What is charge capture in healthcare?🔗

Charge capture in healthcare is the process of identifying, documenting, and coding every billable service, supply, and procedure during a patient encounter. Coding (CPT and ICD) connects what happened in care to what gets billed to the payer. Charge capture is also commonly referred to as “encounter capture” (as in “patient encounter”) in some healthcare revenue cycle contexts.

The process starts with recognizing all billable items provided. It also records key details like date of service, place of service, diagnosis, and procedures. Billers enter coded charges into the billing system and then submit the resulting claim to the payer.

In recent years, charge capture has shifted away from paper-based and other manual workflows toward real-time, automation- and AI-supported tools.

Root causes of charge capture errors🔗

Before you look to employees for charge capture errors, consider your charge capture system. Are these issues impacting it?

• Changing charge capture rules - Payers are constantly changing coverage rules, documentation expectations, and bundling/edit logic. Staying current takes oversight that many billing teams lack.
• Multiple department involvement - With accountability unclear and handoffs creating gaps, misalignment between what was done and what was recorded can slip through.
• Chargemaster inconsistencies - When new supplies and services aren’t mapped to the CDM correctly, soft charges aren’t consistently represented, or calculations are still manual, errors occur.
• Inconsistent or unknown charging policies - If teams follow different rules for what gets billed, when it gets billed, and how it’s documented, confusion and errors ensue.
  

Mid-cycle isn’t the only place that triggers charge capture errors. Upstream issues can spawn inaccuracies as well. For instance:

• Clinical capture and documentation gaps - Typos, wrong selections, omitted items, and incomplete notes can prevent services from being translated into accurate billable charges.
• Patient intake/registration errors - Incorrect demographics or policy details can cause payer and clearinghouse mismatches, leading to rejections and rework even when the clinical services and charges are otherwise correct.
  

Specifically, the above sources of charge capture errors spawn:

• Missed charges
• Incorrect CPT/ICD coding
• Duplicate charge entries
• Incomplete documentation
• Charges that conflict with the record

Failure points make it clear that charge capture errors are rarely caused by one person’s mistake. Hunt for flaws in your charge capture system overall to begin improving it.

The direct revenue impact of poor charge capture in healthcare🔗

Poor charge capture either suppresses what you bill (underbilling) or inflates it (overbilling).

While both outcomes drain revenue, underbilling is the harder one to catch. Payers directly inform healthcare organizations of a denial or an overbill via edits, audits, and denials, but underpayments can slip by. Payers send along an insufficient amount, which billers often pass along to posting, assuming it’s paid in full. HFMA shares that small misses involved in secondary procedures, pharmaceuticals, implantables, and complex drugs ultimately accrue into significant losses.

These small percentage errors compound monthly and annually, often amounting to millions. More healthcare organizations are starting to pay attention, challenging payer underpayments with lawsuits. Most recently, Tennessee’s Ballad Health filed a suit against United Healthcare, claiming $65 million in underpayments and damages.

Another way inaccurate charges deplete revenue is by starting the billing process with artificially low figures. This impact stunts revenue before appeals, A/R follow-up, or patient collections can even help. It also reduces collections against allowed amounts, lowering your net collection rate.

Charge capture error downstream effects on key revenue cycle metrics

When charge capture in healthcare breaks, the first visible symptoms show up fast. Here are the pitfalls resulting from broken charge capture:

• Days in A/R increase - Claims that get held, rejected, or denied must be corrected and resubmitted, slowing cash conversion. Compounding this revenue leak is the fact that as receivables age, collectability declines. Ideally, all accounts should be collected within 30 to 40 days.
• First-pass resolution and clean claim rate drop - Poor charge capture leads to billing and claim-edit failures, which are a direct precursor to lower first-pass performance.
• Denial rates rise - When charges don’t match documentation, denials and delayed reimbursements follow. Denial performance is a core healthcare organization metric affected by upstream execution.

Overall, when charge capture breaks, exceptions increase. That creates rework, rebilling, and slower cash flow.

Compliance and audit risk exposure🔗

Poor charge capture in healthcare isn’t just a revenue problem—it’s a defensibility problem.

It’s up to the healthcare organization to prove that each billed service was medically necessary, properly documented, and correctly coded. Otherwise, reimbursement can be delayed, reduced, or recouped.

Faulty charges expose healthcare organizations to a higher possibility of payer audits, post-payment reviews, and “takeback” activity. You need to be able to defend your charges. See above to review what they are looking for.

5 ways to strengthen charge capture performance

Stronger charge capture in healthcare rarely comes from a single fix. It’s a comprehensive tightening of controls with the goals of reducing variation, shortening lag time, and ensuring correct charges are billed (and can be defended later). Sustainable improvement requires process, accountability, and expert support – not just software.

The tactics that generate a robust charge capture system include:

1. Standardized workflows across specialties - Standardize who captures charges,where they’re captured (EHR, charge capture tool, practice management system), and when they’re captured. Make the “charging moment” consistent across departments. Build specialty-specific guardrails (templates, required fields, default charge sets) for clinicians and staff to rely on.
   
2. Timely charge entry expectations - Set clear time-based expectations for charge entry (e.g., same-day or within 24 hours of service) and tie them to operational dashboards so leaders can see lag by location, provider, and department. Faster, more consistent charge entry reduces missing charges, prevents late-billing scenarios, and speeds downstream claim submission.
   
3. Regular charge reconciliation and audits - Use routine reconciliation to answer one question: “Did we bill for everything we did?” by comparing key source systems like clinical documentation, orders, procedures, supplies, and encounters against posted charges. Pair this with periodic audits focused on high-risk services and high-dollar categories to identify patterns (missed items, incorrect units, duplicate charging) and then hardwire fixes into the workflow.
   
4. Alignment between clinical documentation, coding, and billing - Create a closed-loop process so documentation supports the code, and the code supports the billed charge. Standardize escalation paths for ambiguous documentation, and ensure coding guidance, payer rules, and charge master/build updates are communicated back to frontline workflows.
5. Reframe charge capture as a healthcare revenue protection strategy - Historically, charge capture has been treated like administrative cleanup. Healthcare organizations find that when executed well, it functions as a revenue protection control. How? By reframing “back-office work” as a frontline financial safeguard, you protect margin the same way supply-chain controls or labor productivity controls do.

Navigate charge capture improvement with Medusind🔗

Medusind positions charge capture improvement as a deliberate revenue integrity strategy, not guesswork. Sticking to a “No Charge Left Behind” approach, it ensures every encounter is accounted for and billed, so revenue isn’t lost. Unleashing a software and/or services approach, we treat charge capture in healthcare as a measurable, managed discipline. Supported by coding expertise, advanced technology, process oversight, and audit-ready documentation alignment, a comprehensive charge capture system strengthens the entire revenue cycle.

Contact Medusind to explore the expertise charge capture in healthcare available to help you establish a powerful, revenue-preserving system.