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How to Reduce Hospital Billing Error

Healthcare organizations consistently seek decreases in their medical billing denials to improve revenue cycle performance. Medical billing denials can have a major impact on an organization’s revenue. Take an average 300-bed hospital for example; a one percent write-off can translate to as much as $2-3 million in lost revenue. To maintain financial viability, providers must proactively manage billing claims so denials can be prevented before they occur.

There are several reasons for these errors. Errors can be broken down into several categories such as:

Human error. Some of these errors are due to computer entry errors. Human errors might be a wrong entry code, wrong quantity, wrong patient, etc.

Duplicate billing is frequently seen because a test may be ordered by a doctor and two departments both enter the test into the patient's chart. You might find charges for the operating room listed twice for different days. Any department in the hospital can duplicate a charge for supplies, admission kit, blood pressure cuffs, etc.

Unrequested items. Those items might be personal items such as a toothbrush, slippers, or shampoo. The patient is often automatically charged for such items even if they did not use them. Insurance almost never pays for personal items.

Inaccurate charges. One example may be the type of room that was occupied. Was it private or semi-private? Two rules to remember are: the patient pays for the day they were admitted, not the day of discharge. And the patient pays for the room they occupy at midnight. Inaccurate charges may also stem from services billed hourly or daily, such as oxygen or being in a specialized unit such as ICU.

How to monitor and reduce these error rates?

This task is not simple. It requires a clear understanding of the one’s organization’s inner workings and of the regulatory environment in which the organization functions. One way to demonstrate an effective program is to have a strong auditing and monitoring process- in fact, auditing and monitoring is an essential element under the OIG Compliance Program Guidance. Regular auditing also ensures that an organization operates effectively and efficiently.

A Concurrent Chart Audit by an experienced Nurse Auditor can improve charge capture by utilizing clinical as well as billing knowledge. Therefore, the nurse auditor can reduce revenue loss, ensure proper charging protocols are being followed and further assist in the correction plans with departmental managers regarding areas of concern. A Concurrent Audit can be described as a complete audit on a non-disputed claim, completed within 30 days of patient discharge. Concurrent audits should include a random sample including all payer types including inpatient and outpatient based upon a percentage of the facility’s daily revenue.


Auditors in their never-ending effort to reduce risk, legal and financial exposure, and adverse events, help to verify that management controls are in place and effective. Each department of the hospital has unique risks, for example, the urgent pace of patient treatment in Trauma and ER opens it to a myriad of potential problems with EMTALA. Another high potential for risk is Pharmacy. Hospitals must control pharmaceuticals to avoid inventory shrinkage, ineffective workflow processes, and noncompliance with federal and state regulations. Because such departmental problems can draw intense scrutiny from the government and private payers, auditors must identify and monitor them on a regular basis.


Although hospitals main focus is on healing, hospitals as any other business must be able to survive financially especially in these tough financial times. Auditors are the facilities first line of defense against misstated financial results. In addition to reviewing financial reports, gathering audit outcome stats, auditors must ensure that the central billing office runs effectively as possible. It is apparent that auditing must be conducted in all departments on a monthly basis to assure the organization’s financial well-being.


Julie Doumad RN, BSN, CCFA, CMAS

Director of Audit Services

JD@ahapinc.com

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