Healthcare has been hit hard by rising labor and supply costs in the wake of the pandemic, and the pressure shows little sign of abating. In a recent report forecasting continued tight financial margins in 2025, Moody’s pointed to high labor costs as a structural problem for hospitals, adding, “Reimbursement increases from payors, particularly government ones, will not keep up with higher wages."
That makes it imperative for providers to ensure their revenue cycle management (RCM) is firing on all cylinders, leaving no reimbursement on the table.
But healthcare is a complicated business, especially for hospital coding professionals who must stay on top of CPT, HCPCS and ICD-10 codes, which are necessary to ensure accurate billing and reimbursement from commercial or government payors.
Healthcare organizations face two big — and related — challenges in revenue cycle management: accurately capturing charges and coding them, and managing claims denials from payors. We’ll go through each in turn and outline best practices to ensure compliant coding and billing.
Charge Integrity and Coding
Healthcare differs from other types of business in many ways — one being that it’s difficult to accurately determine the costs of providing care to patients, which complicates the medical billing process.
Healthcare is a dynamic and complicated business. No two patients are identical, even when they present with the same condition, sometimes resulting in vastly different care needs from medical staff. What’s more, physicians and nurses are busy people whose services are always in demand. They don’t always have time to properly document the care they just provided.
Coders face many challenges that put charge integrity at risk including poor documentation processes, such as illegible handwriting or unclear EHR documentation by physicians or nurses, and incomplete medical records. If care notes in the EHR are confusing or incomplete, it puts pressure on coders to find the correct information — or worse, guess — to ensure all services and procedures are accurately coded and billed to payors.
Another challenge is high turnover among RCM coding staff, which may lead to overworked or poorly trained coders submitting claims for reimbursement. Coders must remain up to date on evolving guidelines and coding regulations. In 2024, there were 230 new CPT codes to go with 70 revisions and 49 deletions; another 420 updates, including 270 new codes, are coming for 2025.
Not surprisingly, given all the variables at play, medical billing mistakes are common. According to the American Medical Association, the most common mistakes in medical coding include:
- Unbundling, or using multiple CPT codes for the individual components of a procedure when a single code is available
- Upcoding, which refers to the practice of billing for higher levels of service than are warranted
- Failing to check National Correct Coding Initiative (NCCI) edits when reporting multiple codes
- Failing to use the appropriate modifiers
- Reporting unlisted codes without the required documentation to support them
Insufficient documentation and downcoding, which is when documentation supports billing for a higher-level service for more reimbursement, are also common types of coding errors.
The stakes of inaccurate charge capture and coding are high, with several potential negative consequences:
- Lost revenue
- Delayed reimbursement, which affects cash flow and finances
- Compliance risks, including an increased chance of government or private payor audits or fines
- Denied claims
Charge Capture Best Practices
Ensuring charges are complete, accurate and supported by proper documentation when necessary is key to effective revenue cycle management for hospitals. It is strongly recommended to capture charges quickly — no more than three to five days after a service or procedure is performed.
Another good idea is to use charge capture automation technology to review the process and ensure your chargemaster is compliant and accurate. Modern solutions can also ensure your coding is up to date, so you’re charging for every procedure and service appropriately.
Claims Denials Management
As mentioned earlier, one of the consequences of inaccurate charge capture is denied claims, an issue that has become an increasing source of frustration for hospitals. While coding errors are a major source of denied claims, there are other contributors, including:
- Missing or inaccurate information
- Not obtaining prior authorization
- Deeming services medically unnecessary
- Insurance eligibility issues
Meanwhile, a survey of hospitals and health systems released in 2024 by Premier found that private payors denied nearly 15% of claims submitted, including many that had been pre-approved through prior authorization. More than half (54%) were eventually paid, but respondents reported having to conduct an average of three rounds of reviews with insurers, with each review cycle lasting 45 to 60 days. In some cases, hospitals had to wait six months after delivering services to be reimbursed.
Similar denial rates have been found with Affordable Care Act plans sold on HealthCare.gov.
Denied claims create major problems for revenue cycle management, including decreasing revenue and cash flow, and higher labor costs for having to file appeals.
Avoiding Claims Denials
It’s a good idea to form a team to tackle claims denials, with members from across the organization who can meet regularly to analyze denial trends, identify trends and establish process improvements.
Having an automated technology solution can also help by flagging coding errors or missing documentation, flag potential compliance issues or handle issues particular to pharmacy claims, such as appending proper 340B or Medicare modifiers.
Using analytic technology helps by continuously auditing processes and flagging potential issues, so staff can address them before they cause problems for the revenue cycle. In the end, it means less work and a more productive revenue cycle management staff.