Capturing Charges for Services

• San Francisco General Hospital has inadequate policies and procedures for entering patient charges into the system. As a result, charges for various Hospital services and supplies are not being billed. For example, films are removed from the Radiology Department prior to physicians completing medical reports, which are required for billing purposes. Removed films are not tracked and the Department reports one to two percent of films are never recovered for billing. In the Emergency Department, use of the OmniCell automated supply dispensing cabinets are not always used in accordance with appropriate operating procedures, resulting in charges not being captured for billing purposes. Additionally, the implementation of the OmniCell cabinets does not appear to have been thoroughly coordinated with affected departments. As a result, charges may have been erroneously billed twice.
  
  
• The Finance Department should assess the charge structure and charge entry policies and procedures of all Hospital clinics and departments, to determine the appropriateness of the fee structure and ensure that the system is accurately capturing the costs of services provided. Further, the Finance Department should review charge entry practices by clinic and departmental staff to determine whether they are effective and efficient. These steps would maximize costs recovered through patient charges and would ensure that limited Hospital staff resources are effectively utilized.
  
  
• Addressing the clinics and departments individually, however, is not sufficient. The role of the Hospital’s Finance Department must also be clearly defined, enhanced, and communicated. For control purposes, the Finance Department should provide to Hospital clinics and departments the authoritative and consistent standards, including written policies and procedures, for maintenance of the charge structure and charge entry at all clinics and departments.
  
  
• Further, the Finance Department should actively participate with clinics and departments in all stages of new system acquisitions from needs assessment to implementation in order to provide input on charge capture requirements instead of relying upon the clinics and departments to do this, which is the present situation.

While the San Francisco General Hospital Finance Department is responsible for billing and collections, the responsibility for capturing charges rests primarily with personnel in the individual clinics and departments. Charge entry is the process by which charges for patient care, in the form of services and supplies, are captured by the Hospital so that patients or third party payers may be accurately billed. Charge entry is typically a manual process, in which pre-printed "encounter" forms are completed by staff providing the care, with the data and information manually input later into the billing and collection system. However, in some clinics and departments, charge entry is automated. Services and supplies charges are entered into computers by a clinic or department and electronically transmitted to the "Invision" financial system for billing. The Hospital is currently transitioning to an automated process for tracking supplies across clinics and departments.

Patient Financial Services of the San Francisco General Hospital Finance Department has one staff person, a Revenue Analyst, who is dedicated to maintaining the charge structure. The charge structure is the index of billing codes utilized by clinics and departments to capture the charges for services and supplies provided to patients. The Revenue Analyst is informed of changes that need to be made to the structure in two primary ways. First, the Revenue Analyst receives various publications regularly that update industry protocols as well as changes to payer requirements. Second, the Revenue Analyst relies upon clinics and departments to identify new or changing billable services and to request updates to the billing codes. This responsibility is described in an internal written policies and procedures document, which is not included in the Patient Financial Services policies and procedures manual. Currently, the Revenue Analyst is working with the Invision financial system vendor, Strategic Services Group SMS, to update billing codes and charges in the system in conjunction with the transition to in-house processing of all billings. According to the Revenue Analyst, this will give Patient Financial Services the ability to analyze the existing framework for completeness and accuracy.

Department Reviews

Our audit reviewed the charge entry practices in two departments, Radiology and the Emergency Department. These two departments were selected because Radiology has a highly automated process, whereas the Emergency Department has primarily manual procedures to capture charges. Neither department has written policies and procedures on the charge entry process. In each department, as discussed below, there are issues that impact the extent to which charges are captured. However, each department is expecting to implement a new system, which they anticipate will resolve these issues.

Radiology

Radiology has a highly automated process in which the Department’s internal system, the Radiology Management System (RMS), interfaces with the Invision financial system. Orders for Radiology services are initially recorded in the Invision financial system, while RMS records the services once they have been provided. This information, along with required physician reports, is transmitted back to the Invision financial system so that the charges can be billed.

Controls are in place to ensure that all services are captured. First, senior technicians are responsible for reviewing open orders for services before the end of their shift. Further, reconciliation between the Invision financial system and RMS is completed periodically and on a daily basis if problems have been identified. Both Patient Financial Services and Radiology indicated that there had been significant system interface issues in the past, including the fact that RMS does not have all data fields required for billing, and periodic interruptions sometimes still occur. However, most of these system interface issues have either been resolved or are addressed as the issues are identified.

While the system issues have been addressed, one procedural issue remains. According to Radiology staff, one of the primary obstacles in processing charges is delays in producing required physician reports because patient films are removed prior to this report being completed. The Department states that medical necessity oftentimes requires these films to be removed immediately. Further, because the Hospital is a teaching facility, films may be held indefinitely. Once films are removed, they are difficult to trace. Accordingly, the Department must wait until the films are returned before the report can be completed and the services billed. The Department reported approximately six to seven percent of films are taken before a report is filed. According to the Department, all but one to two percent of these films are recovered. Because they have not been incorporated with other charges and are considered late, the Department is uncertain if the charges are ever billed or recovered from payers. If two percent of the Radiology billings are not captured because of this weakness, the approximate revenue loss would be $166,141 annually.

The Department has plans to implement a "filmless" system where the images will be stored online. This will address operational issues, such as simultaneous access to Radiology images, and will resolve the issue of films being removed. Further, it will facilitate the timely completion of physician reports. Ultimately, this will increase collections. The Department is in the process of developing a Request for Proposals and optimistically expects to have the new system implemented in fiscal year 2003-2004. Lease costs for the system are currently estimated to be between $600,000 and $650,000 annually. The Department is planning on offsetting a significant portion of these costs through reductions in expenditures for film.

Emergency Department

Unlike Radiology, which provides highly specialized services, the Emergency Department provides a complex array of patient care. In 2000, the Emergency Department reconfigured its charge structure with the assistance of the Patient Financial Services Revenue Analyst. While the Department reports that this has made the charge entry process much simpler and has enabled them to capture more charges, charges are still being missed.

In the Emergency Department, charges are captured in two ways: manual recording and automated inventory systems. Most direct services and overhead are captured manually through recording the level of care provided to the patient and through recording room charges. The Emergency Department is in the process of moving from manually recording supplies on an encounter form to using an automated inventory system. Medication and pharmaceuticals have been captured and recorded in an automated inventory system and automatically billed since 1999.

The Emergency Department uses pre-printed encounter forms to record the level of care provided to the patient, the room charge, equipment charges, and select supply charges. This form is attached to the patient’s file and should be updated as equipment and supply charges are incurred. Level of care and room charges are assessed and recorded on the encounter form at discharge from the Emergency Department. However, the Emergency Department reports that file maintenance and, subsequently, charge capture are difficult in the pressured and overcrowded emergency room environment. Equipment and supply charges may not be captured immediately on the encounter form, though they may be picked up at discharge upon final review of the file. Nonetheless, many charges may still go unrecorded.

In conjunction with Materials Management, the Emergency Department has installed OmniCell automated supply dispensing cabinets that can be integrated with the Invision financial system. The OmniCell cabinets were implemented for three primary reasons: to eliminate theft, to automate the inventory process, and to automate the charge process for supplies. While the OmniCell cabinets have been in place since 2001, they have primarily been used as an inventory control device rather than a financial charging mechanism.

The Department reported that the OmniCell cabinets have secured supplies for use by departmental staff only. In the past, there were reported problems of Emergency supplies being removed by other clinic or department staff for convenience purposes. Supplies have continued to be recorded manually on the encounter forms so that they are captured for billing.

In mid-October 2002, the OmniCell system was integrated with the Invision financial system for the Emergency Department OmniCell cabinets. However, the Emergency Department reports that it was never notified of this change. Subsequently, charges that were automatically billed through OmniCell were continuing to be recorded on the manual encounter forms and duplicate billing may have occurred. Further, the charge structure was not evaluated to see if it continued to be appropriate, given that encounter forms may structure supply charges differently than OmniCell.

Subsequent to our initial meeting with the Emergency Department, departmental management began to work with the Patient Financial Services Revenue Analyst to coordinate the OmniCell billing process. Additional issues with the OmniCell system are discussed in detail in Section 11 of this report. That section notes that users of the system are not necessarily complying with appropriate operating procedures which would ensure that supply usage is accurately captured. Indeed, the Emergency Department reported that many nurses are using the catchall "Floor Charge" rather than charging a patient account for supplies taken. These floor charges are never billed. Additionally, it was recently discovered that a nurse manager from another unit continued to have access to and utilized supplies from the Emergency Department OmniCell cabinets.

Finally, the Department utilizes the SureMed system for dispensing medication and pharmaceuticals. The system is secured by user names, passwords, and required patient information. Activity is automatically recorded and downloaded to the Invision financial system for billing.

The Emergency Department is currently in contract negotiations with a vendor to provide a system, the Emergency Department Information System (EDIS), for capturing the services a patient receives, including the level of care and room charges. The primary objective of the new system is to improve Emergency Department documentation, effectively replacing paper files. With improved documentation, departmental management expects the new system to greatly increase the charges captured for billing. At this time, it has not been determined whether EDIS will interface with Invision for billing purposes. The system is expected to be implemented in the next nine months to one year at an approximate cost of $800,000 of which $275,000 will be funded by the San Francisco General Hospital Foundation.

A new system is not, however, a panacea for the issues that are inhibiting accurate and complete charge capture. For the new system to be a success, the Emergency Department will have to assess its internal policies, procedures, and practices. Ingrained practices, such as using the floor charge rather than patient accounts, will have to be identified and resolved if they are impairing the effectiveness and efficiencies the new system promises to bring. Continuing issues with the OmniCell system, which stem from the lack of coordination between departments, potentially the lack of understanding of user needs, and inadequate reporting and supervision, provides insight on issues to address in the new system implementation.

Role of the Finance Department

Generally, decentralization reduces the control an organization has over processes. Accordingly, decentralization of any process should be supported by adequate policies and procedures and other management tools, such as appropriate systems and reporting. Policies and procedures should be standardized to the greatest extent possible and should be authoritative, requiring compliance unless specifically reviewed and waived for a valid reason. However, the Finance Department has not created these controls or provided uniform guidance for capturing charges.

A recent review of Hospital charges conducted in the spring of 2002 by an outside consultant, discussed in Section 2 of this report, also identified the decentralized structure as an issue. The report stated: "In a few departments we noted a lack of understanding of the rate structure (how a department charges for services)." The consultant also made a recommendation to develop "charge protocol manuals to document the services rendered, equipment used, supplies used, charging/pricing philosophy, and related documentation."

Individual clinics and departments, such as the Emergency Department, Radiology, and Materials Management, are unilaterally undertaking significant projects to improve charge entry. However, unless these efforts are coordinated with related departments, these projects may not fully realize the potential improvements that can be made or they may fail outright. Further, clinics and departments, which are driven by the mission to provide care, are less compelled by administrative necessity. It is imperative that the Finance Department and other administrative functions, such as Information Systems, work together to provide the authoritative standards and direction that guide clinics and departments to develop an appropriate charge structure along with supporting policies and procedures for charge entry.

Charge entry has been identified by Hospital management as an area that has been neglected for many years. The Chief Financial Officer for the Department of Public Health is developing a proposal to address weaknesses in charge capturing as well as other revenue opportunities throughout the Department. It is expected that the proposal will include two revenue auditors who will assess charge entry in individual departments, flow chart the front and back ends of the processes, including any information systems, make recommendations based on cost-benefit analyses, and assist in implementation of any recommendations. This effort is warranted given the state of charge entry at the Hospital. With one Revenue Analyst, Patient Financial Services does not have sufficient resources to dedicate to this effort. Additionally, a review by individuals independent of the current process and vested departments would assist in making sure the assessment is thorough and unbiased. The Department of Public Health should move forward with developing its proposal and should include a cost-benefit analysis of hiring additional staff.

Addressing the clinics and departments individually, however, is not sufficient. The role of the Finance Department must also be clearly defined, enhanced, and communicated. For control purposes, the Finance Department should provide the authoritative and consistent standards, including written policies and procedures, for maintenance of the charge structure and charge entry at all clinics and departments. Further, the Finance Department should actively participate in all stages of new system acquisitions from needs assessment to implementation in order to provide input on charge capture requirements.

Conclusions

Responsibility for ensuring patient charges are appropriately and accurately captured is decentralized throughout San Francisco General Hospital clinics and departments. Yet, clinical and departmental staff do not necessarily have the skills, tools or incentives to ensure that charges for services they provide are being captured. Further, there are no controls in place or standardized policies and procedures to assist clinics and departments in the charge capture process.

Therefore, as noted in reviews of the Radiology and Emergency departments, procedural and system issues prevent charges from being appropriately and accurately captured for billing.

Recommendations

Costs and Benefits

The benefits of these recommendations cannot be easily quantified prospectively due to the fragmentation of the charge entry process and the lack of cost analyses for rate setting purposes, as noted in Section 2. It is likely, however, that the additional revenues generated from capturing more charges as well as savings from a more efficient use of resources, would significantly offset the costs associated with these recommendations.

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1. Tom Jenkins Healthcare Consulting, "Review of the Charge Description Master," May 2002.