With healthcare costs projected to rise another 8% year-over-year in 2025, and research showing that providers delivered $745 billion in uncompensated care between 2020-2022, physician practices already operating on tight margins simply cannot afford to let revenue they should be collecting slip away.
Yet, new Ingenious Med-funded research shows that 13.3% of all charges are under-coded, 7.4% are over-coded and, ultimately, organizations are leaving an average 11.4% of total revenue on the table—despite 38% spending more than $500,000 annually on charge capture and documentation, and an additional 39% spending between $100,000 and $500,000.
Making revenue cycle management (RCM) even more challenging are the relatively new charge capture features electronic medical record (EMR) vendors have been adding into their software. While the EMR-embedded charge capture tools may seem at first to be convenient and timesaving, the features can instead come at a great expense to physician groups.
“We’re seeing a lot of healthcare providers that access charge capture functions in their EMR finding that the capabilities don’t meet all charge capture needs,” says Tracy Olsten, CPMA, CPC, CMSC, CMSCS, AAPC Approved Instructor. Olsten is a coder and Chief Operating Officer of The Provider Partner, which works with healthcare providers to optimize revenue opportunities. “Without giving physicians proper tools for coding, medical groups are missing reimbursement opportunities because there’s nothing to help providers understand when services could be billed at a higher charge capture.”
Missing Reimbursement and Limited Visibility into Financial Performance
Complicating matters further, physician practices are forced to rely on reports that are considerably less robust than purpose-built charge capture software. Physician practice leaders in some cases can no longer view billing data at the physician level, across multiple sites, or even further back than one week.
“Revenue leakage is not something that happens overnight. Just like a faucet can drip so can revenue losses. It starts small but grows over time,” Olsten adds. “Utilizing a charge capture system that is specifically designed for capturing all aspects of provider services reduces the number of lost opportunities due to missing key workflows commonly found in many EHRs. When those workflows are missed, the complete revenue picture may not reflect true accuracy.”
In this way, EMR-embedded charge capture products are not meeting the needs of practice managers. Losing visibility into vital productivity data would hamstring any serious businesses, and physician practices are no exception.
A consequence of using the EMR-embedded charge capture tools is that billing staff now have to routinely allocate time to manually check for missed or inaccurate charges. The additional wear and tear on the staff is significant as our research shows that many revenue cycle tasks—including coding and charge capture—already require significant human involvement (see chart).
“Clinicians can be providing great clinical care, documenting it in the EHR, and the software generates a code that appears automatically, but they are essentially flying blind in terms of the coding. Is the EHR charge capture functionality generating the right codes? Probably, but there’s just no feedback,” says Steve Queen, Vice President, Resolv Healthcare. “And people get a little queasy asking that foundational question about how accurate the codes are.”
EMR-embedded charge capture tools can lead to fewer diagnoses being linked to a charge, and more unspecified codes when compared to those enabled by software designed to help physicians capture their charges accurately, according to Jason Stein, MD, Co-Founder and Chief Medical Officer, Ingenious Med, and a practicing physician.
”I’m a physician and can tell you that we often don’t have a clear view about how much waste is being created,” says Charles Hunley, MD, CEO, The Provider Partner, and a critical care physician. (Hunley and Olsten are colleagues.)
‘Drifting’ is the New Problem
Physician practices that lose visibility into daily or weekly productivity data are at risk of looking back at the previous quarter only to realize they have fallen short of volume and revenue forecasts.
Queen likens the potential for physician groups to drift off course financially to an aircraft in flight.
“The airplane might only be drifting by one-third of a degree and that doesn’t feel like a lot … until 6 hours later when you land in Boston, not New York,” Queen says. “Healthcare organizations can drift even slightly away from optimized charge capture and not realize it until it’s too late and they’re down half-a-million dollars or more. Drift is never good.”
Revenue drift is particularly risky right now. Physician practices are already grappling with difficult economic obstacles including rising operating expenses. In addition to the Medical Group Management Association’s survey data (see chart) showing a widespread increase in 2024 costs over 2023, the American Medical Group Association determined that median total expenses soared to more than $1 million per physician in 2023, up from $905,283 the previous year.
“There’s a growing concern that revenue shortfalls, relative to forecasts, may be due to persistent erosion in clinical revenue originating from any or all of the new deficits in the EMR-embedded charge capture and reporting functions,” Stein adds.
Robust analytics features, such as those offered by charge capture company Ingenious Med, give physician practices the ability to see provider productivity data in real-time, to run reports over any length of time, to drill down to the individual provider level, and to use group comparisons to reduce unnecessary variation.
Our survey findings also show that current RCM tools leave room for improvement as well.
AI Outlook: Investing to Drive New Revenue
The Ingenious Med-funded research shows that 94% of participants believe AI will improve both coding and charge capture–which are also among the top reasons their organizations are planning to implement AI in the near future.
Survey respondents say that another critical reason to invest in AI is that technologies will drive double-digit revenue growth across revenue cycle functions:
- 22% Payer amount/timing estimations
- 21% Payer payments
- 19% Coding
- 16% Claims lifecycle
- 16% Denials prevention and management
- 16% Patient payment estimations
Looking ahead, 73% say AI will be widespread in RCM within 5 years—an increase from 60% in the 2023 survey.
Two-thirds (65%) of survey respondents, in fact, say their RCM solution performs only “somewhat well” at charge capture when physician groups need the tools to be very effective at charge capture.
“Practice leaders do not want to be in a position where they are looking at revenue on a monthly basis and scratching their head asking ‘why is my revenue down so much? Why do I have so many claims on hold? Why do I have a provider that hasn’t signed so many of their medical records that’s causing bills to not go out the door?’” Olsten says. “Practice leaders want to be able to catch those issues in real time. So they need analytics and a dashboard to access real-time data or get reports on a real-time or daily basis.”
What’s Needed Now: AI and Smart Analytics to Avoid Financial Drift
To correct or eliminate revenue drift, physician practices can use purpose-built charge capture software that works across different EMRs to measure productivity and manage financials on a daily basis.
Indeed, the survey results reveal that 78% of leaders rank smart analytics highlighting under-coding instances as the top functionality they would like to see included in an RCM solution, followed by smart analytics for charge capture, over-coding, and predictive up-down staffing.
Physician practices need specialized analytics and reports, and partners who specialize in RCM, to determine what ‘optimal’ charge capture practices look like and how to attain those results on an ongoing basis.
“Optimal means having the ability to see your charge capture and coding performance in real time, rather than flying blind quarter-to-quarter,” Stein says. “With the right information and charge capture tools, practice leaders can know where the organization is drifting away from its goals on a day-to-day or week-to-week basis so leaders can take appropriate actions quickly.”